CW - Q4 2022 UK LI Outlook Report - FINAL

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C&W Prime Rent 100k+

C&W Prime Rent 50-100k

C&W Prime Yield

LONDON & SOUTH EAST/EAST

£27.50 Latest

+0% Q-o-Q

+37.5% Y-o-Y

£30.00 Latest

+0% Q-o-Q

+20% Y-o-Y

4.45% Latest

+65bp Q-o-Q

+110bp Y-o-Y

“Market conditions in London and the South East continue to be impacted by tight supply, and robust occupier demand. The market is expected to lead in terms of rental growth during 2023.”

DEMAND Occupier take-up in London, South East & East reached 10.2 million sq ft during 2022, a fall of 32% when compared to a stellar 2021. The majority of this decline was attributed to Q4 where activity stalled largely as a result of instability within financial markets, and apprehension around the economic outlook. Demand remained focussed on Grade A space, accounting for 87% of take-up during the year. The majority of demand came from manufacturing, retail and 3PLs, who combined accounted for 61% of total take-up. The largest deal was the start of development of 1.2 million sq ft by The Range at Suffolk Gateway in Stowmarket , a newly established Freeport location. Demand within London was focussed on smaller units, a bi-product of significant supply constraints resulting in no deals for units over 200,000 sq ft throughout 2022. Typifying this lack of supply in and around the capital, the majority of take-up was seen within existing standing stock.

PIPELINE & AVAILABILITY Availability rose to 11.5 million sq ft at the end of 2022, aided by the delivery of additional Grade A space, and some existing Grade C stock becoming available once again. As a result of robust occupier demand and strong rental growth, developers have continued to commit to the region, and in 2022 delivered an additional 5.1 million sq ft of space that had begun construction speculatively. Of this space 3.1million sq ft has now been signed for, a further 3 million sq ft is currently under construction with delivery expected in the next 18 months, which will further ease supply constraints. The majority of space currently available is located within units ranging from 50,000 sq ft – 150,000 sq ft with just one unit in excess of 500,000 sq ft available at Kingston Park Peterborough, which is available by way of sublease. For 2023, key developments are expected to get underway at sites in Croydon, Barking, Hemel Hempstead, and Luton.

Chris Knight, Partner London

Take-up Take-up Availability Under offer

2.6m sqft Q4 2022

10.2m sq ft 2022 YTD

11.5m sqft Q4 2022

1m sqft Q4 2022

25.9% Q-o-Q

14.9m sq ft 2021 YTD

-3% Q-o-Q

-41% Q4 22 vs Q4 21

-32% Change

+30% Q4 22 vs Q4 21

-28% Q4 22 vs 10yr av

+10% Q4 22 vs 10yr av

Availability by grade (m sq ft)

Take-up by grade (m sq ft) Grade A Grade B

Take-up by sector YTD (m sq ft)

Grade C

Grade A

Grade B

Grade C

Manufacturing

10 12 14 16

Retail

3PL

Unknown

2 4 6 8

Wholesale & Distribution

Other

Ecommerce

Post & Parcel

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022