UK Industrial Spotlight – April 23

Based on prime headline rents in the 62 markets we monitor, average prime rents for standard industrial units between 10,000 and 20,000 sq ft rose by 4% in Q1 2023 and by 12% over the year.

In the Big Box distribution market average prime headline rents rose 3.8% in Q1 2023 and by 12.8% over the year based on 32 locations.

This data suggests that the positive rental growth momentum seen over the past two years has continued into the early months of 2023.
 

Our latest figures on the Big Box logistics market involving Grade A buildings of 100,000 sq ft and over show that take-up eased back to 4.9 million sq ft in Q1 2023 while supply rose to around 29.8 million sq ft at the end of March based on immediately available space and space under construction speculatively. Another 4.1 million sq ft was available by way of assignment or subleases. However, across GB the vacancy rate based on the existing stock and buildings under construction still looks relatively modest at 7.7% and it is just 3.6% if buildings under construction or being refurbished are excluded.

As noted above, prime rents continued to rise across the Big Box market. Whilst momentum has slightly slowed among occupiers and supply has increased, our occupier team has won a number of mandates from companies in the last month all wanting to acquire buildings by the end of the year across the mid and Big Box market.

New data just published by JLL show that across GB some 7.3 million sq ft of new Multi-let and Mid Box industrial and warehouse space was taken up in 2022 in units from 5,000 sq ft to 99,999 sq ft and an additional 1.1 million sq ft was transacted in Q1 2023. At the end of March 2023, the total new supply in immediately available units and space speculatively under construction was 14.7 million sq ft, equivalent to just two years of take-up based on 2022 levels. Average prime rents across GB rose 4% in Q1 2023 and by 12% over the year.

Occupier demand seems to be led by demand for better quality buildings either new or fully refurbished with rents still increasing in areas where there is short supply particularly in the South East.

Overall, we think the market will be resilient, despite a weak economic growth outlook, because businesses increasingly see the benefits associated with new buildings both from an operational perspective and in terms of achieving wider ESG goals, including minimising carbon, and improving energy efficiency and staff wellbeing.

An interesting, and innovative, development in the Multi-let market is expected to complete next month in Barking, east London. BeFirst, the development arm of Barking and Dagenham Borough Council, is developing the Industria scheme to provide 101,747 sq ft of new industrial warehouse and creative space in 45 units in two connected buildings, one with two upper levels and one with three upper levels. Access to the upper floors is provided by a ramp and cargo lifts. The development has been built as a vertical industrial estate in line with the 2021 London Plan which seeks to encourage industrial intensification to make best use of London’s stock of industrial land. Industria is the first multi-storey development of this sort to complete in London and the UK since the X2 development at Heathrow in 2008. JLL has recently been appointed by BeFirst as one of the marketing agents for this scheme and we would be delighted to hear from if you if your clients may be interested to taking space within this development. Please contact Jeffrey.Prempeh@jll.com, Leah.Cave@jll.com or Tessa.English@jll.com.