CBRE – available UK warehouse space falling

New warehouse capacity has dropped to a record low in the UK according to the CBRE. The CBRE reports only 7.1 million square feet of warehouse space in buildings more than 100,000 square feet are readily available at the end of the third quarter of this year, representing a vacancy rate of just 1.53% nationwide.

In Q3 2020 this was 5%, with 21.35 million square feet of readily available warehouse space. This both suggests the supply pipeline is struggling to meet demand and that there will be upward pressure on rents and prices.

Jonathan Compton, Senior Director, UK Industrial & Logistics at CBRE said: “Supply levels are now critical, particularly in the northern belt that straddles the M62 motorway. There are clear signs that rental growth is gathering momentum across the UK and as we head into 2022, this will be the trend to watch.”

Nikhita Patel, Analyst, UK Logistics at CBRE added “This quarter has seen several lettings exchanged where the rental level achieved for prime units exceeds 20% above the quoted rent. Whilst all UK regions have experienced rental growth over the past 18 months, the sharpest increases have been in the South East, where unprecedented demand is inflating competition. This has led to prime rents around the M25 closing the gap with the super-prime M25 West area.”

Looking at the figures a little more closely, online retail is the biggest user of new warehouse space, accounting for 39% in 2021 – showing that the trends seen in growth of the sector are matched with it preparing for the future.

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