Take-up of UK logistics space during the second quarter fell to 9.8m sq ft, its lowest quarterly volume since the final months of 2017.
The team at Gerald Eve said that although demand from manufacturing-related tenants rose over the three months, a “much reduced” take-up from internet retailers dragged down activity.
The firm said the slowdown reflected “the market readjusting” in the face of interest rate rises and inflation.
Availability stood at 5.4%, up from 4.7% in the first quarter but still below the 6.5% 10-year average, driven by a rise in speculative schemes and tenants putting space up for sublet.
Josh Pater, partner at Gerald Eve, said: “Expansionary occupier demand from dedicated internet retailers has inevitably slowed from the pandemic peak. Many internet retailers are now revisiting business plans and looking for ways to save costs and make efficiencies.
“E-commerce, more generally, remains a long-term structural driver of demand for logistics space, and there are others too that will continue to make an important contribution, such as green energy production and EVs, companies nearshoring operations to improve supply-chain resilience and even high street retailers looking to upgrade to more sustainable accommodation or increase their e-commerce offering. On balance, once the dust settles, post-pandemic demand is still likely to be around 10% above pre-pandemic.”
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