Strong demand for logistics space

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Strong demand for logistics space
Scott Morrison, Associate, Logistics & Industrial Agency, Cushman & Wakefield in Leeds

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.”