Warehousing space at record levels in second quarter
According to the latest data released by international real estate advisor, CBRE, the UK logistics market has recorded the highest quarterly take-up figures on record for the second quarter of 2020, with a total of 12.78 million sq ft being taken up compared to 7.83 million sq ft in the second quarter of 2019
Following a robust first quarter, the total take-up for the first half of 2020 stands at 19.04m sq ft. This is 44.1% higher than the first half of 2019 and 4.8% higher than the previous record in the first half of 2018.
A total of 36 deals completed during te second quarter of 2020, a 33% increase compared to quarter two of 2019 which saw 27 deals close. The average unit size was larger at 355,133 sq ft, compared to 278,658 sq ft in quarter two, 2019.
Over 90% of take-up in the quarter was shared equally between three UK regions. The East Midlands’ share of 31.8% was marginally above the South East at 31.5%. This showed a stronger performance from the South East following a quiet first quarter. Yorkshire & the North East’s share was also healthy at 29.1%.
At a sector level, online retail continues to account for the largest proportion of take-up at 43.8%. A number of national occupiers are currently reshaping the nature of their warehouse representation and supply chain operations as a result of a shift in shopping habits brought about by the lockdown restrictions from Covid-19. Representation from the other sectors was shared evenly with third-party logistics accounting for 15.3%, general retail at 13.9%, food retail and the food industry at 13.2% and post & parcels at 9.2%.
Short term ‘Covid’ related deals for 12-month lease terms (or less) accounted for 22.2% by number of deals and 15.5% by floor space. Despite speculation that take-up would be heavily weighted towards the short-term Covid deals, this has not come to fruition.
Paul Farrow, executive director and head of UK industrial and logistics at CBRE, said: “The logistics sector has gone from strength to strength through some testing times for the wider market and has just experienced the highest quarterly take-up figures on record. A large increase in online retail spending has been a key driver in the demand spike, and whilst warehouse availability is low and continuing to reduce heading into the third quarter, we expect the appetite for logistics space to continue to grow.”