After Brexit and other challenges, the industrial and logistics leasing market has experienced a spike in activity from manufacturing occupiers ‘reshoring’ activity back to the UK.
Initial H1 2022 figures from BNP Paribas Real Estate show that manufacturing occupier take-up jumped 53% over the same time in 2021 and is at its highest level since H1 2017.
Supply of existing units reached a record low of just under 1.4 million m2, while the upcoming completion of several speculative schemes should raise this number in Q3.
Newly built stock accounted for 33% of supply (-49% y/y), while Grade A stock dropped by around 43% since the start of the year, with 478,805 m2 of available speculative units due to complete by the end of the year.
Vanessa Hale, head of research and insights at BNP Paribas Real Estate commented: ‘Reshoring is bringing ‘Made in Britain’ back to our products. There are a number of driving factors behind this including inflation, Brexit, the pandemic, the Ukraine war and the blockage of the Suez canal, which have massively impacted supply chains and overheads. As these occupiers fight harder for space, the activity will continue to put pressure on chronically short supply levels. Even so, acute supply-demand imbalances are likely to continue, especially as elevated construction costs start to weigh on future development pipelines. In turn, this will fuel further rental growth, albeit at more moderated levels.’
Logistics providers saw take-up increasing 35% y/y, while retailer take-up was on H1 2021 levels at 668,901 m2.
Turnover reached £2.2bn (€2.6bn) in Q2, down by half compared to 2021's record second quarter, while half-year volume amounted to £6.8bn (€8bn), a drop of 15% y/y.
