Skip to main content Skip to footer

The UK’s industrial and logistics sector remains buoyant despite the current economic climate

18 10 22 The UKs industrial and logistics sector remains buoyant hero

Against a challenging financial and economic backdrop and heightened business uncertainty, there continues to be robust activity in the industrial and logistics sector, according to latest research from Colliers.


The firm has reported that take-up for units over 100,000 sq ft reached 9.6 million sq ft in Q3 2022.

Len Rosso, head of Industrial & Logistics at Colliers explains: “This take-up figure is 12.6 per cent down quarter-on-quarter, taking the total to end-Q3 to 31.5 million sq ft, a 22 per cent drop when compared to the first three quarters of 2021. However, if we look at the immediate 48-month activity prior to Covid-19, Q3 take-up remains elevated and resulted in an increase of 13 per cent over the average quarterly take-up for the period 2018/2019.”

In addition, the data reveals that occupiers are continuing to target Grade A space in Q3 with take-up for speculative units accounting for 50 per cent of total take-up, while purpose-built space recorded a 26 per cent share. Second-hand space accounted for 24 per cent of take-up. 

The research also states that the flight to quality is somewhat driven by occupiers placing greater importance on a building’s ESG credentials. However, it is also dictated by a low level of supply where occupier requirements are likely to be satisfied by the provision of speculatively developed space. Some occupiers are also likely to be planning in advance and opting for purpose-built warehouses to fit in line with their long-term business strategies. Yet given the current issues in the UK’s economy, occupiers will find it increasingly difficult to plan.

When analysing the most recent data for online sales from the Office for National Statistics (ONS), online retailing sales volumes saw a monthly contraction of 2.6 per cent in August 2022, following an increase of 4.8 per cent in July 2022. Despite this fall, online sales volumes are 24.4 per cent above their pre-COVID-19 February 2020 levels.

Andrea Ferranti, head of Industrial & Logistics research at Colliers said: “Due to a natural drop in online retail sales, when compared to the record levels witnessed over 2021 and 2022, Q3 saw an average occupier deal size of 233,000 sq ft, down 35 per cent year-on-year. While this figure is an indication of where the market may be heading over the next 12 to 15 months, it is worth highlighting that more data is needed over the next couple of quarters, into 2023, to ascertain where we are up to. We expect global multi-national businesses to continue to seek large warehouse space to drive efficiencies while future-proofing supply chain operations.”

Colliers’ latest industrial and logistics research also reveals that supply remains extremely low at 17.8 million sq ft* and the scheduled delivery of 18 million sq ft of speculatively developed space this year has not been enough to relieve pressure in the market. Furthermore, 50 per cent of this has either let or is under offer.

Ferranti adds: “We are currently monitoring circa 8.3 million sq ft of new speculative space under construction with scheduled delivery for 2023. As a result, rents are increasing across the board with the latest monthly MSCI figures recording an average annual rental growth to August of 14.2 per cent for distribution warehouses and 12.8 per cent for standard industrial assets. We expect a continuation of rental growth over the next 12-months but at a slower pace due to a challenging economic outlook.”

*This includes new space marketed for completion in Q4

View our Industrial & Logistics services


Related Experts

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. 

View expert

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.

View expert

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.

View expert