As much as 5m sq ft of surplus UK logistics space was being marketed by way of sub-let or assignment by occupiers in the first quarter of this year, according to data from Gerald Eve shared with BE News.
This accounts for around 10% of all available logistics space across the UK – up from around 4% in Q4 2022 – and is around twice the normal average for sub-let space.
Gerald Eve’s figures show sub-let logistics space is currently being marketed in several regions across the UK with a particular focus on larger centres in the Midlands.
Steve Sharman, partner and head of research at Gerald Eve, said: “The post-pandemic economic slowdown and ongoing high cost inflation has weighed heavily on some occupiers, especially those who may have overextended themselves during the pandemic. Those seeking to sub-let include occupiers in the logistics, internet retail and automotive sectors,
“Perhaps the most high profile is Amazon, which announced a consultation on the proposed closure of three (fairly old) fulfilment centres at the start of the year, but other examples include Super Smart and the Pallet Network. The reasoning behind these sub-lets is varied but what they all have in common is the desire to make cost savings in the current environment and capture the reversion generated by rocketing market rents. For occupiers who signed up a year or two ago this could be considerable.
“We expect the increase in sub-letting to be a relatively short term issue whilst inflation is high and occupier business conditions uncertain. As one of the potentially more lucrative measures in the occupier cost savings toolkit, tenants are likely to continue to want to make their surplus real estate holdings work for them this year whilst broader market availability is low.”
