Occupiers of industrial and logistics space say market conditions have slightly improved compared with six months ago, but they still face a number of operational challenges, according to the findings of the eighth annual Future Space report.
The report, which was conducted in the final quarter of 2024 by Analytiqa on behalf of Tritax Big Box and Savills, canvassed the views of 330 occupiers, institutional investors and developers on the key trends and factors affecting the future of industrial and logistics space over the next 12-24 months and beyond.
Of those occupiers surveyed, 39% see market conditions as more favourable than in the prior six months – up from 22% in 2023 – and 40% expect to take more space over the next two years – only 6% of survey respondents intend to take less space.
When asked about the key factors impacting their business, nine issues – from rising costs to net zero carbon transition – were selected by at least 20% of occupiers, with Labour costs highlighted by 62% of respondents compared with 41% in 2023. Labour sourcing was also cited as an issue by 34%.
Power availability has also climbed the agenda, with 36% of respondents citing it as a barrier to securing future space, compared with 11% in 2023 and 7% in 2022.
Henry Stratton, head of research at Tritax Management, said: “More change is coming with ongoing supply chain networks evolution. We’re seeing occupiers continue to realign their logistics real estate networks and consolidate their physical footprint. Ongoing labour challenges are likely to fuel further technology and automation adoption – increasing power demands and the criticality of adequate capacity and reliable supply, as well as demand for high-quality modern logistics facilities.”
Andrew Blennerhassett, associate in the Savills research team, added: “While occupiers appear more optimistic than last year, a recovery in 2025 looks set to be led by the investment markets. The majority of investors expect volumes to rise this year, with a focus on best-in-class units in top locations.
“Investors also ranked pricing aspiration as the most important factor when considering acquisitions, and much will depend on the pricing gap between purchasers and vendors, which has consistently hampered investment activity since 2022. Crucially, investors appear to be settling on a consensus for prime yields, which we believe reflects a narrowing in the pricing gap.”
