I&L take-up and investment activity returning to pre-Covid levels

Take-up of warehouses of more than 100,000 sq ft increased by 4.4% year-on-year in H1 2024, according to the latest data from Colliers.

The company’s latest Industrial & Logistics Market Pulse Mid-Year analysis recorded 13.3m sq ft of take-up across 53 deals. This is in line with the long-term pre-Covid H1 average of 14m sq ft. 

The bulk of the largest deals in Q2 2024 were in the Midlands, where 2.8m sq ft of space transacted. The largest deal was Nike pre-letting 1.3m sq ft at Magna Park Corby (pictured) for a new campus.  

Across the whole market secondhand space was the most popular warehouse product in H1 with 37% of total take-up being in this category. The most acquisitive occupiers in H1 2024 were storage and third party logistics suppliers (46%), followed by wholesale/retail (24%).

Rental growth remains elevated with the latest MSCI data putting growth at 1.5% quarter-on-quarter and 6.8% year-on-year. The vacancy rate across the UK industrial market stabilised at 7.3% in Q2, down from the 7.5% recorded in the previous quarter.

Investment activity in H1 2024 reached £3.5bn, down 32% year-on-year, but in line with the five-year pre-Covid H1 average of £3.6bn.

Len Rosso, head of industrial and logistics at Colliers, said: “We are clearly returning to a more normalised market environment, with take-up, rental growth and investment now within the long-term averages for our sector. It is the prime market locations that have led the way this year, with occupiers looking to future-proof their supply chains by fulfilling their larger scale requirements which they have been contemplating for a while.

“Now that the UK election is over, much of the market is eagerly anticipating some stability, and as the macroeconomic environment improves and borrowing costs come down, we expect demand to increase in 2025.”

Andrea Ferranti, head of industrial research at Colliers, added: “We can see that due to the economic challenges of the last 18 months development of speculative supply has decreased and availability of prime warehouses is going to be impacted over the next 12 months.

“We’re anticipating that with improving market conditions and consumer sentiment, industrial occupiers will need to become more acquisitive once again to meet demand. However they could be facing a lack of good quality space, which could impact their corporate real estate strategies, particularly around ESG credentials, in the near future.”