Rents rise as logistics site vacancy rates remain ‘critically low’, warns real estate giant CBRE

Strong demand for rented logistics space saw ‘critically low’ logistics site vacancy rates in Q4, 2021 with rents rising by up to 20% in some areas last year, according to CBRE.

Research by the company reveals that the M1 corridor is the most popular location for logistics in the UK, with the South East and East Midlands garnering 47.5% of the entire rented logistics space take-up in 2021.

Online retail and third party logistics companies were the biggest sectors looking for new logistics sites, with online retailers taking up 39.8% and 3PLs, 31.2%, continuing a trend from the year before.

The report by CBRE said vacancy rates have risen very slightly from their record low of 1.53% in Q3, 2020, to a current 1.58% in Q4, 2021.

The CBRE said: “Speculative under construction space remains strong at 11.76 million sq ft, however circa 3.22 million sq ft of this is either already let or under offer, demonstrating that new buildings are quickly being absorbed by occupiers and the supply response is therefore not quite enough.”

Paul Farrow, executive director, head of UK industrial and logistics at CBRE, said “Over the past two years, the UK logistics sector has been brought to the forefront and has benefitted from long-term shifts in shopping patterns, with further e-commerce growth expected.

“With no short-term fix for the ongoing supply and demand imbalance, we anticipate rental growth to continue across all UK regions as we head into 2022.”

Pol Marfa Miro, CBRE associate director of UK and EMEA industrial and logistics, added, “Logistics rents for the best, big-box units that serve London have increased more than 10% quarter-on-quarter, and in many locations that figure is now well above 20% more compared to 2020 year-end. This is a result of the extremely low vacancy rate which has also fuelled investment volumes and unlocked refurbishment opportunities.”