Research article

The logistics market in London and the South East

Vacancy rate remains constrained at 3.95%


Didcot Quarter, where Savills IM, advised by Savills, has leased 121,464 sq ft to Simon Hegele

H1 2021 take-up has reached 2.65m sq ft. We’re currently tracking another 3.78m sq ft, which is due to complete in Q3 2021. It’s set to be another strong year

Toby Green, Director, Head of London and South East

Supply

The level of supply has remained broadly stable over the last year. Currently, supply is 4.87m sq ft across 33 units, which reflects a vacancy rate of 3.95%. This is the fourth-lowest vacancy out of the regions.

Occupier preference towards better quality units in the past year has caused a shift in the quality balance of the available stock. Now, 41% of the supply is classified as Grade A compared to 71% last year. Smaller units make up the majority of the available stock – by unit count, 90% are within the 100,000–200,000 sq ft size band, 4% within the 200,000–300,000 sq ft band and 6% in the 300,000–400,000 sq ft size band. The largest unit on the market is Panattoni Park Luton 346, providing 346,132 sq ft of speculatively developed space.

Closer analysis shows that 38% of the supply sits in more peripheral locations. It should also be noted that 27% of the total supply is located in the Inner M25, meaning that just 1.97m sq ft of supply is in core South East locations.

Take-up

H1 2021 take-up totalled 2.65m sq ft, in line with the long-term H1 average. Savills is currently tracking c. 900,000 sq ft of existing supply which is under offer, along with c. 2.89m sq ft of bespoke built-to-suit space due to exchange imminently.

Occupier preference continues to lean towards high-quality Grade A space accounting for 80% of all take-up, of that 37% is built to suit, 36% speculative development and 27% Grade A second-hand units. In terms of sq ft transacted, the region shows a decline on the level of activity seen in 2020 which was inflated by the 2.3 million sq ft Amazon deal in Dartford. It’s important to look at activity in terms of deal count: H1 2021 saw 18 separate transactions, an 100% increase on H1 2020, demonstrating a high level of occupier activity. The deals were centred around the smaller size bands: 89% by deal count were within the 100,000–200,000 sq ft size band and the remaining 11% were within the 200,000–300,000 sq ft size band. There have been no deals this year above 300,000 sq ft.

Savills has continued to see a rise in occupier activity from the Data Centre and Film sectors, together they have accounted for 36% of the total take-up, an increase from 10% in 2020 and compares with a long-term average of 17%.

Development pipeline

There are now 30 units under construction totalling 5.32m sq ft, a 250% rise from this time last year. This includes some larger units such as the 450,000 sq ft Powerhouse 450 at The Bridge Dartford and the 338,267 sq ft unit at Purfleet Commercial Park. There are 22 spread within the South East, totalling 3.72m sq ft with an average size of 168,917 sq ft, and eight within the Inner M25, totalling 1.6m sq ft averaging 200,361 sq ft.

Read the articles within Big Shed Briefing below.

Other articles within this publication

9 other article(s) in this publication