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The NHS took an additional 14.25M SF of warehousing across the UK in the first quarter of 2020 to help with medical supplies.
In a series of short-term, off-market deals the NHS appears to have acted quickly to bolster the supply chain in the early days of the coronavirus pandemic.
According to data from surveyor Gerald Eve, which calculated the 14.25M SF figure, whilst some of the NHS activity meant occupying grey space of 3PLs, such occupation will feed a further tightening of supply in some markets.
The unique surge in demand from the NHS helped the overall availability rate fall from 7.1% to 6.7% in Q1 2020 — the first fall in over a year — as the volume of secondhand and available speculative space under construction fell.
Food and homeware retailers also drove demand for UK warehouses in the first quarter of 2020, according to data from Gerald Eve. Amazon once again led the way, announcing plans for warehouses in Dartford and Gateshead totalling almost 5M SF.
However, Gerald Eve warned that secondhand space will be returning to the market under the influence of the pandemic lockdown.
"Several occupiers, especially manufacturers hit with forced plant closures, or those high street retailers or dependant logistics companies feeling the fallout of reduced consumer demand, are likely to return unwanted space," the firm's Prime Logistics Bulletin said.
Industrial property occupiers linked to the aviation or hospitality industries, two of the most affected segments of the economy by the impact of COVID-19, are also at a higher risk of failure. We expect prime rents to remain broadly flat in 2020 but expect incentives to move out as landlords offer more favourable terms for occupation, especially on longstanding available stock.
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