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Compared to the carnage that is leisure/hospitality property and the acute pain experienced in the retail sector, logistics property has been having a 'good' pandemic.
Online demand is up, reinforcing retailer and third-party logistics providers' appetite for short-term additional floorspace.
Bisnow is hosting a webinar on industrial investment at 1pm on 23 April. You can register here.
Meanwhile the wider horizon of policy has also tilted in favour of logistics, as politicians grasp the importance of the supply chain. Looming policy headaches on immigration, online taxation and business rates could now be eased.
However, new data from Colliers International showed that for all its obvious resilience, the logistics and industrial property sector is also feeling pain.
Two weeks after the 25 March quarterly deadline, Colliers International’s Property Management team collected 82% of rent on units larger than 100K SF, and 70% of rent on units smaller than 100K SF.
For context, this compares favourably with the 63% of rent and 57% service charge collected across all property sectors this quarter.
But it is lower than usual. Bigger box units rent collection was well down on a typical quarter where 99.5% of rent and 89% of service charge is collected. But it was still appreciably higher than the rest of the UK property market.
Take-up in the first quarter of 2020 is unlikely to be a good guide to take-up during lockdown in Q2, but the Colliers data revealed an interesting trend. Whilst lettings of 100K SF-plus units totalled 7.5M SF in the first quarter, up 10% on Q1 2019, it was 20% below the medium-term average for Q1 — suggesting, perhaps, a market that was cooling.
Demand from supermarkets is leading the way, with Aldi submitting a planning application in March to build 1.3M SF at Interlink South in Bardon, Leicestershire, as part of its long-term expansion plans. Tesco and Sainsbury are taking advantage of their existing network by either reoccupying space or provisionally extending terms where possible.
“The market has remained very resilient but depending on the length of the lockdown, this will inevitably impact the depth of the economic fallout," Colliers Head of Logistics Len Rosso said. "Therefore, over the next six months, we may see an increase in business failures, which could translate into a lower demand over Q2/Q3 2020. The quicker we can get back to some sort of new normality, the sooner businesses can focus on their long-term business plans.”
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