Warehouse rents rise thanks to resilient occupier demand
Rents for large warehouses in the UK have continued to rise, at an average of 5% year-on-year.
Rents for units over 100,000 sq ft average £11.50 per sq ft, while prime rents for mid-box and multi-let units have risen to £14.80 per sq ft, a 4.4% growth, according to Colliers.
Rental growth was highest in the Midlands and North West, while rents in London were flat.
Rents for large warehouses in the UK have continued to rise, at an average of 5% year-on-year.
Rents for units over 100,000 sq ft average £11.50 per sq ft, while prime rents for mid-box and multi-let units have risen to £14.80 per sq ft, a 4.4% growth, according to Colliers.
Rental growth was highest in the Midlands and North West, while rents in London were flat.
By the end of the second quarter, the vacancy rate for UK industrial units over 100,000 sq ft stood at 7.3%, down from 7.5% in Q1.
In the first half of the year, only 6.1m sq ft of speculative warehouses was delivered, a drop from the 11.3m sq ft in the second half of 2023.
Industrial land values in 2024 have remained steady at a UK average of £1.95m per acre, below the post-pandemic peak.
Andrea Ferranti, head of industrial and logistics research at Colliers, said that supply had increased notably with some pockets of the market arguably providing occupiers with greater choice. However, he added that rental growth on average had remained elevated due to a resilient occupational market focussed on demand for good quality and efficient space.
Ferranti said: “We have seen many occupiers consolidating their supply chains during the last 18 months, and the Midlands has naturally been the location of choice for much of this activity.
“Meanwhile incentives have returned to the pre-Covid normal of approximately one month rent-free per year of lease term, depending on length, unit specifications, location and covenant strength.”
Len Rosso, head of industrial and logistics at Colliers, said “The elevated borrowing costs as well as construction price inflation did put a dampener on investor appetite for speculative development.
“For the second half of this year we are forecasting only 4m sq ft of speculative development to be delivered down 65% year-on-year. However, as borrowing costs reduce and material costs stabilise, we expect investor appetite for development land to improve significantly over the second half of next year.”
See how Colliers compares with other agents in the industrial and other markets with our On-Demand Rankings >>
Photo © EFAFLEX_Schnelllauftore/Pixabay
