The great logistics boom is showing no signs of slowing as ecommerce and appetite for speedy last mile logistics continues to drive demand for logistics space, pushing up land and rental values across the UK to record levels.
That’s according to Colliers’ Industrial & Logistics experts who this week released their interactive UK Rents Map which tracks prime and secondary rents and land values across more than 100 UK locations.
Colliers’ Rents Map shows a dramatic acceleration of average land values across England, posting a 40% increase y/y in July 2021, as investors compete for sites. While this is underpinned by strong rental growth, investor appraisals are also supported by a continuation of future expected demand, coupled with further rental growth and moderate yield compression over the coming quarters.
“We’re not seeing a situation of this magnitude anywhere else in Europe,” said Andrea Ferranti, head of Industrial & Logistics Research at Colliers. “Sustained demand for logistics space to meet the appetite for online retailing and last mile logistics has caused land values to go through the roof. However, this increase in land values will have a knock on effect far beyond the logistics market and will impact a range of sectors from general industrial through to residential and in some instances leisure and hospitality outside of city centres.”
Meanwhile, average prime rental growth for logistics units larger than 100,000 sq ft in England posted a positive 13.5% y/y in July as the provision of new schemes, accompanied by a low supply environment, is prompting a step change in rental values. Similarly, smaller units of more than 10,000 sq ft, recorded a 14.5% rental growth.
Len Rosso, Head of Industrial & Logistics, Colliers added: “We expect rental growth for prime and secondary units to continue due to a combination of factors such as; strong tenant demand, dwindling supply, a rise of CPI and the shortage of construction materials which, in some cases, is challenging the delivery of design and build and speculative schemes.”