Retailer and distributor requirements for logistics warehouses will exceed available stock by 2020, as logistics warehouse construction fails to keep pace with e-commerce demands.
According to the latest edition of Lambert Smith Hampton’s annual Industrial & Logistics Market Report, 2.8m sq ft of speculative development was under way in the West Midlands region at the end of 2015, spread across 17 units, but Matthew Tilt, head of industrial and logistics at LSH, warned warehouses under construction and the amount of new space planned is not keeping pace with the demands of internet retailers and their distributors.
He said: “Even if current elevated levels of new development continue, a significant and unprecedented increase in construction will be required in the next few years to ensure internet retailers are able to continue to fulfill their customer orders.”
LSH said that the lack of available stock in the West Midlands meant that for the second successive year prime headline rental growth was recorded in all key markets and further growth was expected this year.
Despite a stellar year in 2014, take-up in the logistics sector was down in the West Midlands during 2015, with less than half the total seen the previous year, according to the report.
Tilt said this was due to a raft of major design and build deals in 2014, which spurred record annual take-up, with the 2015 figures being similar to those seen in 2013. “Take-up in the mid box (50,000-100,000 sq ft) sector increased by 20% year-on-year, underlining the ongoing depth of occupier activity and increasing demand for this type of space,” he said.
Availability across the West Midlands contracted by 11% during 2015, to stand at 28.2m sq ft, a relatively modest fall compared with other regions.
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