Warehouse rents continue to rise

By Liza Helps Property Editor Logistics Matters

AVERAGE RENTS for units 100,000+ ft2 across the whole of the UK are at £11.50 per ft2, while prime headline rents for mid-box and multi-let units have reached £14.80 per ft2 up 4.4% year on year.

Colliers Head of Industrial & Logistics Research Andrea Ferranti who compiled the data said that most of the upward rental movement took place in the UK regions, with the Midlands and North West leading the way, while rents in the capital remained stable. The vacancy rate for units of 100,000+ ft2 across the UK industrial market sat at 7.3% by the end of Q2, down from 7.5%  from the previous quarter. In the first half of the year only 6.1 million ft2 of speculative warehouses were delivered, a sharp slowdown from the 11.3 million ft2 recorded during the second half of 2023.

Ferranti said: “Supply has increased notably with some pockets of the market arguably providing occupiers with greater choice. However, rental growth on average has remained elevated due to a resilient occupational market characterised by robust appetite for good quality and efficient space. We’ve seen many occupiers consolidating their supply chains during the last 18 months, and the Midlands has naturally been the location of choice for much of this activity.

“Meanwhile incentives have returned to the pre-Covid normal of approximately one month rent-free per year of lease term, depending on length, unit specifications, location and covenant strength.”

Industrial land values have remained stable in 2024, with a UK average of £1.95 million per acre, while this is a reduction on the post-pandemic peak, land prices have held steady around this level for the past 12 months.

Colliers Head of Industrial & Logistics Len Rosso, added: “The elevated borrowing costs as well as construction price inflation did put a dampener on investor appetite for speculative development. For the second half of this year we are forecasting only 4 million ft2 of speculative development to be delivered down 65% year on year. However as borrowing costs reduce and material costs stabilise, we expect investor appetite for development land to improve significantly over the second half of next year.”