Prime Logistics Bulletin - Q2 2019

Prime Logistics is an essential tool for any developer, investor or occupier interested in the market for logistics buildings over 50,000 sq ft in size across each of the UK’s 26 key distribution markets. Inside the bulletin, we take a balanced look at each segment of the market and provide you with a brief snapshot of our view of quarterly activity.

Bounce back in occupier demand in Q2

Following a subdued Q1, which was the weakest quarter since Q4 2017, occupier demand totalled 12.7 million sq ft in Q2, marking a 23% quarterly increase. This is the strongest level since Q2 2018 and is above both the 5 and 10-year quarterly averages. Whilst it has been an erratic first half of 2019, the elevated levels of take-up in Q2 highlight the continued appetite for logistics space in the UK.

Also encouraging was the large number of individual deals agreed in Q2. We recorded 88 individual transactions, a 21% increase on Q1 and the most quarterly deals concluded in one quarter since Q2 2016. Of note, in Q2 we also saw a considerable increase in the take-up of smaller units (sub-150,000 sq ft) compared to previous quarters, which were crucial to the increased levels of demand.

While the largest deal this quarter was a secondhand deal – the sale and leaseback of Sports Direct’s 1.8 million sq ft campus in Shirebrook near Mansfield, more broadly, we have seen an increase in the quality of space taken-up. Of particular note, occupiers continued to commit to speculative units and we recorded 15 such units let in Q2, totalling 1.9 million sq ft.