The industrial and logistics property sectors are set for another busy year in 2022, as demand for high quality and well-connected sheds continues to soar throughout Yorkshire and beyond, according to leading property consultancy, Gent Visick (GV).
Andrew Gent, director at GV, said: “Throughout 2021, the industrial and logistics property sectors have experienced unprecedented levels of demand from both occupiers and investors, resulting in increased rents and capital values.
“National take up of Grade A modern warehouse accommodation, in excess of 100,000 sq ft, prior to Covid 19 in 2018 and 2019, stood at 34 million sq ft and 30.1 million sq ft respectively, but in 2020 it climbed to 50.1 million sq ft. By the end of quarter three in 2021 it had already exceeded 50 million sq ft.
“Supply of Grade A warehouse space over 100,000 sq ft, stands at 6.95 million sq ft and although there are units now under construction to meet this imbalance, most of these developments will not be ready until later in 2022 or even 2023.
“The level of pressure in the market illustrates the rush for companies to either go online or expand their online capacities to meet the increased demand for home delivery due to the pandemic. This is allied to the added impacts of Brexit, reshoring and increased demand from the manufacturing sector.
“This has to be tempered though, with how any further lockdowns could impact the economy and consumer spending confidence, as well as the prospect of increased taxation, which may lead to a general recession. However, demand for online services and basic goods should see demand for warehouse space hold up.”
Andrew added: “The prospects for GV during 2022/2023 are strong and from what we’ve seen, there are no signs of slowing demand for warehouse space. The lack of immediate supply will help maintain rental levels and the weight of money for investment stock will continue to sharpen yields, despite the recent increase in interest rates.
“There has been significant rental growth as competition for land increases and with improving yields, the value of industrial and logistics property continues to increase. That said, from a Yorkshire perspective, there has been no real rental growth in the market for some 30 years and it could be argued that the current significant increase in headline rents is long overdue and puts the industrial sector on par with the other main regional property markets.
“Our building surveying and project management team are also busier than ever due to the levels of new development, as well as existing units being extended or improved and dilapidation claims increasing. In 2021 the team expanded with the appointment of Michael Jack as a result of increased business. This was followed by the arrival of Niall Mackinnon to establish our lease advisory team, giving us a new line of business advising both landlords and tenants on rent reviews, lease renewals and lease restructuring opportunities.”
Andrew concluded: “Looking further ahead, gigafactories, which will produce batteries for electric vehicles on a gigantic scale, are a new and exciting growth area. As well as the economic benefits they’ll bring, research suggests their development in the UK could lead to demand for a further 50 million sq ft of warehouse space for supply chains to provide relevant components, which will result in thousands of skilled jobs being created.”