3M SF Short-Term Warehouse Requirements Show Logistics Is The Coronavirus Winner So Far
The logistics sector has just experienced its best first quarter ever and faces more than 3M SF of additional short-term requirements.
The surge in demand comes as the supply of new big-box warehouses dwindles, with almost half of new construction paused.
The Knight Frank industrial property tracker showed an immediate need of up to 3.2M SF nationwide for short-term occupation, from as little as two weeks up to 12 months.
According to Savills, take-up of industrial and logistics space (units of 100K SF or more) hit 7.95M SF in Q1 2020, 24% greater than the long-term quarterly average, standing the sector in good stead to navigate the challenging times ahead.
In addition, following the outbreak of the coronavirus, Savills has seen more than 1M SF of vacant warehouse space reoccupied by existing tenants since March 2020. This includes Tesco reoccupying about 900K SF across two units as a result of the spike in consumer spending.
“We are aware of immediate short-term requirements for industrial/warehouse premises across the Midlands ranging in size from 50K to 1.2M SF,” Knight Frank Birmingham Head of Logistics James Clements said.
Savills said that lockdown has accelerated the consumer shift toward online retail, which accounted for 39% of all take-up in Q1 2020, the highest level on record. This compares to 17% for the whole of 2019. Savills has also seen demand from other sectors, including data centres and food production facilities.
“Figures for the first quarter of the year remain incredibly positive, and with almost 3M SF under offer and upwards of 1M SF exchanged subject to planning, the sector should remain resilient despite significant uncertainty,” Savills Head of Logistics Richard Sullivan said.
Savills has recorded an 8% increase in the supply of larger warehouses compared with last year, with 37.45M SF available and a vacancy rate of 6.9%. This equates to 1.2 years’ worth of supply. There is also 5M SF of speculative development currently in the pipeline set to be delivered in 2020 and beyond, down from 8.8M SF last year.
Due to the coronavirus, it is believed that up to 42% of floor space under construction has now paused.