Industrial market | Why is it outperforming others in 2019?

Industrial warehouse

The Industrial market is currently outperforming other property industries, we look at why the sector is currently going through a growth period.

  • Brexit is creating a strong storage and stockpiling market in the UK strong 

  • Online demand is pushing growth for storage space.

Brexit is creating strong storage and stockpiling market in the UK

A no-deal Brexit affects uncertainty in the economy, so the need for storage to stockpile food and medicine has driven the demand for warehouse and logistics space. Three-quarters of the UK warehouse owners say their space is full, with storage costs and enquires for space soaring by up to 25%.

The UK Warehousing Association commented that there was a shortage of space close to major cities for stockpiling goods in case of holdups at ports after a no-deal exit from the EU and a survey of the association members found that 85% had received Brexit-related inquires with 75% unable to take on more business from new customers. The prospect of a no-deal Brexit is still on the radar for many businesses and the uncertainty around what exactly will happen has driven the demand for storage and logistical space.

 

Online demand is pushing growth for storage space.

As online shopping dominates most markets, the need for more storage space is greater than ever. With retailers the most active source of demand in 2018 accusing of 40% of industrial and storage space, according to a report by JLL, ‘’ The further growth of online sales will also continue to drive demand for logistics space this year’’.

With take-up of commercial property, especially in the North East surging to 7.8 million sq ft in 2018, the growth in industrial and logistics comes down to the UK’s evolving e-commerce sector and the constant demand to store goods bought online.

 

''Industrial rents are forecasted to grow on average 2.1% per annum over the next four years''

 

The lack of low-level industrial development units is driving rental growth.

According to JLL industrial and logistics market report, the lack of development on small scale industrial units is driving the price of rents, with a major focus on the development of large-scale industrial units, the demand for quality small industrial units is outweighing supply.

Examples of this being in cities like Glasgow, with a lack of supply and limited new-build activity, particularly in units of 5,000 sq ft or less, this is a key theme throughout the UK industrial market.

At Hurstwood we know the demand for quality industrial units is high, that is why we are refurbishing Leigh Business Park in Meadowcroft Way, Leigh, with 21 new high-quality industrial units, keep an eye out on our social media channels for more updates on the progress that is going on at Leigh.

 

 

 

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