Take-up of ‘big box’ industrial and logistics units of more than 100,000 sq ft fell to 6.8m in Q1 2023 – 49% lower than the same period last year and below the 10-year quarterly average, according to research from BNP Paribas Real Estate.
The highest level of take-up activity was recorded in the Midlands with the East Midlands accounting for 2.5m sq ft of all deals, followed by the West Midlands at 1.4m sq ft.
There is currently circa 13.5m sq ft of industrial and logistics space under construction in the UK, with more than 4m sq ft being built in the East Midlands.
BNP Paribas Real Estate’s analysis also found around 4m sq ft of UK Grade A big box industrial and logistics space has become available for sub-let from owner-occupiers such as Amazon.
Ben Wiley, head of industrial agency at BNP Paribas Real Estate said: “Following the exponential rise in take-up over the past few years, a number of occupiers are taking a slight pause to review their options given the current economic and political challenges. Although demand has remained relatively resilient, decision-making is naturally taking longer than usual, and occupiers are exercising more caution than ever with regards to their leases. The majority are seeking price reductions or improved terms, which, to date, is still not transpiring with supply remaining tight.
“Since the start of the year, we have seen unprecedented levels of new enquiries coming through from a wide range of occupiers, particularly from new UK entrants – which we anticipate will continue well into next year. Conversely, a number of high-profile occupiers are consolidating their spaces, which in many cases was only taken in the last 24 months or never occupied. Encouragingly, there has been strong demand for these, partly due to the units’ stronger ESG credentials and EPC ratings.”
