Q4 MARKETBEAT LI 2022
MAR K E T B E AT
Industrial Q4 2022 UNITED KINGDOM
Take-up still above long-term average The market closed 2022 having seen two successive quarters of contractions in take-up volumes. Take-up fell to 10.2 million sq ft during Q4, down from 11.5 million sq ft during Q3. Despite this, 2022 take-up volumes remain the second strongest on record, and the sector has continued to demonstrate its resilience amidst a backdrop of challenges facing landlords, occupiers, and developers alike. The most notable change throughout 2022 was the shift in demand dynamics, which saw a significant fall in demand from e-commerce and post and parcel occupiers, whilst simultaneously seeing significant growth in demand from manufacturers, seeking to re-shore and safeguard their supply chains within the UK. Take-up remained focussed on good quality stock, with 72% of space being taken in Grade A units throughout the year. Furthermore, occupiers looked to secure space early, with Build to suit schemes and pre-lets accounting for 43% of total take-up, its highest level over the last three years. Availability rises slightly Although supply remains at relative lows, constraints have begun to ease following two consecutive quarters of increases. Availability now stands at 55.8 million sq. ft, rising from 44.3 million sq ft during Q4 2021. The majority (62%) of this new availability is in Grade A space, which has risen by 56% YoY. Grade B shortages remain prevalent, with just 12.1 million sq ft available, due several occupiers renewing existing leases in order to avoid re-location costs, or higher rents in more recently completed units. Throughout 2022, developers have delivered new industrial space in key locations amidst a backdrop of ongoing constrained availability. 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. Uncertainty shades H2 investment performance Investment volumes fell markedly during Q4, with trading conditions shaded by economic uncertainty and instability within financial markets. Q4 2022 posted a total volume of £1.3bn, the second lowest value since 2012. Bolstered by a strong start to the year 2022, Q1 seeing £6.7 bn transacted, total investment volumes reached £14.3 billion the second strongest year on record, behind 2021, and well ahead of the £7.9bn transacted during 2020. The Industrial and Logistics sector has seen a fairly rapid response to macroeconomic conditions, seeing significant decompression in yields during H2 2022. It is expected that this rapid outward movement and re-pricing will closer align buyer and seller aspirations and encourage the return of investor activity. Having seen the first outward movement in yields since 2012 during Q2, yields continued to decompress throughout the year now standing 150BPS higher than the same period last year.
12-Mo. Forecast
YoY Chg
55.8 M Availability, SQFT Q4 10.2 M Take-Up,SQFT Q4
18.4% Prime Rent Growth YoY
Average UK Big Box
LATEST INDICATORS
12-Mo. Outlookt
YoY Chg
45.3 Manufacturing PMI (December 2022)* -42 GfK Consumer Confidence Index (December)
TAKE-UP AND AVAILABILITY
C&W PRIME RENT INDEX, Dec 2008=100
26.6% Online Share of retail. (By value SA, December 2022)
80
75%
240
70
55%
60
200
50
Source: GfK,S&PGlobal (IHSMarkit), ONS * A score below 50 indicates contraction ** Compared with same month the previous year
35%
40
160
30
Million sqft
15%
120
20
10
80
-5%
0
2015
2016
2017
2018
2019
2020
2021
2022
Availability
Take-up
Q4 2008
Q4 2009
Q4 2010
Q4 2011
Q4 2012
Q4 2013
Q4 2014
Q4 2015
Q4 2016
Q4 2017
Q4 2018
Q4 2019
Q4 2020
Q4 2021
Q4 2022
Source: Cushman & Wakefield Research, Big Box = Units 100K sq ft +, Mid box = 50k-100k
YoY Growth (100K +)
50-100K
100K +
MAR K E T B E AT
Industrial Q4 2022 UNITED KINGDOM
MARKET STATISTICS
Availability (sq ft)
Grade A (sq ft)
Spec Grade A U/C (sq ft) Current Quarter Take-up (sq ft)
YTD Take-up (sq ft)
Prime Rent (£ / sq ft)
Prime Equivalent Yield
2,467,640
1,640,519
589,115
166,173
717,794
27.5
4.45%
London
9,094,592
6,514,698
1,905,187
2,473,802
9,493,821
22.5
4.80%
South East & East
8,393,605
5,054,046
2,063,574
1,361,508
8,147,147
8.25
4.80%
North West
7,436,724
4,916,739
1,810,078
903,449
8,847,801
10
4.95%
West Midlands
8,613,384
7,540,066
4,519,548
1,962,581
9,157,300
9
4.95%
East Midlands
4,774,794
3,686,665
2,073,587
1,396,783
7,092,581
8.25
5.10%
Yorks & Humberside
5,351,508
3,331,976
2,549,081
341,465
5,523,063
8.5
5.10%
South West
3,168,260
1,074,251
816,411
571,563
1,966,001
7.25
6.30%
North East
4,268,364
212,582
212,582
785,047
2,125,588
6.75
6.55%
Wales
2,274,682
398,161
-
258,143
1,456,190
7
6.55%
Scotland
55,843,553
34,369,703
16,539,163
10,220,514
54,527,286
10.65**
4.45%
Total
* Unweighted average for the 71 submarkets tracked by C&W
KEY LEASING/OWNER-OCCUPIER TRANSACTIONS Q4 2022
Property/Business Park
Sub Market
Tenant
SQFT
TYPE
Gateway 14, Stowmarket, Suffolk
East
The Range
1,200,000
BTS
Panattoni 630, Rotherham
Yorks & Humber
Alliance Automotive
630,000
BTS
Former Bison Concrete Premises, Mulberry BP
East Midlands
The Pallet Network
610,000
Pre-Let
Connect 6, Farington Park, Preston
North West
Victorian Plumbing
544,000
BTS
Ark, Trafford Park
North West
Supreme Imports
245,000
Existing
KEY INVESTMENT TRANSACTIONS Q4 2022
Property Name
Region
Seller/Buyer
Size (sq ft)
Price
Edward Bavister Associate +44 (0) 7721 671 121 / edward.bavister@cushwake.com
Thames Gateway Park, Dagenham
South East
Abrdn/ICG
£99,000,000
395,288
Redditch Gateway South, Redditch
East Midlands
Stoford/Blackbrook Capital
£62,551,160
446,794
South
Abrdn/Aviva
£46,500,000
Unit 24, Sutton Business Park
210,000
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
©2022 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
Super W, J20A, Warrington
Yorks & Humber
BA Pension Fund/Leftfield Capital
246,136
£32,100,000
cushmanwakefield.com
Source: Cushman & Wakefield Research, RCA
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