UK Industrial Sector Reaches Record Levels of Take-Up in 2018

  • East Midlands led regional take-up followed by York & North East, the South East and the North West
  • E-commerce accounted for 32% of take-up, the highest on record
  • New Grade A warehouses accounted for circa 75% of take-up

Industrial and logistics take-up in the UK for 2018 reached record levels according to the latest figures from CBRE. Total take-up in 2018 for big box logistics (min of 100,000 sq. ft. and 10m plus eaves) reached 31.495M sq. ft., surpassing both 2017 and 2016 levels at 17.4M sq. ft. and 29.3M sq. ft. respectively.

Regionally, take-up levels were dominated by the East Midlands at 11.762M sq. ft., representing 37.35% of the UK’s overall take-up. Additionally, Yorkshire & the North East had a phenomenal year with take-up at 6.731M sq. ft. compared to 1.26M sq. ft. and 2.45M sq. ft. in 2017 and 2016 respectively. Take-up in the South East remained consistent, at 5.8M sq. ft. representing 18.42% of the national take-up.

Take-up by occupiers in the e-commerce sector continued to grow, reaching 9,98M sq. ft. in 2018, which is the highest on record, accounting for approximately 32% of all take-up nationally. Combined with food retail and ‘other’ retail the B2C segment overall accounted for 52% of all warehouse take-up. 3PLs accounted for 24.9% of take-up, up from 22.7% in 2017, 16.6% in 2016. The automotive industry, by contrast, saw a large decrease in take-up at only 2.2%, compared to 8.9% in 2017, and 8.0% in 2016.

Concerning availability, there is currently 28.13M sq. ft. of lettable space (less than 12 months’ supply based on 2018 take-up). Around 29% of that availability are buildings presently under construction in 36 projects.

There are currently 67 buildings under construction with an aggregate floor area of 22.905M sq. ft. Of these, 28 (14.13M sq. ft.) are committed design and build schemes with the remaining 39 (8.771M sq. ft.) being speculative.

2018 saw an increase of lettings of the XXL warehouses, which has given developers confidence to build speculative warehouses on a very large scale. Moreover, as the e-commerce sector continues to develop, we expect appetite for warehouse space, especially in urban ‘last-mile’ areas to remain strong.  However, there remains a demand/supply imbalance that in normal market conditions would indicate continued and tangible rental growth going forward.
Jonathan Compton, Head of Industrial & Logistics Strategy at CBRE UK