CW - Q4 2022 UK LI Outlook Report - FINAL

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NATIONAL OVERVIEW Occupier Market

“The sector demonstrated its resilience during the second half of 2022, performing robustly despite the fierce challenges facing both occupiers and landlords. However, the market remains substantially more active than pre pandemic days, and has seen promising signs from key sectors such as manufacturing and retail.”

DEMAND Occupational demand fell to 10.2 million sq ft during Q4, a fall of 11% QoQ, and 45% decrease on the same period last year. Despite this, total take-up volumes for the year are the second highest on record, surpassing 2020. Unsurprisingly, the Golden Triangle (Midlands & M1 Corridor) continued to prove highly sought after during the year, accounting for circa. 50% of total take-up. The North West also proved highly sought after, accounting for 15% of total take-up volumes. 2022 saw a large shift in demand dynamics and source of take up. The E-commerce and Post and Parcel sectors both recording significant reductions in the level of new space required, falling sharply from record levels observed during 2020 and 2021. However, there was strong growth in demand from the manufacturing sector which saw take-up volumes grow 30% on their 2021 levels.

PIPELINE & AVAILABILITY Supply remains relatively tight across the United Kingdom, but has been eased somewhat by a rise in availability which now stands at 55.9 million sq ft, a 26% increase compared to the same period last year, and a quarterly increase of 13%. The majority (62%) of this new availability is in Grade A space, which has risen by 56% YoY. Grade B shortages remain prevalent, with a number of occupiers renewing existing leases in order to avoid re-location costs, or higher rents in more recently completed units. Throughout 2022, developers delivered an additional 17.5 million sq ft of speculatively developed space in 2022, the highest volume on record. However, as a result of shortages of key construction materials and labour, a number of schemes scheduled for delivery during 2022 have been delayed and are now expected to complete early 2023.

Richard Evans, International Partner, Head of UK Logistics & Industrial

Take-up Take-up Availability Under offer

10.2m sq ft Q4 2022

54.5m sq ft 2022 YTD

55.9m sq ft Q4 2022

7.5m sq ft Q4 2022

-11% Q-o-Q

70.6m sq ft 2021 YTD

+13% Q-o-Q

5.3m sq ft Stock

-45% Q4 22 vs Q4 21

-23% Change

+26% Q4 22 vs Q4 21

2.2m sq ft Under Constr.

+0.62% Q4 22 vs 10yr av

-6% Q4 22 vs 10yr av

Take-up by Grade (m sq ft)

Take-up by Sector YTD (m sq ft)

Availability by Grade (m sq ft)

- 10 20 30 40 50 60 70 80

0 10 20 30 40 50 60 70 80

Post & Parcel Wholesale & Distribution Ecommerce Other Unknown Retail Manufacturing 3PL

Millions

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