Warehouses account for a significant proportion of the UK real estate market and their use has evolved over time.
Their strong take-up is increasingly being driven by online retail.
Industrial take-up 2007
Industrial take-up 2016
But there is a shortage of supply...
- Current vacancy stands at 4% of built stock.
- New development limited to certain key areas and mainly larger units.
- Current UK grade A availability equates to just 4 months’ supply.
UK availability by grade (M sq ft)
With strong barriers to entry...
- High Build Cost makes development uneconomical.
- New site development is limited due to funding shortfalls and lender caution.
- Planning constraints pose significant obstacles in the development process.
This has led to the strongest rental growth for 15 years...
- IPD growth strongest for 15 years.
- UK industrials currently some of the strongest rental growth on record.
- Secondary industrials rental growth is now outperforming prime.
- Capital growth normally follows.
Average UK industrial rental growth (%pa)