Supply

H1 2020 has seen strong transactional activity which has reduced supply to 4.69 million sq ft across 29 separate units, a 20% fall from the peak of 5.89 million sq ft seen at the end of 2019.

The quality balance of the supply continues to lean towards better quality units. Of the space on the market, 71% is classified as Grade A compared to just 39% three years ago. Smaller units make up the majority of the available stock with 79% being within the 100,000–200,000 sq ft size band. The largest unit on the market is Panattoni Park Luton 346, providing 346,132 sq ft of speculatively developed warehouse space.

H1 has seen a significant increase in freehold demand for large B8 sites for the Data Centre and Film sectors removing Industrial & Logistics sites from the future development pipeline.

Take-up

H1 2020 take-up totalled 4.56 million sq ft, a 74% increase above the long-term H1 average for the region and 16% above H1 2019. The largest deal was Amazon committing to a 2.3 million sq ft unit at Littlebrook in Kent.

Occupier preference continues to lean towards high quality Grade A space accounting for 91% of all take-up. Build-to-suit space dominated accounting for 67% of space transacted, followed by speculatively developed space at 16% with second hand Grade A space accounting for just 8%. The remaining 10% consisted of second hand Grade B space.

H1 2020 saw nine separate deals, an 18% decrease on the H1 average. The deals were spread over all size bands with 55% involving units over 300,000 sq ft including a cluster of larger deals on the M1 and M40.

Development pipeline

There are nine units under construction totalling 1.52m sq ft, a 13% rise from the start of the year. Five are in the South East at 994,019 sq ft and four within the M25 totalling 528,401 sq ft. The current speculative development aligns with occupier demand as the majority (78%) are within the 100,000–200,000 sq ft size range, there is a single unit within the 200,000–300,000 sq ft, and one being developed within the 300,000–400,000 sq ft range.

_{Read the articles within Big Shed Briefing below.}