With 48.9m sq ft taken so far this year, 2021 is also on track to overtake 2020’s take-up volume of 53m sq ft, which was itself a record. Online retailers, with 43% of Q3 take-up, and third-party logistics operators, continue to lead demand.
This booming demand has resulted in an unprecedented squeeze on supply and, for the first time since Cushman & Wakefield began tracking UK logistics and industrial supply in 2009, availability has fallen below 50m sq ft, to 49m sq ft. This in turn has sparked a new wave of speculative development, with 12m sq ft in the pipeline as at Q3, in an attempt to match supply to demand.
Bruno Berretta, UK Retail, Logistics & Industrial Research Lead, Cushman & Wakefield, said: “While e-commerce remains the main driver of activity, it is interesting to see demand emerging from ‘new’ sectors such as electric/smart vehicle manufacturing and vertical farming. While their overall property requirements are relatively small so far, a greater focus on the ESG agenda going forward coupled with supply chain re-orientation post -Brexit could see this new breed of occupiers becoming increasingly prominent in the not-too-distant future.”
Richard Evans, Head of UK Logistics & Industrial at Cushman & Wakefield, said: “Demand continues to outstrip new supply with rental growth accelerating as a result, particularly in London.”
On the investment front 2021 will set a new record, with £10.7bn having been transacted during the first nine months of the year on a par with the record annual volume registered in 2017. Activity has been dominated by overseas investors, primarily US private equity companies, which have undertaken 63% of transactions so far in 2021.
Ed Cornwell, UK Logistics & Industrial Capital Markets Partner at Cushman & Wakefield, said: “We continue to see relentless investor demand for UK logistics. We are currently tracking more than £22 billion in capital wanting to enter the sector which equates to approximately four years’ worth of transactions pre-Covid.”