Logistics take-up is lagging compared to the same period in 2014. The total for H1 2015 was 12.7 million sq ft, marking a 25 per cent decrease on the 16.8 million sq ft seen in the same period last year. However, lack of demand is not the issue, but rather lack of supply – there simply aren’t enough major sites suitable for the large requirements coming through, and very little churn at the smaller end of the market.

Speculative development will help to relieve the pressure and there are 19 schemes due to be delivered before year end, providing 3.6 million sq ft of new industrial space, much of which is likely to be let during the construction phase. These include 297,320 sq ft being constructed by IDI Gazeley in Daventry.

Larger deals over 500,000 sq ft are on the rise, with seven taking place in H1 2015, including Poundworld, which recently took 524,000 sq ft in Wakefield and Exertis taking 543,620 sq ft in Burnley, both of which were build-to-suit. This compares with just three deals over 500,000 sq ft in H1 2014. Build-to-suit requirements have also increased as the supply of larger stock has dwindled. For the year to date it accounts for 51 per cent of take up compared with 30 per cent in 2014 and just 4 per cent in 2009.

One region defying the trend of falling take up is the North West, which saw 3.13 million sq ft let in H1 2015, accounting for 26 per cent of all industrial take up across the UK. Occupiers, including The Hut, Nice-Pak, B&M Bargains and Optima Logistics, have all committed to units in the last nine months, taking more than 2 million sq ft between them.

With 4.3 million sq ft of industrial stock currently available, the North West also remains the market with the most supply. However, Savills classifies 51 per cent of the available stock as Grade C.

The level of requirements in the market remains strong with a number still unsatisfied, in particular those led by the 3PLs for whom immediacy of occupation and relative lease flexibility to service customer contracts are key drivers. Those opportunities remain scarce and it is therefore imperative more sites that can accommodate these and larger requirements in the short to medium term come through the development pipeline.

Further information

For more on the occupational and investment markets, contact Savills Industrial & Logistics.