UK big box logistics take-up hits 34.1 million sq ft in 2021 as demand for speculative space continues to surge
JLL’s research highlights elevated occupier demand and limited supply across the UK logistics market
Occupier demand in the UK logistics market shows no signs of easing, with some 34.1 million sq ft taken up in 2021 in Grade A buildings of 100,000 sq ft and over. This is the second highest annual level, only exceeded by 2020’s record high of 35.8 million sq ft. In addition to concluded transactions, at the end of 2021 some 4.3 million sq ft was under offer.
The level of take-up was driven by demand for new space which, at 26.5 million sq ft, accounted for 77.6% of all take-up.
Over the year, 64.6% of all new space taken up comprised space built or under construction speculatively, while 35.4% was Built to Suit (BTS) space.
Take-up directly attributable to e-fulfilment accounted for 41.1% of all floorspace transacted, only slightly below the record annual share of 42.2% posted in 2020.
Available supply across the UK fell by 19.3% over the year to 18.7 million sq ft at the end of 2021, including 4.3 million sq ft under offer.
The available space comprised 3.6 million sq ft immediately available in ready-to-occupy buildings and 15.1 million sq ft under construction speculatively. Total available supply represented a UK vacancy rate of 5.5%, or just 1.1% if speculative space under construction is excluded.
Ed Cole, Head of Logistics, JLL, commented: “2021 was another huge year for occupier demand with annual take-up exceeding the 30 million sq ft mark for only the second time. Many companies are requiring additional space to accommodate growth or requirements to hold more inventory to cover bottlenecks or supply chain uncertainties. E-fulfilment remained a big driver of demand at 41% of transacted floorspace and JLL advised on 32% of all floorspace taken up over the year.’
Joel Duncan, Director – Capital Markets, JLL, added: “The UK investment market remains highly competitive. We estimate that the amount invested in the industrial and logistics sector over the whole of 2021 was in the region of £16 billion, well above the previous highest annual level registered in 2017 (£11.0 billion) and nearly double that posted in 2020 (£8.3 billion). There is still a huge weight of capital chasing a finite stock and we don’t expect this to ease going into 2022.”
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 95,000 as of September 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.