2025-03-12-莱坊-UK_Logistics_Market_Dashboard_February_2025_4页_950kb

Investment Market Summary

Core Content

The document provides an overview of the UK and European industrial and logistics real estate markets, including investment activity, returns, rental growth, development completions, and occupier market trends. It also highlights the current state of the manufacturing and online retail sectors, which influence the demand for industrial space.

Investment Activity

• Total Investment (Q4 2024): Strong investment activity continued into early 2025, with £592 million invested in the first two months of the year.
• Annual Investment Forecast: The Q1 investment total is expected to exceed that of the past two years.
• Investor Trends: Overseas investors have shown strong activity, while institutional capital has been underrepresented compared to previous years, with expectations of a shift as the year progresses.
• Yield Trends:
  • Ten-year gilt yields increased slightly in January 2025 to 4.52%.
  • Industrial equivalent yields also hardened, reaching 6.19% in January, a 170bps premium over gilt yields.
  • Significant transactions include Tritax Big Box REIT purchasing the Sainsbury's distribution centre in Haydock for £75 million with a net initial yield of 6.0%.

Total Returns

• Industrial Total Returns (Annualized):
  • 2024: 8.4%
  • 2025: 10.8%
  • 2026: 9.0%
  • 2027: 8.0%
  • 2028: 6.9%
  • 2025-2028 CAGR: 8.7%
• Office, Retail, and Other Sectors:
  • Office: 8.4% CAGR
  • Retail: 8.4% CAGR
  • Other: 8.1% CAGR
  • All Property: 8.4% CAGR

Occupier Market Activity

• Take Up (Q4 2024): 8.0 million sq ft, similar to the previous year.
• Annual Take Up (2024): 35.7 million sq ft, significantly higher than 2023's 30 million sq ft.
• Vacancy Rate (Q4 2024): 7.3%, up slightly from 7.2% in Q3, but stabilising.
• E-commerce Trends:
  • E-commerce has been a weaker driver in recent years, but there are signs of rebase post-pandemic.
  • Amazon is actively expanding, seeking additional space for delivery stations and regional distribution centres.

Rental Growth

• Annual Rental Growth (Jan 2025): 5.4%, a slight deceleration from 5.9% in December.
• Monthly Rental Growth (Jan 2025): 0.22%, up from 0.59% in December.
• 2025 Rental Growth Forecast: Revised up to 4.0%, compared to a previous forecast of 3.7%.
• Regional Forecasts:
  • South East: 4.6%
  • North West: 4.5%
  • London: Expected to see the strongest gains over the next four years.
• Long-term Trend: Rental growth is expected to slow through 2026/27.

Development Activity

• 2024 Development Completions: Approximately 20 million sq ft of new industrial and logistics space.
• 2025 Development Pipeline: Indicates an increase in new supply, with around 5.5 million sq ft already completed and an estimated 30 million sq ft under construction.
• Supply Constraints: Despite high vacancy rates, supply constraints remain in many areas, especially for high-quality units, which is driving development activity.

Industry/Trade Trends

• Manufacturing PMI Index: Continued to face tough conditions in February 2025, with weak demand and rising costs.
• Expectations for Future Output: Manufacturers are more optimistic about future prospects, expecting a modest rise in volumes in the three months to May.
• Online Retail Penetration:
  • 26.8% in January 2025 (down from 27.3% in 2024).
  • Online grocery penetration: 8.9% in January, up from 8.8% in January 2024.
  • The online grocery market has not declined as sharply post-pandemic as the broader online retail market.

Key Contacts

• Claire Williams: Head of UK & Europe Industrial Research
  • Email: Claire.Williams@knightfrank.com
  • Phone: +44 203 897 0036
• Johnny Hawkins: Head of Logistics & Industrial
  • Email: Johnny.Hawkins@knightfrank.com
  • Phone: +44 20 7861 1519
• Will Gubb: Head of Industrial & Logistics Capital Markets
  • Email: Will.Gubb@knightfrank.com
  • Phone: +44 20 7861 1595
• Charles Binks: Partner, Head of Industrial & Logistics Agency
  • Email: Charles.Binks@knightfrank.com
  • Phone: +44 20 7861 146

Important Notice

• This report is for general information only and should not be relied upon.
• Knight Frank LLP does not accept any responsibility or liability for loss or damage resulting from reliance on the content.
• The views expressed do not necessarily reflect those of Knight Frank LLP.
• Reproduction of the report is not allowed without prior written approval.