A sharp increase in demand for storage space has been highlighted by a new report on the UK ‘big box’ warehousing market.
The report, from Jones Lang LaSalle, shows take-up of warehouses of 100,000ft² or more during the first half of 2013 jumped 23% compared to the second half of last year, with take-up of ‘Grade A’ space totalling 9.7 million ft², compared to 7.9 million ft²in the second half of 2012. In the first half odf last year it was just 3.6 million ft² .
At the same time, availability of ‘Grade A’ floorspace dropped 13%, with around 19.2 million ft² free at the end of June. Of this, just 6.8 million ft² was speculatively developed new floorspace – some 76% below the pre-recession peak.
Retailers accounted for 47% of total Grade A demand in the six months to the end of June, with logistics firms accounting for 28% and manufacturers 6%.
The East Midlands saw the largest share of Grade A floorspace take-up during the period at 23%; the Greater South East (South East, Eastern and London) accounted for 20%; the West Midlands for 17%; and the North West for 16%.
Jon Sleeman, director, UK research at Jones Lang LaSalle, told Motortransport.co.uk the rise in demand was a positive sign but did not necessarily reflect a sudden uplift in market activity. “It does suggest the market is showing some signs of recovery, but some of these deals can take a long time to complete and some of it is reflecting requirements that came out of the market 24 months ago,” he said.
Big deals
A small number of big deals – such as securing of planning permission for one million ft² of space by Sainsbury’s at DIRFT in Daventry earlier this year, and John Lewis’670,000ft² deal at Magna Park, Milton Keynes – had also helped to bump up the total, he said.
Occupiers were finding it harder to find suitable premises than the 19m ft2 of unoccupied Grade A floorspace suggested, added Sleeman. “I think occupiers would say it’s still quite difficult to find what they want. The sentiment we get from occupiers is that they’ve seen many of these buildings before and in many cases, they aren’t ticking all the boxes in terms of being the right product in the right location.”
No change was recorded in headline prime distribution rents in the major markets in the first half of the year, showed the report, but net effective rents have continued to harden as tenant incentives have been reduced, said Sleeman. During the 2009 recession, a 10-year lease on existing stock might typically have included two years or more rent-free; that has now fallen to around nine months, he said.
