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UK logistics space at an 'unprecedented low'

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A tidal wave of demand for warehousing has left the vacancy volume of UK logistics floor space at an unprecedented low, with rents poised to rise again, new figures reveal.

The latest research from global real estate advisor, CBRE, shows that take-up of UK logistics space totaled 42.4 million sq ft in 2021, the second year in a row over 42 million sq ft.

But the two year long tsunami of demand has left the built supply dangerously low.

The UK vacancy rate remained “critically low” said CBRE, scoring just 1.58% vacant space for Q4 2021. This showed virtually no change with the 1.53% recorded in the summer quarter.

Paul Farrow, Head of UK Industrial & Logistics at CBRE, said: "With no short-term fix for the ongoing supply and demand imbalance, we anticipate rental growth to continue across all UK regions as we head into 2022."

Hopes for change come from speculative development when 11.76 million sq ft is under construction. However circa 3.22 million sq ft of this is either already let or under offer, demonstrating that new buildings are quickly being absorbed by occupiers and the supply response is therefore not quite enough, said CBRE.. 

During 2021 the M1 corridor was the most attractive location for UK logistics, with take-up in the South East and East Midlands representing 47.5% of total take-up in the UK last year. This was followed by Yorkshire & North East, West Midlands, North West and South West accounting for 21.9%, 15.2%, 12.1% and 3.3% respectively.

Online retail and third-party logistics continued to dominate take-up levels in 2021, accounting for 39.8% and 31.2% respectively, highlighting that the majority of activity took place across these two sectors. This compares to 31.3% and 29.4% in 2020, where online retail and third-party logistics also accounted for the largest proportion of take-up.

 

 

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