2025-05-19-莱坊-UK_Logistics_Market_Dashboard_April_2025_4页_1mb

Summary of the Industrial & Logistics Investment Market

Core Content Overview

This document provides an analysis of the UK industrial and logistics investment market, focusing on investment trends, returns, occupier activity, rental growth, and development activity. It also includes insights into the broader industry and trade context, particularly the manufacturing sector and online retail growth. The report references data from Knight Frank Insight, MSCI, RealFor, and other sources to support its findings.

Key Investment Highlights

• Investment Total:

  • The final Q1 2025 investment total reached £1.6 billion, a 10% increase compared to Q1 2024.
  • Q2 2025 transactions have been affected by global market uncertainty and US tariff policies, which have introduced volatility and led to a more cautious approach by investors.

• US Capital Contribution:

  • US capital accounted for 38% of total investment in the UK industrial sector in 2024 and 81% of overseas investment.
  • In 2025, US capital's share has decreased to 27% of total investment and 46% of overseas investment, suggesting a shift in investment focus.

• Potential for Future Investment:

  • Some US investors may seek to diversify out of the US due to economic uncertainty and stagflation risks, potentially boosting UK industrial investment.
  • The UK logistics market is attractive to US investors due to similar lease structures, e-commerce growth, and ease of doing business (language, transparency, legal system).

• Yields:

  • Ten-year gilt yields softened in March 2025 to 4.67%, up from 4.51% in February.
  • Industrial equivalent yields rose slightly to 6.22% in March, up from 6.20% in February.
  • The industrial yield was a 155bps premium over gilt yields in March.
  • A £74 million forward sale of a 390,000 sq ft warehouse in Avonmouth, Bristol, was reported, representing a 5.7% yield.

Returns and Growth Projections

• Total Returns:

  • Annual total returns for the UK industrial sector reached 10.40% in March 2025, the first time exceeding 10% since September 2022.
  • This was up from 9.88% in February 2025.

• Growth Forecast:

  • Industrial returns are forecasted to be 8.4% in 2024, 10.8% in 2025, 9.0% in 2026, 8.0% in 2027, and 6.9% in 2028, with a CAGR of 8.7% from 2025 to 2028.
  • Office, Retail, and Other sectors also show positive growth forecasts, though All Property is expected to grow at a slower rate (CAGR of 8.4%).

• Rental Growth:

  • Annual rental growth for the UK industrial sector in March 2025 was 5.4%, down slightly from 5.5% in February.
  • Monthly rental growth was 0.49% in March, up from 0.38% in February.
  • Forecasted rental growth is expected to slow throughout 2025, with an annual growth of 4.0% projected by year-end.
  • Rental growth is anticipated to continue declining through 2026/27.

Occupier Market Activity

• Take-up:

  • Q1 2025 saw 8.3 million sq ft of take-up (units over 50,000 sq ft), up from a preliminary figure of 8.1 million sq ft.
  • Occupier activity was relatively weak due to rising operating costs (higher NI contributions and minimum wage) and uncertainty in international trade.

• Vacancy Rate:

  • The UK vacancy rate stood at 7.3% at the end of Q1 2025, stable quarter-on-quarter.

• Q2 Activity:

  • There has been notable occupier activity in Q2, with large buildings under offer, including Panattoni's Avonmouth 885, the largest speculatively built warehouse in the UK.
  • These transactions indicate strong demand for large warehouses and are expected to further reduce vacancy rates in this size bracket.

Development Activity

• Completions in 2024:

  • Around 20 million sq ft of new industrial stock was completed in 2024.

• 2025 Development:

  • 7.8 million sq ft of new stock is expected to reach PC (pre-construction) this year.
  • An additional 24 million sq ft is under construction and expected to complete later in 2025.
  • These figures may change as completion dates are revised.

Industry & Trade Context

• Manufacturing PMI:

  • The S&P Global UK Manufacturing PMI for March 2025 was 45.4, slightly above the 17-month low of 44.9.
  • Manufacturing output volumes were broadly unchanged in the quarter to April, with a marginal decline expected in the next three months.
  • Manufacturers are downbeat about future prospects due to rising costs, declining new orders, and global economic uncertainty.

• Global Supply Chain Pressure Index (GSCPI):

  • The GSCPI remains near zero, indicating supply chain pressures are in line with historical averages.
  • Shipping costs are still elevated due to the Red Sea crisis, with shipping rates from the Far East to North Europe rising by 39%, and to the Mediterranean by 68%.
  • The US-Houthi ceasefire has not led to a return to the Red Sea route yet.

• Online Retail Sales:

  • UK online retail sales have increased, with 26.8% penetration in March 2025.
  • Penetration rates are aligning with pre-pandemic trends, indicating structural growth in the online retail market.
  • This growth is providing confidence for retailers and logistics operators to expand.

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 2078611595

• Charles Binks

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

Important Notice

• This report is for general information only and should not be relied upon for decision-making.
• Knight Frank LLP disclaims all responsibility or liability for any loss or damage resulting from the use of the report.
• The views expressed are not necessarily those of Knight Frank LLP.
• Reproduction of the report is not allowed without prior written approval.