MARKET INTELLIGENCE
Big box bulletin
H1 2024: Review of distribution activity
Panattoni Park, Swindon
Data and analysis
Commentary
In H1 2024, the take-up of big-box*, grade-A space totalled 10.9 million sq ft. It is encouraging that H1 2024's figure is 30% higher than H1 2023, reflecting improving market sentiment and whilst below the five-year H1 average, the comparison is skewed due to the exceptional demand seen during the global pandemic. The Midlands, especially prime locations within the 'Golden Triangle', remain a hub of activity, accounting for 68% of H1's leasing activity.
Additional positive signs are evident as grade-A supply in H1 2024 totalled 47.4 million sq ft across 207 units, down from 48.1 million sq ft three months prior (209 units). Of all available units, 35% are completed speculative units, with the remainder being secondhand and only a few new units under construction. The current supply leans heavily towards smaller units (100,000 - 399,999 sq ft), which make up 91% of available inventory by number of units, making larger requirements challenging to satisfy.
Investment in the single-let big-box distribution market remains limited, with investors cautious amid macroeconomic headwinds. Consequently, investment volumes are 46% lower than last year's period and 65% below the five-year H1 average. Active buyers include Clarion Partners, Tritax Symmetry, and Brookfield Asset Management, contributing 54% of H1 investment volumes. With a newly elected Labour government, falling inflation, and anticipated interest rate cuts, economic recovery is expected in Q4 2024, likely spurring greater business confidence and more activity in the capital markets.
Despite elevated stock levels and a notable imbalance in available shed sizes, prime headline rental growth remains robust, especially in prime locations. Regions experiencing the most significant year-on-year growth include the North West, London/South East, and the East and West Midlands, where prime rents now punch into double digits at £10.25 psf.
*Units over 100,000 sq ft
“Despite elevated stock levels and a notable imbalance in available shed sizes, prime headline rental growth remains robust, especially in prime locations. Regions experiencing the most significant year-on-year growth include the North West, London/South East, and the East and West Midlands, where prime rents now punch into double digits at £10.25 psf.“
Andrew Jackson
Principal & Managing Director, Industrial
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