The UK logistics property market dipped in spring 2018, as economic uncertainty made for heavy weather, according to data from Cushman & Wakefield.
In total, 6.3 million sq ft was transacted between April and June this year, 32% down on the same period last year, and largely due to uncertainty surrounding Brexit. E-commerce continued to dominate take-up, accounting for nearly 50% of all deals, with Amazon investing in its first ‘mega’ shed of 1.5 million sq ft in the North East.
A total of 8.7 million sq ft of speculatively developed warehouse space is due to reach the market in 2018. As a result, Grade A availability has risen by 18% to 23 million sq ft since the beginning of the year, with the South East and North West registering the sharpest increases (59% and 52%) over this period.
The report highlighted that, regardless of Brexit, UK logistics property is expected to continue to benefit from the growth of ecommerce which reached a new high in May, accounting for 18% of total retail sales.
Bruno Berretta, UK Logistics & Industrial Research & Insight, Cushman & Wakefield, said: “With less than a year before the UK officially leaves the EU, many occupiers have turned their attention towards Brexit and this has had a material impact on the deal flow in Q2, with fewer transactions agreed.
He continued: “Unless there is a visible breakthrough in negotiations, this uncertainty could extend into the second half of the year, when an official declaration outlining a blueprint for future UK-EU trade is expected during the quarterly EU summit in October. An upturn in activity is possible particularly given that enquiry levels for units of 50,000 sq ft and above have remained relatively stable in H1 2018 compared to H1 2017.”