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The take-up of Grade A floorspace increased by 57 per cent in 2013 compared with 2012.Retailers increased their share of total take up from 33 per cent in 2012 to 43 per cent last year.
London, 31st January 2014 - Jones Lang LaSalle’s latest report on the UK Big Box Industrial & Logistics market shows rising occupier and investor demand and predicts a strong year ahead for Built to Suit (BTS) and speculative development, as well as increased demand from retailers for space.
In total around 18.0 million sq ft was taken up in 2013, 57 per cent higher than 2012 (11.4 million sq ft.) Rising demand and a lack of immediately available floorspace led to the majority of new space comprising of BTS space. At take up of 10.8 million sq ft, equating to 77 per cent of available floorspace, this is the highest annual take-up recorded for BTS since 2001. On the retail side, Asda, Costco, Poundland, John Lewis and Sainsbury’s, amongst others, all agreed to large BTS pre-lets in 2013.
The squeeze on demand has led to a fall in the availability of Grade A stock, with the availability of new space falling by 11 per cent in the second half of the year and second-hand availability falling by 21 per cent.
Investor demand for UK industrial and logistics assets was robust, with investment volumes totalling 4.4 billion in 2013. Prime logistics yields in London, the South East and the regions sharpened over the year and a shortage of prime stock will lead to investors becoming more attracted to good quality secondary opportunities.
Jon Sleeman, Director of Research in Jones Lang LaSalle’s Industrial & Logistics team commented: “Falling unemployment and inflation will boost consumer confidence leading to a strong retail outlook. This, coupled with a good GDP growth outlook should lead to a further uplift in occupier demand this year. While on the whole distribution rents will grow modestly over the medium term in certain locations, notably in and around London, there will be a strong potential for growth given the limited supply. ”
Richard Evans, Director in Jones Lang LaSalle’s Industrial & Logistics team added: “This year we will be working on more BTS and speculative developments. Last year we saw another increase in retailer demand for big box units and we are confident that this year online grocery retail will be expanding. This will lead to each of the major supermarkets looking to open at least one dot.com warehouse in the South East.”
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