National investment

19 July 2017, by James Williams

Given the continued appetite of investors to deploy capital into the sector, and combined with strong competition for prime assets, there is potential for an inward yield shift in the second half of the 2017

 

 

 
Sainsbury's Distribution Warehouse Hams Hall

▲ Sainsbury's Distribution Warehouse Hams Hall

■ The positive sentiment aimed at the UK logistics sector has shown little sign of abating into 2017 as investment volumes have reached £2.3bn, almost £1bn higher than the same period in 2016 and 150% higher than the long-term average.

■ The market was aided by a number of portfolio transactions. Project Apple saw CBRE Global Investment Partners invest £310m into a joint venture with Prologis whilst SEGRO took full control, from Aviva, of the Airport Property Partnership. Oxenwood also completed their acquisition of the Ultrabox portfolio in a joint venture with AIMCo of Canada.

■ The largest single unit deal of the half year came at Hams Hall in the West Midlands where Far Eastern clients of KFIM purchased the 699,983 sq ft Sainsbury's Distribution centre for £98.5m, reflecting a net initial yield of 4.9%.

■ Stock availability remains an issue for investors as many of the largest developers are holding stock rather than trading. This is demonstrated by the fact that deal count has actually fallen year on year. First half investment volumes are made up of 77 deals compared to 116 for the same period in 2016.

■ The Savills prime yield remains unchanged at 5%, however there is increasing downward pressure as demand for prime assets remains high and stock levels low.

FIGURE 27

National logistics investment volumes

 
Figure 24

Source: Savills Research, Property Data

FIGURE 28

Industrial & Logistics yields

 
Figure 25

Source: Savills Research

 

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Key Contacts

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street

 

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