PRIME LOGISTICS The definitive guide to the UK’s distribution property market Q1 2016 Bulletin
• 10.8 million sq ft of logistics space taken-up in Q1 • Activity driven by deals on large units over 1 million sq ft • Largest immediately-available shed on the market let to L&G Homes • 'BREXIT' uncertainty has not yet slowed market activity • 1.8% average annual prime rental growth predicted to 2018 • Largest volume of speculative development completions since Q3 2008 • Institutions rein in exposure to speculative funding
PRIME LOGISTICS The definitive guide to the UK’s distribution property market
Key occupational transactions, Q1 2016 Property
Size (sq ft)
The Big 555, Sherburn Distribution Park
Angle 325, Derby Commercial Park
No Ordinary Designer Label Ted Baker Letting (speculative)
Clipper Logistics John Lewis
Black Velvet, Hams Hall
Pre-lets/pre-sales accounted for 48% of Q1 take-up (10% in Q4 2015)
Source: Gerald Eve
MEGA SHEDS DRIVE Q1 TAKE-UP
HOUSE BUILDING SUPPORTS LOGISTICS
SPEC SPACE FILLS SUPPLY GAP
Take-up during Q1 fell 4% to 10.8 million sq ft, which whilst a reduction, is still comfortably above the five-year quarterly average of 9.6 million sq ft.
The letting of the refurbished and recently extended 550,000 sq ft ‘Big 555’ warehouse at Sherburn Distribution Park to L&G Homes in February was the largest transaction of existing standing stock since Amazon let the 995,000 sq ft ‘Bigfoot’ building in Daventry in Q3 2014.
The letting of the ‘Big 555’ building has taken the largest available up-and-built warehouse off the market. The largest immediately-available building on the market is now the 420,000 sq ft combined Units 3 and 4 at the M58 Distribution Centre in Skelmersdale. There are other secondhand buildings of a similar size range – Max 380 in Scotland and DC380 in Harlow for instance, but nothing over 450,000 sq ft in size.
It was the pre-letting activity of mega sheds which helped drive this strong quarterly figure and three deals over 1 million sq ft completed during Q1. The largest of the quarter was the purchase of 55 acres of land for a 1.2 million sq ft facility by The Range at Western Approach in Bristol. DHL also took a pre-let for 1.085 million sq ft at Magna Park Lutterworth and Amazon pre-let 1.053 million sq ft at Mountpark in Coalville. Over the last five years, very large sheds have accounted for an average 6% of take-up per quarter, however during Q1, they accounted for 36%. This pushed the average deal size to 168,272 sq ft, up from 103,478 sq ft in Q4 2015. A number of corporate deals have been struck between food retailers in Q1, the basis of which was to enhance product offerings and adapt to changing shopping patterns. These agreements could have a knock-on effect on requirements for logistics space. The wholesale supp