UK warehouse take-up hit record levels in the second quarter of the year, buoyed by ecommerce.
Despite a slowdown in activity in April during the height of the Covid-19 pandemic and lockdown, Cushman & Wakefield data shows the second quarter as a whole saw take-up of 13.3 million square feet, the highest on record.
This growth was primarily driven by ecommerce, accounting for 64% of take-up during the second quarter, including three major Amazon deals.
In addition to the overall figures, there were also 3.6 million square feet of short-term deals by food retailers and the public sector.
Availability hit 73.5 million square feet, which was 25% below the highest ever figure, meaning that rents have remained stable.
Richard Evans, head of UK logistics and industrial at Cushman & Wakefield, said: “The latest data supports the theory that the logistics sector has emerged from the crisis of the pandemic in positive shape. Online sales have grown exponentially, the data driven economy will boost demand from the data centre sector and moving forwards occupiers across many sub-sectors will look to increase inventory levels because of their experiences during the pandemic.
“However, given the challenges of lockdown and the wider economic climate developers have been quick to adjust their speculative programmes, with most schemes being reviewed, and some delayed. This should help prevent oversupply despite the inevitable business failures we expect to see over the course of the year.”
Bruno Berretta, associate director, UK industrial and logistics research and insight at Cushman & Wakefield, said: “While in some cases landlords have offered to compromise on headline rents to secure long term leases, more commonly we have seen increased incentives being used to secure deals. Three extra rent-free months for a five-year term appear to be commonplace.”
Ed Cornwell, logistics and industrial capital markets partner, said: “We are tracking some £680 million of assets either going through the bidding process / under offer and therefore likely to complete in Q3. In addition, we have visibility on a further pipeline of over £1.5 billion. As a result, we are expecting total transaction volumes to be closer to the £5 billion mark by the end of the year which is a significant level given the period of upheaval and uncertainty endured by the economy as a whole.”