Industrial property investment to break £7bn
2020 has been a historic year for industrial & logistics, says Colliers, with the sector outperforming retail and offices, and reaching record highs for take-up and occupational demand.
The company predicts investment volumes for industrial assets will reach in excess of £7 billion before the year-end.
Colliers’ report goes on to state that take-up for distribution warehouses (that is units sized 100,000 sq ft +) topped 34 million sq ft in Q1-Q3 2020, 10.7% ahead of the figures for the whole of 2019. Demand has remained strong throughout the year and Colliers is predicting that annual occupational demand will reach a new record close to or over 45 million sq ft. Meanwhile, the average deal size reached a new record this year at 310,000 sq ft for the period Q1-Q3 2020, compared to 213,000 sq ft recorded back in 2013.
“With the national lockdown earlier this year bringing both occupier and investment activity to a halt, the sector has rebounded very quickly and now is stronger than before the pandemic struck back in March,” said Colliers International head of industrial & logistics research Andrea Ferranti. “The industrial sector has witnessed strong demand from overseas and national investors. As a result, there has been more yield compression in 2020 for well-let, prime distribution warehouses, as well as multi-let opportunities in close proximity to urban centres. Given, we do not expect the Bank of England to raise its base rate (0.1%) in 2021, it would not be unexpected to see further mild yield compression in 2021.”
