UK industrial and logistics rents rose by 8% on average in 2023, according to new data from Colliers.
The firm’s latest Rents Map shows prime rents for large distribution warehouses (100,000 sq ft+) increased by 8% to £11/sq ft, with rents for mid-box and multi-let units reaching £14.50/sq ft – up 6.3%.
Take-up of large warehouses (100,000 sq ft+) last year fell by 36% to 24m sq ft – a 14% decrease on the 10-year pre-pandemic average (2010-2019).
Supply hit 38.5m sq ft, from a low of 20m sq ft in 2022 – below the pre-pandemic 10 year average supply rate of 45.2m sq ft.
Len Rosso, head of industrial and logistics at Colliers said: “2023 was a difficult market compared to the boom we’ve seen in recent years, however despite these tricky conditions the sustained occupier demand has resulted in a continuation of rental growth and a rise in land values in core locations.
“While investors and developers have worked hard to deliver more quality prime warehouse space, following the glut of take-up over the pandemic period, supply remains constrained in most core markets due to the increased costs of construction and higher borrowing costs caused by inflation. This combination of difficulties for the market is what is spurring on these continued rental rises, which we anticipate will also continue during 2024 as we are witnessing a slow-down in the current development pipeline.”
Rosso added that 2024 will be anther “stop-start” year of occupational demand. “Those who have to move because of lease events or contract expansions will be in the market, but until we see stability around household spending and credit conditions its unlikely that many occupiers will consider growth plans, and by the end of the year there will be a lack of warehouse options once again – resulting in another year of continued rental growth,” he said.
