Warehousing availability on the increase but take up expected to be moderate

The availability of modern warehouses is set to reach a six-year high according to property agent and advisor Cushman & Wakefield – but there are huge regional variations within the UK.

Currently there is 5.6 million ft2 of speculative space under construction which will boost the availability of Grade A buildings – consisting of new and modern second-hand space – to 20.6 million ft2 at some point this year, the highest figure since Q4 2011.

However, much of the development activity has focused on certain regions leading to large disparities in supply levels. In the South East, for example, availability is 6.5 million ft2 compared to just 266,000 ft2 in the North East. In the East Midlands the figure is 4.3 million ft2 and in Wales 450,000 ft2.

The findings were revealed in Cushman & Wakefield’s UK Logistics & Industrial Regional Outlook. This also predicted that an underlying imbalance between supply and demand will boost interest in multi-storey warehouses, something developers are looking at in crowded markets such as Heathrow and Park Royal in London and across Europe.

“In January 2018, Segro pre-let a new 539,000 ft2 multi-storey facility to IKEA near Paris, which suggests that this type of development is a feasible solution to limited developable land and growing demand for distribution space near cities in the UK and rest of Europe,” the report said.

Amazon has, in fact, already taken this approach and has a four-storey facility totalling 2.2 million ft2 in Tilbury with a similar building being constructed for it in Avonmouth.

Cushman & Wakefield’s report found that take-up in 2017 was 8% below the five-year average and predicted moderate performance this year.

Bruno Berretta from Cushman & Wakefield’s UK Logistics Insight and Research department said: “Brexit negotiations will undoubtedly influence real estate decision-making among many occupiers, notably those with European supply chains and regions which have strong trading links with the EU.

“However, the growth in e-commerce will continue to benefit the sector, as internet sales account for an increasing proportion of overall retail sales.”