The industrial property sector has been largely unaffected by the Brexit vote, with 7m sq ft of logistics space let in the third quarter, according to Cushman & Wakefield.
There has been robust occupier demand across most regions, according to Cushman & Wakefield’s third-quarter update, with e-commerce a significant driver of this activity, especially urban fringe space for last-mile fulfilment.
Development has increased to meet demand, with grade-A available space up 17% in 2016 to date following several years of declining supply. This is in part due to more speculative development, particularly in the South East, Midlands and North West.
Investors have also been seeking opportunities outside the established M1 and M6 corridors with interest particularly strong along other primary routes – notably the M4, M5, M62 and main trunk routes across the Midlands. Despite the rise in availability, most regions are struggling to keep up with demand and Cushman & Wakefield expects upward pressure on rents in 2017.
However, it cautioned that while investment demand is strong, some regions may face upward pressure on yields going forward as investors demand higher premiums to compensate for greater economic uncertainty caused.
Simon Lloyd, partner at Cushman & Wakefield, said: “The UK is at the forefront of the growth in e-commerce, which is accounting for an ever-increasing amount of sales – a trend which is forecast to continue.
“This has led to many companies reorganising their operations and setting up separate warehouses – often in multiple regional locations – specifically to deal with internet sales. Together with the rapid growth of a number of online-only retailers, such as Amazon and Wiggle, this has ensured the robust market we are now seeing.”
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