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Big Box warehousing demand soars in H1 2018

Big Box warehousing demand soars in H1 2018

Demand for Big Box warehousing has soared by 25%, according to data from Savills.

The rapid growth of demand is sure to put pressure on rents, which are already showing signs of rising once again in some parts of the U.K.

Savills reports that  take-up of industrial & logistics space (units of 100,000 sq ft or larger) hit 16.4 million sq ft in the first half of 2018, a 25% increase on last year’s figure and 33% above the long term average.

Demand has once again been underpinned by online retail activity with occupiers in the sector accounting for 28% of all transactions

This increase has led to a slight drop in supply, falling from 28.4 million sq ft at the start of the year to 27.8 million sq ft in the first half of 2018. However, at present Savills is tracking over 9.4 million sq ft of speculative development across 49 units due to be delivered in 2018/19. This is the highest level recorded for more than 10 years as developers continue to capitalise on the popularity of the sector.

The golden triangle with the focus for activity, with the East Midlands recording half year take-up of more than 4 million sq ft, nearly double that of the same period in 2017. Key transactions in the region have taken place at East Midlands Gateway where four build-to-suit deals have been agreed, totalling nearly 2 million sq ft.

In both the South East and Yorkshire, more space has been transacted in the first half of the year than in the whole of 2017 with large land sales in Bedford to B&M and Aldi, as well as Clipper Logistics taking 615,000 sq ft in Sheffield, the largest deal for a second hand unit this year.

Kevin Mofid, head of industrial research at Savills, said: “As we head in to the second half of the year the current pace of take-up is on par with 2016 levels, the best year on record for industrial take-up. With this in mind, there are still a number of large unfulfilled requirements in the market, which stands us in good stead for another stellar year.”

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