Booming demand has pushed availability of logistics and industrial space in the UK to a record low, according to Cushman & Wakefield.
Available logistics and industrial space has slipped below 50 million square feet to 49 million square feet for the first time since the real estate services company began tracking supply in 2009.
Cushman & Wakefield said that 16.1 million square feet of space was taken in Q3, with 48.9 million square feet secured in the first nine months of 2021. This was on track to overtake last year’s record take up volume of 53 million square feet.
Online retailers, with 43 per cent of Q3 take-up, and third-party logistics operators continue to lead demand.
Bruno Berretta, UK retail, logistics & industrial research lead at Cushman & Wakefield, said that while e-commerce remained the main driver of activity, demand was 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,” he said.
The unprecedented squeeze on supply of space has resulted in a new wave of speculative development, with 12 million square feet in the pipeline as at Q3.
Investment in space will this year will set a new record, with £10.7 billion 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, mainly US private equity companies, which have undertaken 63 per cent 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.”
Earlier this month, global real estate adviser CBRE reported that vacant UK logistics space had fallen to 7.1 million square feet in Q3 2021, representing a record low vacancy rate of 1.53 per cent. This compared with a vacancy rate of 5 per cent in Q3 2020.