MIPIM 2016: So far in 2016, total take-up of UK warehouse space has exceeded 5m sq ft, with a further 1.9m sq ft (176,515 sq m) under offer – a 85% increase on last year’s figure of 2.7m sq ft, according to Savills.
Savills anticipates that take-up is likely to surpass the long-term average for Q1 of 5.4m sq ft, reaching close to 7m sq ft by the start of Q2.
This has been driven by a number of significant mega-shed deals including The Range’s 1.2m sq ft facility in Bristol and Amazon’s 1m sq ft distribution fulfilment centre in the Midlands.
The ongoing strong performance of high street and online retailers continue to dominate the market as they adapt to changing consumer habits.
Richard Sullivan, national head of industrial and logistics at Savills, said: “It has been an exceptional start to the year for the industrial and distribution sector across the UK. Take-up is set to reach record levels by the end of Q1 as occupier demand remains high, most notably from manufacturers and online retailers.”
As a result of this growing demand, delivery of new speculative warehouse space across the UK is set to increase this year by up to 160%. There is currently 8.8m sq ft of speculative development due for delivery in 2016, with major schemes in the pipeline including Logistics North in Bolton where First Industrial are delivering 357,000 sq ft, and Prologis Park, Dunstable, where 358,068 sq ft will be available in the spring.
This is a marked increase on last year’s figure of 3.3m sq ft. In 2015, 25% of new space was let prior to completion, suggesting that a significant increase in construction is necessary in order to satisfy the current market requirements.
Simon Collett, head of building and project consultancy at Savills, said: “This phase of speculative development is different from the last and needs to be as the occupier base continues to shift. The onus is now on investors and developers to consider flexibility in their building design, both for the here and now and the mid to long term.”
Savills today is playing host to over 300 guests from across the industrial and logistics sector at this year’s Shedmasters event in Cannes.
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