Rental levels at large warehouses are set to rise this year after a fall in the supply of sites across the UK last year.
Supply of logistics facilities of over 100,000ft² fell to “exceptionally low levels” during 2013, according to CBRE’s latest MarketView report.
At the end of the year, it stood at just over 20 million ft² – almost 60% below the 2009 peak, and a 21% fall compared to the end of 2012.
Take-up of such space, meanwhile, rose to just over 19 million ft² during the year, said the CBRE report – well above the long-term average of 15.7 million ft² and similar to the 2012 total.
In a separate report, property agent Jones Lang LaSalle indicated that demand for new Grade A ‘big box’ floorspace rose 57% last year, with 18 million ft² being taken up. However, available floorspace fell 17% in the second half of the year to finish at just under 16 million ft² – nearly 80% below the pre-recession peak.
Commenting on the figures, Jones Lang LaSalle director of UK research Jon Sleeman told Motortransport.co.uk that although much of the growth in demand last year was a simple reflection of the general economic recovery, reorganisation of retail supply chains - such as the ongoing restructuring of Marks & Spencer’s distribution network - have had an impact.
Sleeman also pointed to growth in efulfilment, saying: “Because a lot of items bought online are delivered via a parcel network, we’re also seeing strong growth from the parcel network operators.”
Despite a gradual return by developers to speculative new-build sites - four of which were under development at the end of 2013 - the squeeze on availability will likely continue this year, said Sleeman.
“What we’ll see this year is some developers pushing ahead with actual headline rents,” he said. “We aren’t going to see huge rental moves, but we are predicting a little bit of growth as the supply and demand balance becomes a bit more favorable for developers and landlords.”
Although headline rents have stayed broadly static in the last couple of years, effective rents have increased in some cases as incentives introduced in the immediate aftermath of the recession, like rent-free periods, expired.
