The 2015 edition of our annual Industrial & Logistics Market Report 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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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.

 
With economic growth forecast to strengthen and availability diminishing, we predict 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.

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, we expect investors to move further up the risk curve to secure higher returns and to increasingly consider development to secure scarce stock.