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£4.4 billion invested in UK industrial investment market in 2013
MIPIM, 13th March 2014 - Research released by JLL today predicts that improving economic conditions will translate into increasing industrial property demand this year, with take up set to exceed 2013 levels. JLL predicts a return to rental growth over the next four years and strong investor activity in the UK market.
At the end of 2013 availability involving units from 1,000 to 99,999 sq ft was 17 per cent lower than a year before. At the end of last year only 7 per cent of available space in units from 1,000 to 99,999 sq ft was in new or refurbished units.
JLL expects to see an increase in speculative development, with a number of ‘big box’ units and smaller multi-let schemes underway. There is currently some 2.1 million sq ft of floorspace speculatively under construction, including ‘big box’ units and smaller multi-let units which will help to boost dwindling levels of Grade A stock.
Investment in the UK industrial property market totalled £4.4 billion in 2013, 70 per cent up on 2012 (£2.6 billion) with regional multi-let yields moving in by around 75-100 bps over the year. The report highlights that while investor demand will remain focused on prime stock, as availability continues to fall investors will look at good quality secondary assets and the arbitrage between prime and secondary assets will narrow.
Jon Sleeman, Head of UK Industrial Research at JLL commented: “The UK economy is gathering momentum which is translating into stronger occupier demand . We expect supply to continue on a downward trend. We are seeing a good level of enquiries in the market and speculative development, while picking up, remains modest overall.”
Andy Harding, Director in JLL’s Industrial & Logistics team added: ““With improving demand and shortages of good quality available buildings, the market is seeing a return to speculative development. The South East and Greater London regions currently have the highest level of speculative development underway, but with the marked take-up within all the regions there is the anticipation of an increasing number of much-needed development starts during 2014 throughout the UK.”
Industrial Property Trends research can be downloaded here: http://www.jll.co.uk/united-kingdom/en-gb/research/192/uk-industrial-property-trends-today-issue-5-march-2014
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