E-commerce sees the logistics market reach a 10 year high

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Britain’s logistics market enjoyed a record breaking 2018, with the e-commerce market accounting for more than a quarter of space take up.

Research from Cushman & Wakefield shows that the UK saw a take-up of 35.9 million sq ft last year, the highest level since 2008.

Take-up in Yorkshire and the Humber rebounded in 2018 after a quiet 2017, reaching 2.1 million sq ft, while remaining 20 per cent below the five-year average.

The year ended how it started, with a 360,000 sq ft pre-let at Logics Leeds. 2018 also saw the letting of a number of speculatively built units that had been vacant since 2016 such as Mountpark Wakefield (133,445 sq ft) and Helix at Gateway 36, Barnsley (75,200 sq ft).

Nationally, the fourth quarter of 2018 showed take-up reach 11.1 million sq ft, the strongest Q4 on record in over a decade. Whilst 2018 saw fewer deals, take-up was boosted by above-average deal size (191,000 sq ft). E-commerce accounted for 26 per cent of annual take-up with Amazon taking 5.3million sq ft of space in the quarter.

Across the UK take-up reached record or near-record highs in the South East/East (7.4m sq ft), East Midlands (6.9m sq ft), North West (5.7m sq ft), North East (6m sq ft). The largest deal was Amazon’s letting of 1.99m sq ft at Integra 61 in Durham.

Tom Erxleben, surveyor in Cushman and Wakefield’s Leeds Industrial & Logistics team, said: “Take-up of industrial and logistics space in Yorkshire and Humber in 2018 rebounded after a quiet 2017, reaching 2.1m sq ft, 20 per cent below the five-year average of 2.6m sq ft and in contrast with the national picture where average take-up was at a 10 year high.

“In large part this is due to a shortage of available Big Box space and a cautious reaction to speculative development after a very subdued take-up in 2017 when grade A take-up was less than 200,000 sq ft, prompting some occupiers with near term needs to look outside the region.

“The lack of Big Box supply in the region is being addressed with two 200,000 sq ft + units under construction: a 278,000 sq ft unit at G Park Doncaster, and Super G (259,000 sq ft) at Castleford, both scheduled for completion in Q2 2019. Developers have been encouraged by the growth in rents over the past year, a strong funding market and healthy level of enquiries.

“The evidence so far suggests Brexit uncertainty is not having any discernible impact on demand and there are good reasons for optimism in the region’s logistics sector for the foreseeable future.”

Speculative development nationally also saw the lowest void periods since Cushman & Wakefield began tracking it across the UK in 2009, reaching on average nine months for new spec-built space.

According to the report, 42 schemes of 50,000 sq ft and above are scheduled to complete this year, totalling 6.9m sq ft – 17 per cent above the five-year average, with more on the starting blocks.

Prime rents for larger units rose by 3.3 per cent during 2018, below the five-year annual average of 4.6 per cent, with London registering the highest annual rate of growth (5.7 per cent).

The Investment market remained resilient with volumes in Q4 totalling £1.6 billion, taking annual 2018 turnover to £6.7 billion. Foreign investors remained active, accounting for a third of all purchases across the year, with US buyers, led by Blackstone, being the most acquisitive foreign investor.