JLL research reveals sharp uptake in Big Box space in first half of 2018
JLL has published its H1 2018 UK Big Box Industrial & Logistics research
JLL has published its H1 2018 UK Big Box Industrial & Logistics research, which reveals the following:
Occupier take-up of Grade A logistics floorspace totalled 12.3 million sq ft in the first half of 2018, 90% higher than the second half of 2017 (6.5 million sq ft) and 38% up on H1 2017 (8.9 million sq ft).
Logistics companies were the most active source of take-up in H1 2018, at 38% of the total whilst the growth of online retail has continued to generate new demand for warehousing with retailers accounting for 34% of demand.
Grade A availability increased over the first six months of the 2018 to 20.2 million sq ft, following a pick-up in both new and good quality second hand supply. Nationally, the vacancy rate rose from 6% at end-2017 to 7% at mid-2018.
Nationally, distribution rents are forecast to grow by 3.4% this year.
Commenting on JLL's research, Richard Evans, director Industrial & Logistics, said: "Take up in the occupational market was exceptionally strong in the first six months of this year, indeed it was one of the strongest half yearly levels on record and 27% higher than the five-year half yearly average, H2 2013 - H1 2018 (9.7 million sq ft). The sharp rise is partly attributable to a number of large transactions, that had initially been expected to complete last year, rolling over into 2018. Of the 12.3 million sq ft taken up in H1 2018, around 9 million sq ft comprised new units, with the remaining 3.2 million sq ft consisting of good quality second hand space."
Regionally, the research revealed that the East Midlands accounted for the largest share of take-up of new floorspace in H1 2018 at 45% of the total. This was followed by the Greater South East (South East, East and London) which took a 16% share and the West Midlands, which accounted for 15% of total demand.
Jon Sleeman, director Industrial & Logistics research concluded: "Despite the likelihood of slow economic growth this year and continued uncertainty over Brexit, we remain positive about the logistics market in 2018. With over 4 million sq ft of logistics space currently either under offer or expected to complete in the short-term we expect a robust level of take-up this year, potentially around the 20 million sq ft mark which would be above the five-year annual average."
With more speculative development taking place nationally we also expect to see a change in the take-up of new space with speculative product eating into the dominant built to suit (BTS) share. Based on our monitoring of the supply pipeline, we expect speculative development to continue to rise, including larger units.
Notes to editors
This study provides a comprehensive round-up of occupier market demand and supply, based on our tracking of Grade A quality distribution units of 100,000 sq ft and over. It also comments on investment activity and yields.