Nationwide overview

31 January 2017, by Richard Sullivan

2016 sees the highest amount of take-up recorded

 

 

 

▲ Amazon dominates the market

Take-up

■ Following the results of the EU referendum a period of uncertainty was expected to impact the UK commercial property market with occupiers deferring decisions until the potential impacts became clear.

■ The UK logistics market has, however, performed astonishingly well with Savills recording information on 135 transactions equating to 34.6m sq ft, just 400,000 sq ft over the 2014 record of 34.2m sq ft.

■ This has been assisted in no small part by the insatiable appetite of online retailers to acquire warehouse space as consumers shift to making purchases away from the High Street. Indeed in 2016 online retailers have accounted for 29% of all of the space transacted. However, it should be noted that there is strong activity in many other occupier sectors with 3PLs accounting for 18% of the market and manufacturers a further 16%. Examples being Great Bear committing to a second 479,000 sq ft unit at Markham Vale near Chesterfield and Gestamp Talent acquiring a 543,692 sq ft Build to Suit unit at Four Ashes in Wolverhampton.

FIGURE 1

Best year ever for take-up

 
Figure 1

Source: Savills Research

Supply and Pipeline

■ The availability of existing units has, for the last two years, hovered around 30m sq ft as the development pipeline of speculative warehousing has struggled to keep pace with demand. Indeed the third quarter of 2016 saw supply fall to the lowest level ever recorded at just 22.7m sq ft, although an increase in supply of second hand units and speculative units reaching completion have seen supply rise to 27.6m sq ft.

■ Into 2017 we are tracking 17 schemes through the development pipeline which total just over 3m sq ft. The largest being M6DC in Cannock at 372,000 sq ft, a joint venture between Graftongate and Exeter Property Group.

FIGURE 2

Speculative developments increase supply

 
Figure 2

Source: Savills Research

 

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Key Contacts

Richard Sullivan

Richard Sullivan

Director
Industrial & Logistics

Savills Margaret Street

+44 (0) 20 7409 8125

 

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street

 

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