UK industrial & logistics take-up hits 8.6 million sq ft in Q1 2022 as demand remains elevated

Occupier demand in the UK industrial and logistics market shows no signs of easing, with some 8.6 million sq ft taken up in the first quarter of 2022 in Grade A buildings of 100,000 sq ft and over. This compares with 6.9 million sq ft in the previous quarter and 6.6 million sq ft in the same quarter a year ago.  Therefore, Q1 2022 represents a 23% increase in floorspace taken-up compared with Q4 2021 and a 30% increase compared with Q1 2021. In addition to concluded transactions, at the end of Q1 2022 some 4.8 million sq ft was under offer.

The level of take-up was driven by demand for new space, which at 7.2 million sq ft accounted for 84% of all take-up in Q1 2022.  Over the quarter, 52% of all new space taken up comprised space built or under construction speculatively, while 48% was Built to Suit (BTS) space.  

Logistics Service Providers accounted for 39% of total take-up, retailers (including pure-play internet retailers) accounted for 35% and manufacturing companies accounted for 14% of all floorspace. ‘Other’ uses made up 12%.

Available supply across the UK increased by 9% over the quarter to 20.4 million sq ft including 4.8 million sq ft under offer.  The available space comprised 4.1 million sq ft in immediately available ready-to-occupy buildings and 16.3 million sq ft under construction speculatively. 

The total available supply represented a UK vacancy rate of 5.7%, or just 1.2% if speculative space under construction is excluded. 

In the year to March 2022, prime headline logistics rents increased by 19% across the 32 locations that JLL monitors across the UK.

Ed Cole, Head of Logistics, JLL, commented: “It was another impressive quarter for demand and take-up in the logistics market to begin the year. This is especially so when considered against a backdrop of historically low supply and further economic uncertainty. We are still seeing rents increasing in all major markets with buoyant demand against supply being further squeezed by material delays in speculative development construction programmes.”

Jon Sleeman, Director UK Industrial & Logistics Research, added “The occupier market continues to exhibit strong demand and supply dynamics despite a more challenging economic outlook.  Demand in the first quarter of 2022 came from a diversity of companies and we continue to see a good level of active requirements.”