United Kingdom Logistics Market Snapshot, H1 2018
- Take-up for the first half of 2018, at 17.4M sq ft in 51 deals, exceeded the whole of 2017 and represents around 60% of the record year of 2016. Q1 2018, which saw 28 deals totalling 10.6M sq ft, was the highest take-up on record.
- 68% of take-up was for design & build pre-let warehouses, 24% for existing built stock and 8% for speculative development.
- In H1 2018, the star performer was the East Midlands which at 6.92M sq ft in 14 deals equates to some 39.8% of the UK’s overall take-up. This is an increase in the East Midlands of 336% on H1 2017 and 111% on H1 2016. The South East was again robust with 3.6M sq ft (13 deals) followed closely by Yorkshire & North East (7 deals) at 3.26M sq ft. After a quiet Q1, the North West bounced back with 1.31M sq ft of take-up (6 deals) in Q2.
- In respect of size bands the majority of the buildings transacted fell in the 100,000 sq ft to 199,999 sq ft banding (49% by count/20.7% by floor area). There were 8 deals in both the 200,000 sq ft to 299,999 sq ft and 300,000 sq ft to 399,999 sq ft size bands, 1 deal in the 400,000 sq ft to 499,999 sq ft bracket and 9 deals above 500,000 sq ft. The average eaves height was 12.94 metres and 28% of the take-up was to existing or ‘under construction’ buildings that are cross-docked. 18 of the 51 deals are in respect of buildings that are currently under construction and exchange of contracts has taken place.
- There is currently 19.89M sq ft of Grade A stock available (representing 14 months’ supply based on the 5 year average take-up). This includes 11.7M sq ft of speculative development in 43 schemes currently under construction. This compares to 19 months’ availability of second hand stock (11.53M sq ft). Second hand availability has appreciably fallen over the past few months.
- In terms of sector representation some 32% of take-up was to the online retailers (defined as those retailers with no physical store presence), 21% to the 3PLs, 14% to the traditional retailers and 7% in respect of post & parcels.
- With regard to pre-let design & build warehouses there are currently 26 buildings under construction with an aggregate floor area of 11.7M sq ft (average size of 450,000 sq ft). Unsurprisingly the majority of new build is taking place in the East Midlands and South East.