UK warehouse market has best year of take-up ever recorded, says Savills
According to Savills latest Big Shed Briefing, the UK warehouse market (units of 100,000 sq ft +) saw the highest level of take-up ever recorded in 2016, hitting 34.6 million sq ft (3.214 million sq m). The firm says that these record breaking levels can be attributed to the ongoing demand from online retailers.
Whilst online retailers continue to dominate, accounting for 29% of all space transacted in 2016, Savills notes that other sectors have also remained active. For example 3PL’s and manufacturers accounted for 18% and 16% of the market respectively. Notable deals include Great Bear, the healthcare product manufacturer, committing to a second 479,000 sq ft (44,500 sq ft) unit at Markham Vale near Chesterfield and Gestamp Tallent, the automotive metal component producer, acquiring a 543,692 sq ft (50,510 sq m) build-to-suit unit at Four Ashes in Wolverhampton.
Kevin Mofid, head of industrial & logistics research, comments: “Continued structural change in all aspects of retail will see the logistics sector remain the beneficiary in the short to medium term. Budget retailers remain in the market and new pure-play retailers are keen to build a logistics infrastructure.”
As a result of the strong take-up levels and muted speculative development, supply remains critically low at just 27.6 million sq ft (2.5641 sq m). Going forward, Savills does not anticipate a significant increase in stock, as there are currently only 17 units under construction across the UK, the largest being Grafton Gate and Exeter Property Group’s M6DC in Cannock totalling 372,000 sq ft (34,559 sq m). Combined, this equates to no more than 3 million sq ft (278,709 sq m). Even when taking the current development pipeline into account, there is now less than a years worth of supply left in the market.
Kevin continues: “The figures are testament to the strength of the sector, which has performed astonishingly well in the past 12 months. In order to maintain this momentum going forward, it is now crucial that we tackle the supply issue to ensure that occupiers can continue to fulfil their requirements and carry on building their supply chains.”