Yorkshire & North East led the way in UK logistics take-up for Q3 2022, contributing 27.1% of total take-up, despite a 38% decline in the region for this quarter, according to the latest research from global real estate advisor, CBRE.
Availability rose to 1.8m sq ft at the end of Q3 in Yorkshire & North East, up 16% QoQ, with 56% of this available space comprised of speculative units under construction. Due to the lack of ready-to-occupy space, the region’s vacancy rate fell further to 1.04%, down slightly from 1.07% in Q2. Big box prime rents remained stable for the fourth consecutive quarter at £7.75 psf. Prime yields moved out a further 60bps to 4.50%.
Nationally take-up of logistics space totalled 7.67m sq ft for Q3 2022. The aggregate for the first nine months of 2022 stands at 30.25m sq ft, which equates to 95.8% of 2021 and 92.1% of the record-breaking year of 2020 for the same period, signalling the sector’s resilience.
This represents a decrease of 30% compared with Q3 2021, which saw take-up reach 10.9m sq ft. A total of 29 deals have completed this quarter, a decrease of 19.4% compared with Q3 2021, which saw 36 deals complete. Speculative schemes accounted for almost half of total take-up at 46.9%, followed by build-to-suit at 34.7% and secondhand accounting for the remaining 18.4%.
Third-party logistics dominated at a sector level, accounting for 56.3% of total take-up for the quarter. This was followed by retail at 21.3%. The remaining 22.4% was split across supermarkets, manufacturing, motor and other, demonstrating that demand for logistics space is wide-ranging and that competition for units remains strong.
Take-up was widespread across the regions for the quarter. Yorkshire & North East led the way at 27.1%. This was followed by West Midlands at 20.7%, East Midlands at 19%, South East at 16.3%, North West at 9.3% and the South West at 7.5%.
Nationally, vacant available space increased from 5.73m sq ft at Q2 2022 to 6.51m at Q3 2022. This was due to a number of speculative buildings reaching practical completion during the quarter. However, with only 21 built speculative units available, there remains a significant under supply. The increase in completed units resulted in the UK vacancy rate increasing fractionally from 1.18% to 1.32%.
Mike Baugh, executive director, CBRE Leeds, said: “The regional market is still in a good place, with a comparative low supply of space and continued steady occupier demand. There are a number of significant deals under offer in Yorkshire, which will hopefully lead to another strong performance for the year end.”
Jonathan Compton, senior director, UK Logistics at CBRE, said: “Despite the ongoing economic uncertainty, the logistics occupational market remains strong with a wide range of occupiers securing space across the country. The decrease in take-up this quarter points to a degree of normalisation in the market following a prolonged period of record-breaking numbers, however the under-offer pipeline signals towards another robust year for the sector.”
Annabel Nash, senior analyst, UK Logistics Research at CBRE, added: “We have seen a significant shift in the type of occupier taking space following a dominant display from online retail. Third-party logistics providers are now leading the pack, accounting for more than a third of total take-up year-to-date. Ongoing supply chain and shipping disruptions are resulting in longer lead times, driving retailers to extend their stock profile in the UK. Therefore, companies that do not have the sufficient infrastructure are turning to third-party logistics providers for fulfillment on their behalf.”
