According to Savills, take-up of industrial warehouse space in the UK is set to exceed 50 million square feet by the end of 2020, this is largely due to the growth of online sales as a result of the Covid-19 pandemic.
The real estates data has shown that online retail accounted for 37% of the 46.8 million square feet of take-up to date, 29.6% of which has been taken by Amazon.
Consequently, due to the significant demand from a “cross sector of occupiers” grade A supply is suggested to be at its lowest level since 2016, with the national vacancy rate now averaging 6.01%.
In response, “speculative announcements” have reportedly picked up in Q4, with 8.54 million square feet of warehouse space now under construction and due for delivery in 2021.
Kevin Mofid, head of industrial and logistics research at Savills, said: “Even with a month still to go until the end of 2020, the sector has reached unparalleled heights and demand remains strong as we head into the new year.
“However, despite the current supply and demand imbalance, we are seeing the availability of second hand stock creeping up, which could increase further still as we see more tenant defaults as a result of the ongoing economic uncertainty.”
Richard Sullivan, national head of industrial and logistics, added that this year has proven just how “critical industrial and logistics” is to keeping the UK moving.
He said: “With new sectors emerging and existing ones constantly evolving, we must ensure we have the right size space in the right locations to cater to this demand and it is encouraging to see speculative announcements pick back up in line with growing confidence.”