Colliers – Logistics rents growing due to demand

Warehousing rents are set to grow by 4% in 2019 according to property advisors Colliers. This is despite the current economic jitters that have impacted growth in other sectors.

Colliers’ research suggests that demand for logistics and industrial space has remained strong in Q3 of 2019, with 21.9 million square foot of new warehousing and office space taken up, and this should exceed the 10 year average by the end of the year.

“The sector remains well balanced in terms of supply and demand, with developers seemingly unfazed by the current economic jitters. As a result, we expect newly developed distribution warehouse space in 2019 to have reached 10.7 million sq ft by the end of the year,” said Andrea Ferranti, Head of Industrial & Logistics Research for Colliers International. “Consequently, availability, which includes distribution warehouses scheduled for completion in Q4, increased to circa 36 million sq ft, the highest Q3 recording since 2014. Though, it is worth nothing that based on the five year average take up of circa 30 million sq ft, this indicates that there is just above one year’s worth of supply available in the UK.”

Len Rosso, head of industrial and logistics at Colliers International, concludes: “Although the industrial and logistics sector has remained seemingly sheltered by economic headwinds as occupiers have continued, albeit at a slower pace, to seek better and more operationally-efficient distribution warehouses to drive up profitability, those occupiers who can afford to postpone their property-related investment decisions are either extending their leases or resorting to third party logistics providers to de-risk and increase flexibility.

“Looking ahead, it’s difficult to predict any specific pattern in take up as economic uncertainty makes business planning for the year ahead more challenging. Though one thing is clear, the underlying market drivers and long-term prospects of the sector remain positive.”

This suggests that even as other industries have faltered, logistics and final mile delivery remains buoyant, largely driven by the transition from high street shopping to e-commerce.

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