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Industrial market continues to boom as “perfect storm” created for third party logistics providers

01 08 22 Industrial market continues to boom hero

Use of third party logistics providers indicative of strength of ecommerce despite economic uncertainty.


Colliers’ latest research shows that 3PLs have driven demand in the first half of the year, accounting for 40.5% of take up. This is partly in response to an increased need for flexibility from businesses arising from economic uncertainty, whereby using external delivery firms reduces costs and pressure on the business compared to in-house provision. Online shopping continues to be popular despite rising inflation levels and interest rates, creating a ‘perfect storm’ for the rise of 3PL take-up.

The demand from 3PLs has impacted the larger end of the market with the number of deals for warehouses over 300,000 sq ft reaching an all-time high in H1, with 26 deals taking place in H1 compared to the 23 and 20 transacted over the same period in 2020 and 2021 respectively. For space over 100,000 sq ft, take up reached 21.2 million sq ft in the first half of the year, only 14% below the record-breaking 24.8 million sq ft in H1 2021.

Len Rosso, head of industrial and logistics at Colliers, comments: “Interestingly, online retailers have decreased their activity in H1, only accounting for 13.6% of take-up, down from over half of all take up this time last year. This can be partly explained by the increase in activity by 3PLs, which many online retailers are currently employing for logistics solutions. It is also worth noting that the year-on-year figures are largely skewed by Amazon, which alone accounted for 35% of the total in H1 last year, they are a clear testament to a robust occupier base in the market.

“There’s no doubt the creation of new supply is struggling to keep up with strong occupier appetite for warehouses. There is currently only 18.9 million sq ft across all grades in the market, 20% down year-on-ear which equates to less than six months’ supply. These tensions are set to become even more strained as occupiers seek to reduce their carbon footprint, increasingly looking for new space that aligns with their ESG agenda.”

The strong levels of demand in a depleted supply environment mean that purpose-built space accounted for 52% of total take up while speculative space recorded a 31% share.

Andrea Ferranti, head of industrial and logistics research at Colliers, adds: “As a result of these strong market dynamics we are witnessing exceptional rental growth across the UK, with the latest MSCI data in June showing a six-monthly average growth of 6.3% for national distribution warehouses while London industrial assets outperformed at 9% over the same period. Looking to the end of the year the market will remain undersupplied alongside continued elevated demand. Therefore, as predicted at the beginning of the year, we are still expecting 12.5% average rental growth for prime warehouses.” 

View UK Industrial & Logistics Barometer | July 2022

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Len Rosso

Head of Industrial and Logistics

Industrial and Logistics

London - West End

Len has more than 30 years' experience in the commercial property sector. Having started out as a trainee surveyor in 1983 he moved on to set up Jansons in 1990, a niche agency specialising in industrial in North and West London. In 2004/5 the business was voted Industrial Agency of the Year, this being the first ever non West End national practice to have won this prestigious award. In that same year the business transacted in excess of 3.5 million sq ft which accounted for in excess of 50% of the total transactions for the North and West London market.


Since joining Colliers International, as the Head of the UK Logistics and Industrial Department, the objectives are the same as always, to outperform all competitors whilst providing the highest level of service to all our clients. In 2018, the Colliers International UK Industrial & Logistics team completed over 250 deals totalling over 15 million sq ft. 

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Andrea Ferranti

Director for Industrial Client Engagement

Research and Forecasting

London - West End

Head of Industrial & Logistics Research working closely with the Research & Forecasting team whilst supporting the Industrial and Logistics teams nationally in providing research and advises to clients. Andrea leads on the division’s key research papers which include, but not limited to, the Industrial & Logistics Barometer and the UK Speculative Development Map – both of which have become key benchmark publications highly valued by UK investors and developers alike.

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Hannah Zitren

Associate Director

Marketing & Communications

Manchester

I am responsible for media relations and generating coverage in top tier broadcast and print media. I work across a range of Colliers’ UK & Pan-EMEA business lines advising on their strategic and tactical PR needs.

My role includes:

·         Developing and executing PR plans for the various business lines to help promote their key messages across all aspects of the media - print, broadcast and social.

·          Media evaluation and reporting objectives, targets and successes across the business.

·         Reputation management and crisis management.

·         Media training.

·         Media engagement: setting up meetings with top tier media and various internal spokespeople to continuously expand and build a presence with property and vertical media network.

·         Consistently delivering service excellence, meeting with business heads of a regular basis and trying to influence the research as much as possible to ensure our content has a strong enough news hook.

·         Key campaigns that I work on include MIPIM; MAPIC; REVO; Midsummer Retail Report; IHIF; Cities of Influence in addition to a host of all alternative property sector research reports.

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