MARKET INTELLIGENCE
Big box bulletin
2024: Review of Distribution Activity
PLP Stafford
Data and analysis
Commentary
Take-up of big-box* space totalled 21.2 million sq ft in 2024, 11% ahead of last year - a result helped by improving occupier sentiment, which fed through the year and turned into deal-making. Take-up volumes for the year do, however, remain 33% below their five-year average, but this comparison is skewed due to exceptional demand during the global pandemic. By geography, the Midlands remains the hotbed of activity, especially prime locations within the 'Golden Triangle' that account for 42% of all leasing activity this year.
At the end of 2024, Grade-A supply totalled 51.6 million sq ft (spread across 220 units), an increase of 9% compared to last year. By number of units, 45% are completed speculative units, 38% are second-hand, and the remaining 17% are units under construction. However, there is a distinct lack of larger mega sheds (400,000 sq ft+), with only 10% in the current supply pipeline above this size, making larger requirements challenging to satisfy.
Investment into the single-let big-box distribution market has been limited this year, with investors remaining cautious amid macroeconomic headwinds. As a result, 2024's result of £1.04bn was 12% lower than 2023 and 62% lower than the 5-year average. However, much like leasing volumes, this calculation remains largely skewed by the pandemic-driven boom in investment into the sector, with investors drawn to the sector's robust fundamentals—fundamentals that remain to date. This is evident as we saw a pickup in activity over Q4 with £423 million spent on single-let distribution units, up by 116% quarter-on-quarter, which bodes well going into 2025, when further activity is anticipated.
*Grade A Big-Box (Units over 100,000 sq ft)
“With 2024 behind us, conditions going into 2025 look more positive. Given the fall in inflation, further interest rate cuts are anticipated, albeit slightly more spread out than initially expected. This should encourage more activity in the capital markets at the very least, notwithstanding the sector's potential to deliver strong returns compared to its peers, as despite elevated stock levels and a notable imbalance in available shed sizes, prime headline rental growth remains robust, especially in prime locations“
David Willmer
Principal & Managing Director, Industrial & Logistics
This report has been prepared by Avison Young for general information purposes only. Whilst Avison Young endeavours to ensure that the information in this report is correct it does not warrant completeness or accuracy. You should not rely on it without seeking professional advice. Avison Young assumes no responsibility for errors or omissions in this publication or other documents which are referenced by or linked to this report. To the maximum extent permitted by law and without limitation Avison Young excludes all representations, warranties and conditions relating to this report and the use of this report. All intellectual property rights are reserved and prior written permission is required from Avison Young to reproduce material contained in this report.
© 2024 Avison Young (UK) Inc. All rights reserved.
