Having dominated take-up in the industrial and logistics sector in recent years, online retailers are starting to take less space, while 3PL, manufacturing and automotive industry take-up is increasing, reveals new data from Savills.

Data I&L 29 april

In 2020 and 2021, online retailers accounted for just over a third of all industrial and logistics take-up, while third-party logistics operators accounted for just over a quarter of total take-up. However, online retailers account for just 13% of take-up in 2022 to date, compared with 36% for 3PL operators, markedly down on the three-year average of 28%.

“This is partly due to businesses outsourcing via third-party logistics operators, who, as a result, are requiring more space, increasing their market share from 29% in 2020 to 36% in Q1 2022,” says Will Laing, industrial research analyst at Savills.

Laing says the data also highlights another interesting trend. “Following political and economic uncertainty, we have also seen an increase in manufacturers and automotive firms acquiring space, accounting for 21% of the total take-up so far in 2022, after being largely inactive in the last few years,” he says.

While the type of organisation taking space is evolving, one thing that has not changed is the rate of activity. In Q1 2022, Savills’ data shows take-up hit 12.7m sq ft – a new record for a first quarter, exceeding the long-term average by 79%. The company recorded 43 transactions in Q1 – considerably higher than the average first-quarter figure of 29.

However, there could be trouble ahead, warns Laing. “On the supply side, available space has fallen to its lowest-ever level and now stands at 16.75m sq ft, a fall of 46% since this time last year,” he says. “This reflects an average nationwide vacancy rate of just 2.77%, falling to as low as 1.26% in the East Midlands.

“While there is 20.4m sq ft under construction, a significant proportion of this is already under offer, meaning supply will remain constrained for the foreseeable future. These market dynamics will continue to push occupiers towards build-to-suit deals, which rose to 40% of the market in Q1 by unit count.”