CBRE has released the UK Logistics Market Summary for Q1 2021. Following the remarkable year of 2020, total take-up for Q1 2021 reached 5.2m sq ft to include five deals signed within Yorkshire and the North East with total take-up reaching 0.9m sq ft.
A record 16m sq ft of UK logistics space across 55 units was under offer at the end of the quarter, signifying a 40% increase year on year, and CBRE anticipates a busy period ahead in terms of take-up.
Yorkshire and the North East regions saw an increase in prime big box rents in Q1, following in the footsteps of the other regions which saw rental growth during 2020. Five deals were signed in the region during Q1, all newly built units, with total take-up reaching 0.9m sq ft- a 67% decrease quarter on quarter.
Lack of available stock for larger space is driving occupiers to look at smaller, built units to satisfy immediate demand requirements. Available space in Yorkshire and the North East fell by 53% – down to its lowest point in more than four years with just 1.6m sq ft of space available. All of the available space is ready to occupy with an almost even split between second hand and build-to-suit units.
Prime rents within the region have increased by 25p per sq ft after remaining level over the past two years. Prime yields have also seen movement, decreasing for the third after running by a further 15bps to 4.35%.
A total of 25 logistics deals were completed across the UK in Q1, more than twice the total recorded in Q1 2020, yet total take-up was 19% lower year on year, meaning smaller units have become increasingly popular in recent times. Online retailers have monopolised logistics take-up in terms of floorspace for Q1, taking almost 50% of the total take-up across 10 deals.
Subsequent to the record levels of demand, ready to occupy supply has been decreasing for the past couple of years, falling 31% YoY to just 16.2m sq ft available at the end of Q1 2021. Speculative under construction space has increased 74% QoQ to 6.7m sq ft (26% of the development pipeline), the highest level seen in two years as a response to the extraordinary demand seen during 2020.
Mike Baugh, Senior Director, CBRE’s Industrial team in Leeds, commented;
“We are delighted to see such a strong result for UK logistics at the start of this year. We anticipate there will be little new space available across all size ranges as we head towards the half year. It is encouraging to see developers reacting to this take up and continued demand with plans for further speculative development, however large scale employment land opportunities are still limited in the region. Following a record breaking quarter, including five successful deals on new units in the region, we are anticipating a busy year ahead!”