Rents for large distribution warehouses have risen by 5% year-on-year on average in 2024, according to Colliers’ latest Industrial & Logistics Rents Map.
The average rent for UK units of 100,000+ sq ft currently stands at £11.50/sq ft, while prime headline rents for mid-box and multi-let units have hit £14.80/sq ft – up 4.4% year-on-year. Most of the upward rental movement so far this year was recorded in the regions, with the Midlands and North West leading the way.
The vacancy rate for units of 100,000+ sq ft across the UK industrial market stood at 7.3% at the end of Q2 2024 – down 7.5% on the previous quarter.
In the first half of the year only 6.1m sq ft of speculative warehouses were delivered – a sharp drop on the 11.3m sq ft delivered in H2 2023.
UK industrial land values have remained stable so far this year, achieving an average price of £1.95m per acre.
Andrea Ferranti, head of industrial and logistics research at Colliers, said: “Supply has increased notably with some pockets of the market arguably providing occupiers with greater choice. However, rental growth on average has remained elevated due to a resilient occupational market characterised by robust appetite for good quality and efficient space. We’ve seen many occupiers consolidating their supply chains during the last 18 months, and the Midlands has naturally been the location of choice for much of this activity.
“Meanwhile incentives have returned to the pre-Covid normal of approximately one month rent-free per year of lease term, depending on length, unit specifications, location and covenant strength.”
Len Rosso, head of industrial and logistics at Colliers, added: “The elevated borrowing costs as well as construction price inflation did put a dampener on investor appetite for speculative development. For the second half of this year we are forecasting only 4m sq ft of speculative development to be delivered, down 65% year-on-year. However as borrowing costs reduce and material costs stabilise, we expect investor appetite for development land to improve significantly over the second half of next year.”
