commercial property lambert smith hampton

News - 04/03/2015

Record year for industrial market

2014 was a record-breaking year for the UK industrial and logistics sector, according to new research from national property consultancy Lambert Smith Hampton, as take-up reached new heights, investment activity hit previously unseen levels and speculative development returned in a meaningful way.

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The latest edition of the company’s annual Industrial & Logistics Market Report, published today, reveals that take-up rose by 8% from 2013’s level to reach 103.3m sq ft. This was the result of robust economic expansion and the continuing structural change in the retail and distribution sector caused by the growth of online shopping.

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West Midlands leading the way

Although the majority of UK regions posted an increase in take-up year-on-year, the West Midlands region was key to overall performance. The region saw record take-up of 19m sq ft in 2014, boosted by a number of sizeable build to suit transactions.

But grade A take-up low

The strong recovery in demand has put the supply of industrial stock under acute pressure and started to influence the nature of occupier activity: despite considerable demand, grade A take-up was actually the lowest on record last year.

Rental growth to continue

With economic growth forecast to strengthen and with availability diminishing, Lambert Smith Hampton predicts that prime and secondary rents in many markets will surpass their pre-recession highs in the next 12 months and up to 4.4m sq ft of new space could commence construction on a speculative basis during 2015.

Investors to look for higher returns?

In the investment market, a record £6.6bn of industrial assets changed hands in 2014, highlighting the sector’s positive fundamentals. As prime yields harden, the authors expect investors to move further up the risk curve to secure higher returns and to increasingly consider development to secure scarce stock.

Steve Williams, national head of Industrial and Logistics at Lambert Smith Hampton, said: “The market has experienced unprecedented levels of demand and we expect this to continue for the remainder of the year, with speculative development going only some way to satisfy the pent-up demand for grade A space.

“Continued restriction of supply will see rents drive on to heights not seen since 2007/08.”




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