Stalled boardroom decision-making as a result of Brexit uncertainty has impacted industrial take-up for the first quarter of 2019, resulting in the lowest Q1 take up since 2013.
However, according to global real estate advisor Colliers International, this is just a temporary roadblock for the sector, with experts predicting that pent-up demand will produce a bumper year for take-up in 2020.
According to the Spring 2019 Industrial & Logistics Barometer, national ‘Big Box’ take-up (100,000+ sq ft) slowed to 4.9 million sq ft in Q1 2019.
In addition, there has also been a lack of mega-deals, with only two deals of 500,000+ sq ft occurring between January and March 2019.
Tom Watkins, Associate Director in the Industrial & Logistics team at Colliers International in the South West and Wales, says that recent speculative development at Central Approach, Avonmouth, and Bridgwater Gateway, is evidence that developers are confident the market will kick back into life once Brexit has been resolved.
“Industrial and logistics has been the undisputed standout performer over the last 12 to 18 months, successfully managing to navigate the unchartered waters of Brexit following the referendum in 2016,” he said.
“Despite a slow start to 2019, we believe that the fundamentals driving the market remain unchanged. Although the market is experiencing a slow patch, Colliers are expecting this to only last as long as the immediate uncertainty.
“There is pent-up demand for distribution space in the South West, and once occupiers are more comfortable with the status of the economy, they will want to move quickly to secure premises. The major speculative developments that are currently proposed at Central Approach and Bridgwater Gateway will be well placed to accommodate this demand.
“Over the 12-month period to the end of March 2019, the retail sector accounted for 56 per cent share of total take-up as the change in consumer behaviour remains the key market driver.”
Speaking in Bristol recently, Walter Boettcher, director of research and forecasting at Colliers International, predicted that an end to the Brexit impasse would “open the floodgates” to a spending spree among businesses of all types in the South West.
Andrea Ferranti, Head of Industrial & Logistics Research at Colliers International, added: “We are confident that, once occupier confidence returns and investment decisions are implemented by those retailers executing their online strategy, pent-up demand will produce a bumper year for take-up in 2020.”
The Colliers research finds that 2019’s scheduled completions will total circa 10.8 million sq ft nationally, up 55 per cent on the total space completed in 2018.Len Rosso, Head of UK Industrial & Logistics at Colliers International, said: “Looking ahead, requirements by occupiers to bolster operational efficiency and reap the benefits of growing e-commerce demand will support the market this year. We fully expect this to translate into steady take-up in 2019, in line with the 10-year average, and a stand-out year in 2020.”