Strong year for UK industrial and logistics property sector, says LSH

Strong year for UK industrial and logistics property sector, says LSH

The industrial and logistics property sector had one of its strongest years to date in 2016, according to consultancy Lambert Smith Hampton (LSH). LSH’s Industrials and Logistics report, issued today (9 March), found that UK-wide industrial and logistics take-up totalled 99.2m sq ft in 2016, up 3% on 2015 and 6% above the five-year annual average.

“The uplift in demand was driven by a record year of activity in the logistics sector where take-up increased by 6%, surpassing 2014’s previous high and totalled 37.3m sq ft.  Accounting for over 20% of logistics take-up – a record share for a single occupier – and pivotal to the sector’s success, is e-commerce retailer Amazon,” said LSH.

“However, despite improved take-up year-on-year, there was a greater depth to the market in 2015, with some significant development in the medium-sized sector (10-50,000 sq ft).  Of particular note, take-up in the mid-box warehouse (50-100,000 sq ft) market was down 24% year-on year.”

Interestingly, LSH found that  “uncertainty surrounding the EU Referendum also did little to hinder rental growth in the sector”, as “an ongoing lack of supply has driven another year of strong rental growth”.

Steve Williams, Head of Industrial and Logistics at Lambert Smith Hampton, said: “Reflecting on a tumultuous 2016, it is remarkable just how strong the year turned out to be for the UK industrial and logistics sector. Rental growth not only continued – it accelerated; logistics take-up surged to a new record and pricing in the investment market stands higher now than it did pre-Referendum.

“2016 was, however, flattered by Amazon, who took an unprecedented share of the market, which underlines how the drivers of demand have changed radically from the last cycle.

“Meanwhile, greater uncertainty in the economic outlook engendered by last summer’s vote has arguably intensified investor demand for the sector, with tight supply and underlying structural change in consumer patterns elevating the sector into something of a safe haven.”

“In order to find a value in today’s market, investors and developers need to be more forensic in their study of the sector; developers and investors would also do well to look at the smaller size bands, 0-50,000 sq ft, where shortages are at their most acute.”

 

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About The Author

Ian Taylor

Ian Taylor is the Editor of Triangle’s Mail & Express Review Magazine and the www.postandparcel.info portal. Ian has been a business journalist for almost 30 years, editing and writing for a wide range of magazines and newspapers with a particular focus on the transport and logistics industries.

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