UK logistics and industrial real estate is set for a bright 2025, thanks to rising demand from retail and manufacturing sector occupiers, according to Cushman & Wakefield.
The consultancy has tracked a resilient performance by the sector over 2024, despite elevated levels of uncertainty and ongoing economic concerns. Annual take up reached 32.7m sq ft in 2024, a minor improvement on the 2023 volume.
Specifically, data showed take-up of grade-B logistics and industrial space rose by 11% year-on-year, as occupiers balanced the need for additional capacity with concerns around affordability.
However, size-wise, demand for mid-box buildings, measuring between 50,000 sq ft and 100,000 sq ft, contracted by 10% during 2024, reaching its lowest level since 2018 as small and medium size enterprises grappled with the effects of macroeconomic conditions.
Elsewhere, Cushman & Wakefield tracked take up of UK warehouse space from retail businesses, which rose by 44% over the last year following limited activity at the height of the cost-of-living crisis.
In addition, increased take up activity was noted among manufacturers, rising 10% year-on-year, signalling continuation of growth from that sector.
Turning to the supply levels, the availability of warehousing real estate increased for a second consecutive quarter in Q4 2024. Total vacant space hit 68.5m sq ft, up 3% year-on-year and from 64.3m sq ft recorded at the end of Q3 2024.
The rise in available space during H2 has been driven predominantly by the rapid development of grade-A and grade-B space.
In contrast, availability of grade-C space has continued to contract as older buildings are withdrawn from the market for refurbishment or, in some instances, total redevelopment to avoid regulatory obsolescence.
Richard Evans, head of UK logistics and industrial at Cushman & Wakefield, said: “It proved to be another challenging year for the market in 2024, characterised by protracted decision-making and low levels of business confidence. Such conditions have undoubtedly had an impact on leasing volumes. Despite this, demand levels have held relatively stable, performing in line with 2023 and there remain a number of reasons to be optimistic about market conditions.
“Having weathered the storm in 2024, an improving consumer market, a new government industrial strategy, and planning reform may help ease pressures throughout the year and as such, we expect occupier activity to gradually improve throughout 2025.”
Photo © EFAFLEX_Schnelllauftore/Pixabay
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