Brexit Begins To Bite As Warehouse Property Take-Up Tumbles
Brexit fears have prompted a juddering slow-down in the U.K. logistics property sector, new data from Cushman & Wakefield revealed on the day after another knife-edge House of Commons vote on the Prime Minister's Brexit plans.
Second quarter take-up was 6.3M SF, a mighty 32% down on the same period last year, largely due to uncertainty surrounding Brexit. E-commerce continued to dominate take-up, accounting for nearly 50% of all deals. E-commerce reached a new peak in May, and now accounts for 18% of all retail sales in the U.K.
A total of 8.7M SF of speculatively developed warehouse space is due to reach the market in 2018. As a result, Grade A availability has risen by 18% to 23M SF since the beginning of the year, with the South East and North West registering the sharpest increases (59% and 52%) over this period.
“With less than a year before the U.K. officially leaves the EU, many occupiers have turned their attention towards Brexit and this has had a material impact on the deal flow in Q2, with fewer transactions agreed," Cushman & Wakefield U.K. Logistics & Industrial Research Director Bruno Berretta said.
“Unless there is a visible breakthrough in negotiations, this uncertainty could extend into the second half of the year, when an official declaration outlining a blueprint for future U.K.-EU trade is expected during the quarterly EU summit in October. An upturn in activity is possible particularly given that enquiry levels for units of 50K SF and above have remained relatively stable in H1 2018 compared to H1 2017.”