UK Big Box H1 2023

JLL's research shows a shift in demand and supply dynamics since the end of 2022.

July 18, 2023
  • Jon Sleeman
  • Oliver Jones
  • Ed Cole

Mid-way through 2023 sees the industrial and logistics market shows a shift in dynamic, which needs to be looked at in detail beyond the headlines as the market is more nuanced than first suggested.

Some 4.1 million sq ft was taken up across GB in Grade A units of 100,000 sq ft and over in Q2, bringing take-up in H1 to 9.1 million sq ft. This was well down on the same period last year, but that was another year of exceptionally strong demand; in fact, take-up in H1 2023 was around the pre-covid average. Overall, there is less depth to demand and the velocity of transactions has slowed with decision-making at board level being subject to much greater scrutiny. However, there are sizeable active requirements from big name occupiers still moving forward, highlighting that demand is clearly still out there. We are encouraged by this and also the volume of work our Supply Chain and Strategic Occupier Solutions teams are undertaking, which points to potential transactions both in the short-term and long-term.

Headline available supply across GB jumped higher during Q2 but the overall supply at midyear (34.8 million sq ft excluding ‘grey space’) was still less than two years of take-up even based off the lower take-up level posted in H1 2023. To us, this does not imply an impending over-supply at a macro-level, but in certain geographies some buildings have proved ‘sticky’ and there is a risk of potential pockets of over-supply in certain size bands.

Despite these shifting dynamics, prime headline rents continued to increase; at mid-year, our GB logistics rents index (based on 32 markets) was 1.8% higher over Q2, 5.9% higher over H1 and 9.5% higher than 12 months ago.

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