The UK logistics market has recorded the highest quarterly take-up figures on record for Q2 2020, achieving total take-up of 12.78m sq ft compared to 7.83m sq ft in Q2 2019, according to the latest data from global real estate advisor, CBRE.
Following a robust Q1, the total take-up for the first half of 2020 stands at 19.04m sq ft. This is 44.1% higher than H1 2019 and 4.8% higher than the previous record in H1 2018.
A total of 36 deals completed during Q2 2020, a 33% increase compared to Q2 2019 which saw 27 deals close. The average unit size was larger at 355,133 sq ft, compared to 278,658 sq ft in Q2 2019.
Over 90% of take-up in the quarter was shared equally between three UK regions. The East Midlands’ share of 31.8% was marginally above the South East at 31.5%. This showed a stronger performance from the South East following a quiet Q1. Yorkshire & the North East’s share was also healthy at 29.1%.
At a sector level, online retail continues to account for the largest proportion of take-up at 43.8%. A number of national occupiers are currently reshaping the nature of their warehouse representation and supply chain operations as a result of a shift in shopping habits brought about by the lockdown restrictions from Covid-19. Representation from the other sectors was shared evenly with third-party logistics accounting for 15.3%, general retail at 13.9%, food retail and the food industry at 13.2% and post & parcels at 9.2%.
Short term ‘Covid’ related deals for 12-month lease terms (or less) accounted for 22.2% by number of deals and 15.5% by floor space. Despite speculation that take-up would be heavily weighted towards the short-term Covid deals, this has not come to fruition.
Nick Tutton, Director, Senior Director Advisory & Transaction at CBRE Southampton said: “Across the south coast, Q2 has been dominated by Covid-19 related requirements with a sharp increase in the number of companies manufacturing PPE driving a demand for short and long term storage requirements. This was evidenced by Zidac Laboratories taking almost triple its existing floorspace at Merlin Park, Portsmouth to fulfil its new hand sanitiser production.
“The increase in online shopping has seen several of the main parcel companies having either already taken space or with active requirements in the market. This continued demand in spite of a slow start to the quarter has buoyed the market and provides confidence take up will continue and potentially even accelerate as restrictions ease.”
Paul Farrow, Executive Director, Head of UK Industrial & Logistics at CBRE said: “The Logistics sector has gone from strength to strength through some testing times for the wider market and has just experienced the highest quarterly take-up figures on record. A large increase in online retail spending has been a key driver in the demand spike, and whilst warehouse availability is low and continuing to reduce heading into Q3, we expect the appetite for logistics space to continue to grow.”