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Race for space for occupiers with only 18.1 million sq ft of industrial space left due to pressures of e-commerce

10 01 22 Race for space for occupiers hero

According to latest research by Colliers, industrial occupiers are in a race for space as the UK is experiencing the lowest level of supply ever recorded, with only 18.1 million sq ft left, due to demand for logistics units continuing to be driven by the structural change in consumer spending patterns.


Colliers states that take-up in 2021 for industrial distribution warehouses of 100,000 sq ft+ reached 50.7 million sq ft, up 3.6 per cent year-on-year, a new record for the sector.

The research demonstrates that investors and developers are responding to this demand, with 11.1 million sq ft of speculatively built supply of 100,000 sq ft+ completed in 2021. This is the equivalent of 26 Wembley Stadiums and 49 per cent more space than in 2020. However 75 per cent of this speculatively developed space in 2021 has either already let or is under offer.

Andrea Ferranti, Head of Industrial and Logistics research commented: “The logistics sector continues to benefit from strong tail winds driving online consumer spending to constantly elevated levels.

“High levels of occupational activity and demand for new warehouses, due to the unceasing expansion of occupiers’ supply chains to keep up with e-commerce sales and online deliveries, will remain elevated throughout 2022. This will be supported by the provision of new space with global occupiers also working towards decreasing their carbon footprint.

“Despite demand remaining elevated relatively to historical standards, companies will continue to struggle to find space and it’s all about survival of the fittest and who will be able to expand operations in this challenging business environment.”

The latest Office for National Statistics (ONS) figures reveal that the share of online sales of total retail sales have increased to 30.1 per cent from 21.6 per cent in November 2019 prior to the pandemic. So Colliers predicts an annual e-commerce share of circa 29% for 2021, potentially a new record. Demand for new industrial warehouses will remain elevated and rents will continue to rise strongly as a result throughout 2022. This rental rises will continue to trouble occupiers looking to bolster their ability to keep up with the increasing demand for speedy and timely deliveries.

Len Rosso, Head of Industrial and Logistics at Colliers added: “The latest ONS figures point to the fact that consumer shopping behaviour has really changed over the years. Rents will certainly rise, pushed by a landlord-favourable supply/demand imbalance, increasing land values and inflationary pressures on construction costs. As a result, developers and funds will be reluctant to agree a set rent in advance for pre-lets on purpose-built projects and speculative schemes. This strong occupier market will continue to attract investors and we expect further yield compression over the first half of this year.

“While we are tracking circa 18 million sq ft of speculative supply advertised for completion by the end of this year, the sector really needs this extra space to function properly and given the strength of the demand, we believe that the market will not be oversupplied in 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

Currently on maternity leave.

As PR manger in the UK, I am responsible for media relations and generating coverage in top tier media. I work across a range of Colliers’ UK & Pan-EMEA business lines (residential; licensed and leisure; planning; hotels; retail; healthcare and automotive) 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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