Research

The UK Big Box Industrial and Logistics Market report - January 2019

January 31, 2019

The industrial sector continues to set the pace among commercial property asset classes, and the ‘big box’ logistics market is no exception. With occupiers taking up 22.6m sq ft of Grade A big boxes (100,000 sq ft and over), 2018 tracked well above the historic five-year average.

Despite prevailing economic uncertainty and softening consumer spending, the big box sector is evolving rapidly, driven by structural change and the rise of online retail. The logistics market has responded by funding, building and occupying the right buildings to underpin robust e-commerce operations. Retailers in 2018, from ‘pure play’ to multi-channel, drove Grade A take-up to its third highest year on record, accounting for 40% of total stock.

Appetite within the investment market for logistics continues to be strong, with it forecast to continue to outperform retail and office sectors over the coming five years. UK investors remain enticed by the long-term income returns, with overseas investors waking up to the opportunity that the logistics sector offers to help them outperform their benchmarks.

Tessa English, director, JLL industrial and logistics research concluded: “Looking forward take-up in 2019 may not necessarily reach the levels recorded in 2018, given the economic and political uncertainty around Brexit. What was of interest was the continued diversification for occupiers, as more must move to a true multi-channel approach and try to optimise their supply chains.

“The further growth of online sales will also continue to drive demand for logistics space this year. Generally, we should see a further rise Grade A supply of ‘big box’ units in 2019, but this is anticipated to be at a more modest rate than 2018.”

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