2016 recorded the second-highest level of logistics take-up in the past 10 years, and the take-up of new product posted an all-time high.
JLL national logistics team head Richard Evans said that approximately 23.9M SF of Grade A logistics floor space was let in 2016, a 38% increase over the previous year and the second-highest year on record. Of that, 19.9M SF was in new buildings, the highest annual level, according to JLL’s records, which date back 21 years.
The retail sector provided the most active source of demand in 2016, accounting for a 58% share of total Grade A demand.
There was 12.4M SF of Grade A floor space available nationally at the end of the year, 17% lower than at the end of 2015, according to JLL's data. Approximately 7.7M SF is new property, and 4.8M SF is high-quality second-hand floor space. 2.5M SF is speculatively under construction. At the end of 2016, the vacancy rate for modern logistics stock was just 5%.
JLL director of industrial and logistics research Jon Sleeman is tracking a large number of active requirements for big-box space and expects continuing robust demand this year, although at a somewhat lower level than 2016 due to a slowdown in the UK economy. With speculative development remaining modest, vacancy rates will remain low in many markets, supporting some further rental growth, he said.
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