The industrial and logistics sector is having quite a moment. Driven partly by insatiable demand from online retailers and attracting droves of investors as a result, the sector has gone from strength to strength in the past few months.
Take-up in Q1 this year reached 9.8m sq ft – the highest first quarter on record – but with rental growth high and land prices soaring to more than £3m per acre in some locations, the question now is whether industrial and logistics is in a bubble and, if so, is that bubble about to burst?
It is a question that will have been hotly debated at Property Week’s Industrial & Logistics Conference this week, but the consensus from the experts we spoke to for this week’s supplement is: no. Sure, the market is inflated and a natural correction could take place, but the fundamentals remain robust. Indeed, forecasters predict that the industrial market will be the top-performing core asset class until 2022 and potentially beyond.
GLP’s €2.4bn (£2bn) acquisition of Gazeley in December was a sign of continued confidence, as is the company’s activity since – it approved more deals in the first four months under GLP’s ownership than it had over the previous two years. Perhaps most interestingly, it announced its intention to build a three-storey shed at Silvertown in east London – the first in the UK.
If London mayor Sadiq Khan’s bid to make the most of employment land by encouraging intensification is successful, Gazeley’s scheme could be one of many. Some say occupiers are hesitant about multi-storey. It’s true that retailers are consolidating their distribution operations to make efficiencies, but demand remains high and with space scarce, multi-storey might well be the answer.
All in all, it seems that the only way is up for the industrial and logistics market.
Mia Hunt is Property Week’s market reports editor
Fears mounting over industrial and logistics bubble
- 1Currently reading
Fears are mounting over an industrial and logistics bubble
No comments yet