UK big box take-up in H1 2021 exceeds 20 million sq ft, driven by record high take-up in Q2
E-commerce continues to shine, accounting for 51% of take-up H1 2021
Take-up once again reached record levels in Q2 2021, as the logistics market in the UK shows no signs of easing throughout the first half of the year.
Take-up of Grade A big box logistics units reached 14.8 million sq ft in Q2 2021, bringing the H1 total to 21.4 million sq ft. This quarter’s result breaks the record previously set in Q3 2020 and means that the H1 total is 58% above the 5-year half yearly average.
At the end of H1 2021 there was 21.2 million sq ft of Grade A floorspace available, of which 11.4 million sq ft was under construction as landlords try to keep up with the huge levels of demand. Overall availability was 9% down on the total supply at the end of 2020.
Ed Cole, head of logistics, JLL commented: “The record half-year stats for an H1 are evidence of what everyone who is closely involved in the sector already suspected. Demand has continued at a staggering pace beyond what has been previously experienced. This has been predominantly driven by the same e-commerce businesses that reacted fastest to the surge in on-line retail last year continuing to acquire space, which are now being joined by those who want to keep pace and not be left behind.
“The issue all occupiers currently share is the problem of an acute and deepening shortage of modern supply across all key markets and size brackets causing a rate of rental growth not witnessed before. Whilst speculative development is coming through it is not matching the speed of take-up.”
Commenting on the current investment market, Joel Duncan, director of capital markets, JLL said: “The logistics investment market continues to go from strength to strength as investor appetite remains very strong. With the continued positive news in the occupational market coupled with the lack of supply coming through, expectations of continued rental growth also remain positive. This coupled with the anticipation of outperformance over other sectors has caused a considerable weight of money to target the sector. This has led to further yield compression across the sector with the bull run looking set to continue.”
Oliver Jones, a senior research analyst at JLL, added: “The UK logistics market continues to prove its resilience, with no let-up in demand from the levels we saw in 2020. Again, we witnessed record-breaking levels of take-up this quarter. Additionally, we have seen a greater proportion of deals completed on speculative developments throughout the first half of this year, accounting for 51% of new build take-up; this is a step away from tradition where build-to-suit deals have historically had a greater share. Furthermore, we are tracking a further 10.0 million sq ft, almost half of available space, as under offer – much of which is still under construction.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 91,000 as of March 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.