2024-10-10-莱坊-UK_Logistics_Market_Dashboard_August_2024_4页_1mb

Investment Market Summary

Core Content

The industrial and logistics investment market in Q2 2024 recorded total transactions of £2.5 billion, marking a 31% increase compared to the previous quarter. Despite being lower than the £3.3 billion recorded in Q2 2023, it remains marginally above the 10-year average for Q2 investment (£2.4 billion). REITs and Listed property companies accounted for 18% of the investment in 2024, up from 5% in 2023.

The equivalent yield for the industrial and logistics sector slightly compressed in July to 6.26% from 6.27% in June, but it is 25 basis points softer than the same period a year ago. Gilt yields hardened in July to 4.01%, but this trend reversed by the end of August, with gilt yields at 4.00%. The spread between gilt and industrial equivalent yields widened to 226 basis points in July.

Key Investment Trends

• Industrial Yields: Equivalent yield compressed slightly to 6.26% in July, but remained softer than a year ago.
• REITs Activity: REITs and Listed property companies have been more active in acquisitions this year.
• Notable Transactions:
  • ICG Real Estate acquired a 540,000 sq ft Amazon fulfilment centre in Chesterfield for £45 million.
  • Essar Energy Transition purchased Thornton Science Park, a 66-acre site from the University of Chester for around £120 million.

Performance Forecast

The table below outlines the forecasted total returns for the industrial and logistics sector, as well as other property types, for the years 2024 to 2028:

Occupier Market Activity

• Take Up: Q2 2024 saw a total take-up of 9.5 million sq ft, the highest since Q3 2022, and 21% higher than the previous quarter.
• Vacancy Rate: The UK vacancy rate at the end of Q2 was 6.9%, up from 6.5% at the end of Q1 2024. However, some regions saw declines, including Wales, West Yorkshire, and Scotland.
• Notable Take-Ups:
  • EVRi took two units in Sheffield and Avonmouth for their logistics network expansion.
  • Boyes purchased a 132,000 sq ft logistics unit in Scarborough for redevelopment into a distribution centre.

Rental Growth

• Annual Growth: UK Industrial rents grew at an annual rate of 6.3% in July, the same as the previous two months.
• Monthly Growth: Monthly rental growth was 0.38% in July.
• Forecast: UK industrial rents are expected to grow by 4.7% in 2024, slowing to 3.4% in 2025, with a CAGR of 3.3% from 2024 to 2028.
• Regional Growth: The South West is expected to see the strongest rental growth this year at 6.2%, while London leads in rental growth expectations for the five-year forecast at 4.2% CAGR.

Development Activity

• Completion Forecast: Approximately 22 million sq ft of industrial and logistics developments are expected to complete in 2024, with around 15 million sq ft already completed this year.
• Recent Development:
  • Henley Investment Management secured financial backing and purchased a prime 2.1 acre site in Fulham for redevelopment into a mixed-use scheme, including a 55,000 sq ft last mile logistics facility and a 276-apartment scheme.

Industry & Trade Trends

• Manufacturing PMI: The UK Manufacturing PMI rose to 52.5 in August, a 26-month high, reflecting solid expansions in output and new orders, as well as the strongest jobs growth for over two years.
• Supply Chain Pressure: The Global Supply Chain Pressure Index (GSCPI) rose to -0.09 in June, up from -0.33 in May, indicating continued supply chain issues, largely due to Red Sea disruptions.
• Occupier Expectations: According to the CBI Industrial Trends survey, 9% of manufacturers expect output to improve over the next three months, down from 25% in June.
• Job Vacancies: Job vacancies in the transport, logistics, and warehouse sector have risen steadily, with levels broadly in line with those recorded a year ago.
• Online Retail Sales: Online retail penetration (excluding auto fuel) rose slightly to 27.8% in July, from 27.4% in June. Online spending increased by 2.5% in July 2024 and 3.6% compared to July 2023.
• Online Grocery Sales: Online grocery retail penetration remained stable at 9.0% in July.

Key Contacts

• Claire Williams - Head of UK & Europe Industrial Research
  Email: Claire.Williams@knightfrank.com
  Phone: +44 20 3897 0036 / +44 20 7861 519

• 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, Industrial & Logistics Agency
  Email: Charles.Binks@knightfrank.com
  Phone: +44 20 7861 1146

Important Notice

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