Total sales volumes in the UK warehouse market, covering units of 100,000 sq ft or more, hit £2.3 billion in the first half of 2017 – up £1bn on the same period in 2016.
The figure, which is 150% up on the long-term average, is attributed to the ongoing popularity of industrial property for generating attractive returns and is underpinned by a consistently robust occupier market, according to Savills.
Savills said that although transaction volumes were up, the number of deals had fallen year on year due to the constrained availability of stock.
Seventy-seven deals were recorded in the first half of 2017, compared with 116 for the same period in 2016. This is partly due to large-scale owners continuing to hold stock rather than trade in order to build up their portfolios.
Savills said prime yields remain unchanged at 5%, however it anticipates that as demand stays high and stock low, there is likely to be continued downward pressure on this figure with strong prospects of an inward yield shift during the second half of the year.
James Williams, director in the industrial investment team at Savills, said: “Given the continued appetite of investors to deploy capital into the sector, we anticipate buoyant investor demand to continue. Investment volumes could be tempered by constrained supply, however this will maintain the downwards pressure on yields.”
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