Research article

The logistics market in the East of England

Second-best year for take-up, 75% was Grade A


736 Kingston Park, in Peterborough, providing 736,000 sq ft, the largest unit in the region

There is currently just 0.78 years worth of supply left in the East of England, and with no units currently under construction, we are starting to see reduced incentives and sustained rental growth

William Rose, Director, Peterborough

Supply

The supply of warehouse space over 100,000 sq ft in the region currently stands at 1.47m sq ft across four units. Whilst strong transactional activity has been pushing supply downwards, the recent marketing of 736 Kingston Park has meant that the overall level of supply is stable on an annual basis. Of the current supply, 92% is classed as Grade A compared to 15% six months ago. It should be noted that the aforementioned 736 Kingston Park accounts for half the total supply in the region and 50% of all Grade A space.

The available units are spread between all size bands with a single unit in each; however, there are no units available within the 400,000–500,000 sq ft band. Moreover, using the five-year annual average take-up, there is just 0.78 years worth of supply in the region.

Take-up

Take-up in 2020 has been the second-best year on record reaching 2.78m sq ft through nine transactions, representing a 78% increase on 2019 and 48% increase above the five-year annual average.

In terms of deal count, 45% were between 100,000–200,000 sq ft in size, 22% 200,000–300,000 sq ft and 11% 300,000–400,000 sq ft. In 2020, 22% of transactions involved units over 500,000 sq ft equating to two transactions, this has been the most recorded in any year demonstrating the rising occupier demand for larger units.

Occupier preference continues to centre around Grade A space accounting for 75% of transactions, 20% was Grade B and 5% Grade C. Built-to-suit space accounted for the largest proportion of take-up, reaching 58%, 31% involved second-hand space and the remaining 11% involved speculatively developed space.

Demand has stemmed from a diverse mix of tenants in 2020, food manufacturers accounted for the largest proportion of take-up at 34%, followed by 3PLs at 31% and online retailers at 13% with the balance spread evenly across other industries.

Development pipeline

Following the delivery of 611,000 sq ft at Peterborough Gateway by Newlands, there are now no units under speculative development in the region. Current market conditions suggest that further speculative development will be well received.

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