• Swindon & Wiltshire Property
• Thursday December 22 2022
• Author Name: Peter Davison

Logistics market faces significant supply constraints – Colliers

The logistics market in the UK currently faces significant supply constraints, including design-and-build opportunities, according to a new report by property services and investment firm Colliers.

Vacancy rates reached a historic low of 3.1 per cent in Q2/Q3 2022 for units 100,000+ sq ft, according to the firm’s latest Industrial and Logistics report.

This points to an undersupplied market, even when accounting for pipelined speculative space and design-and-build opportunities, says the firm.

The highly documented supply-demand imbalance in the industrial and logistics sector drove UK annual rental growth to a record-high of 12.4 per cent in Q3 2022.

At 2.1 per cent the South West had the second-lowest vacancy rate after Yorkshire and Scotland.

The report says the record 18 million sq ft of speculative deliveries in 2022 has not been enough to meet demand.

Len Rosso, head of industrial & logistics at Colliers said: “There is currently 16.2 million sq ft of speculative supply either under construction or where developers have announced construction works to start in early-2023.

“However, construction plans on some of these schemes may be revisited due to weaker land and capital values, which are challenging development appraisals.

“This figure may look high when studied in isolation but when compared in the context of five-year regional annual average take-ups, it is in line with expectations.

“However, if we consider that this new space is skewed slightly as four million sq ft is being delivered through six units equal or larger than 500,000 sq ft, it becomes clear that investors are remaining relatively cautious in the wake of economic forecasts.”

The full report can be read at https://www.colliers.com/en-gb/research/colliers-big-box-warehouse-development-snapshot