Spec development slowdown pushes rents up

By Liza Helps Property Editor Logistics Matters

DESPITE GRADE A warehouse supply levels ticking up 5% in the third quarter of 2024 to some 49.9 million ft2 in 217 units nationwide, only 41% has been speculatively developed; the remainder mostly secondhand space coming back to the market.

An uptick in demand which saw a total take-up of 4.5 million ft2 in units of 100,000 ft2 plus, now sees year-to-date volumes to 15.6 million ft2 – 21% ahead of last year, signalling that sentiment has seen encouraging improvement and is translating into deals, with modern grade A units being taken up the fastest.

The report noted that 'current supply leans heavily towards smaller units (between 100,000 – 399,999 sq ft) which account for 91% of available inventory by number of units, posing a challenge in accommodating larger space requirements'.

Avison Young UK Principal and Managing Director Industrial and Logistics Andrew Jackson, said: “Despite elevated stock levels and a notable imbalance in available shed sizes, prime headline rental growth remains robust, especially in prime locations. Regions experiencing the most significant year-on-year growth include the North West, London and South East, and the East and West Midlands, where prime headline rents now punch into double digits at £10.25 psf.”