Demand for logistics space in the UK continues to be resilient with the first quarter of 2018 being the strongest for the past three years, according to research from Cushman & Wakefield.
Total take-up of logistics space in the first three months of 2018 climbed to 10.2 million sq ft, outpacing the same quarter last year by 60%.
The purpose-built share of the market was especially strong indicating that many occupiers are looking beyond Brexit and taking longer-term commitments.
In the first quarter, purpose-built deals accounted for 35% of the total number of transactions and 67% of total take-up (by sq ft). Retailers (including eRetailers) took the lead over manufacturers during the first quarter, accounting for 57% of take-up.
UK omni-retailers have been busy ensuring their portfolios support the changing nature of their businesses as online sales account for an increasing share of total turnover.
M&S’s decision to close its Neasden site in North-West London to open a new 495,000 sq ft distribution centre north of the M25 is an example of this type of restructuring.
Meanwhile, H&M plans to consolidate eFulfilment activities in a new 750,000 square feet purpose-built facility in Milton Keyes later this year.
The research also shows that take-up by pure online players is on the rise, accounting for 24% of total retailer take-up in the first quarter. After a pause in its network expansion at the end of last year, Amazon resumed its growth plans to sign a 500,000 square foot purpose built deal at East Midlands Gateway Park.
With Shop Direct taking another 550,000 square feet, East Midlands Gateway ended the quarter accounting for 78% of total pure player take-up.
Regionally, the Midlands and South-East accounted for the lion’s share of Q1 take-up of 79%. Meanwhile, other regions had their fair share of large deals including Premier Farnell (360,000 square feet) in Yorkshire and B&Q (375,000 square feet) in the South West.
Scott Morrison, Associate, Logistics & Industrial Agency, Cushman & Wakefield in Leeds, said: “In Yorkshire, we have seen strong take-up with Premier Farnell taking 361,000 sq ft at Muse’s Logic Leeds site which echoes the national picture that retailers are taking above two thirds of total floor space and purpose-built deals are accounting for 35% of the total number of transactions.”