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Tuesday, 23 April

Industrial Property Market Makes Most Moves

Warehouse

JLL’s latest Industrial Tracker report highlights the industrial market as the shining star of the property market, with strong rental growth boosting overall returns for the sector.

The Tracker (published as Spring 2019) monitors and comments on the state of the standard industrial market, involving small and mid-sized boxes. With generally modest levels of supply and robust occupier confidence, developers demonstrated a wider focus on speculative development last year.

At the start of 2019, JLL recorded over 12 million sq ft of industrial and logistics floorspace speculatively under construction nationally. However, much of this space was ‘big box’ (100,000 sq ft and over) logistics space. The report suggests that continued low levels of speculative development of smaller industrial units could dampen supply levels and drive further rental growth.

As 2018 was a positive year for occupiers, with steady demand and stable take-up, supply continued to fall across many regions or maintained stability from its low base level.

 

High level findings include:

During 2018, the level of demand was reported as stable compared with 2017 in 8 out of 11 regions, with agents highlighting an increase in demand in the North-West, East Midlands and West Midlands.

Nationally, JLL rental growth data shows an unweighted average growth rate across the country of 8% in 2018.

The overall total return delivered by the UK industrial market was strong in 2018 at 15.5% (according to the MSCI Quarterly Index), significantly outperforming offices (6.2%) and retail (-0.3%) sectors. Standard industrial recorded a total of return of 16.7% and distribution warehouses recorded a return of 12.9%.

Andy Harding, JLL's lead director of industrial and logistics said: “With strong occupier demand and modest supply, the industrial market had another solid year in 2018. From an investment perspective, the industrial sector has proven again to be the standout performer amongst the main commercial property types, outperforming both retail and offices.

Despite a backdrop of political and economic uncertainty from Brexit, cities continue to grow as does the need to service them. Our predictions suggest that strong demand and supply fundamentals will drive another robust year.”

Picture: There are good rentals and positive building growth in the industrial & warehousing property market - which suggest that FM contractors should be offering more services in the sector.

Article written by Brian Shillibeer

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