Industrial take-up so far in 2014 is 28.5m sq ft, 50% up on the previous year’s figure and the biggest volume since 2010.
According to Savills, which launched its latest industrial research at its annual Big Shed Breakfast today, availability now stands at 25m sq ft, less than a third of the level five years ago.
Almost all regions of England have reported a sharp increase in activity, with levels doubling in the Midlands.
Around 60% of total take-up came from second hand stock, while average deal size has increased from 217,000 sq ft in 2005 to 231,000 sq ft today.
The increase in size is driven by retailers, who are increasingly in need of large distribution warehouses to optimise supply chains for the omni-channel environment.
Savills head of logistics research, Kevin Mofid, said: “Even if the pace of take-up for the year ahead were to reduce to average annual levels of circa 16m sq ft, supply is falling at such a rate that the market needs more speculative development in order to meet demand.
“The supply/demand imbalance also suggests a strong argument for rental growth across logistics, which we predict could reach a 2.8% year-on-year growth by 2017.”
Richard Sullivan, national head of industrial and logistics at Savills, said: “We have a fascinating supply/ demand dynamic where control of land in core markets will be the main driver over the next couple of years providing both build-to-suit and speculative development opportunities.”
Reflecting a robust occupier market, Savills says investment in the UK industrial and logistics sector in 2014 continues to build traction, accounting for 11% of all UK investment, up from 9% in 2013.
There is a growing demand from an increasingly diverse investor group from the UK and overseas and Savills research shows £3.4bn has been transacted across distribution warehouse investment to date this year, compared with £2.1m in 2013.
