Key points:
- 2020 was a record year for the industrial and logistics sector across the Glenny region with the take up of ‘Big Box’ facilities hitting an all-time high of 4.2m sq ft and demand for large logistics units peaking at 8.8m sq ft.
- Overall activity approached 8.0m sq ft, 15% above the 10 year average, but after such an unprecedented year we saw requirements for large logistics facilities ease in Q1 2021.
- Requirements in the smaller workspace market (<25k) rose by 65% in the last 12 months, and the Mid-Box market (50-99k) saw a significant increase with demand up by 33%.
- The Eastern M25 office market rebounded in Q1 2021 as demand for space recovered to pre-pandemic levels (1.6m sq ft), but indications show that occupiers are downsizing their space requirements.
Glenny’s commercial property research for its Q1 2021 Databook shows that demand for Big Box units moved back to pre-pandemic levels in early 2021, whilst the rest of the market continued unabated.
John Bell, Head of Business Space at Glenny, comments on the latest research and the promising start to this year: “There is no doubt that 2020 was a remarkable year, not only because of the pandemic but also in how occupiers responded quickly to mitigate the issues arising from it, particularly in the logistics supply chain. It comes as no surprise that there has been an easing in Big Box demand during the first quarter of 2021 after such a strong Q4 2020 but demand in this size bracket still outstrips supply. Requirements across the rest of the market remain at exceptional levels.”
The demand for industrial floor space can be further broken down into Mid-Box (50-99k sq ft) and Medium (25-49k sq ft) sized units which are seen as suitable for the flourishing urban logistics sector, and smaller buildings (<25k sq ft) which appeal to a wide range of regional and local businesses.
Bell adds, “The most exceptional increase in requirements over the past 12 months has, somewhat surprisingly, come in the smaller workspace market where requirements are up by 65%. The ‘Mid Box’ market has also seen a significant increase, with demand up by 33%, which points to a very positive outlook for take up in the coming year as supply levels for this product have also improved.”
The rise in supply is due to a number of reasons; with new schemes completing, 2.7m sq ft of additional industrial floor space was delivered during 2020, whilst a number of occupiers have released space back onto the market due to the difficult economic conditions.
Bell concludes, “The Eastern M25 industrial market is a key location for servicing the London economy as it rebounds from the pandemic. This will be reflected in strong demand for urban logistics facilities as well as further Big Box demand which will emanate from port locations including DP World’s London Gateway which also benefits from its recently acquired Freeport status.”
Offices
The first signs of recovery were evident in the Eastern M25 office market in Q1 2021 as demand for space recovered to pre-pandemic levels (1.6m sq ft), although there are predictable indications that occupiers are downsizing their space requirements. Take up across the Eastern M25 market was down to 1.2m sq ft. 53% below the 10 year average for the region, with all markets under performing. Against the backdrop of reduced activity in 2020, supply has increased during Q1 2021, with the overall availability rate across the region rising to 7.6%, equating to 6.9m sq ft.
