Q4 Most Active Quarter for the Industrial Market for Two Years

Posted by Colliers on 29th January 2025 -

Take-up in industrial warehouses of 100,000 sq ft plus reached its highest for two years in the last three months of 2024 with 8.8 million sq ft of units being leased – the most active quarter since Q3 2022, according to Colliers Industrial & Logistics team’s latest analysis.

Q4 2024 brought the overall big box industrial take-up figures to 28.2 million sq ft for the 12-month period, an 18 per cent increase year-on-year. The Midlands was the area in most demand among occupiers with circa 60 per cent of take-up taking place in this region due to its strategic central location for tenants who have been reconfiguring their supply chains in recent years. 

Retail/wholesalers and 3PL/storage occupiers were the most active in 2024, taking 30 per cent of stock each, followed by the manufacturing sector (22 per cent), other occupiers (nine per cent) and pure-online retail (six per cent). The remaining three per cent was classified as unknown or confidential. 

Colliers Research for the latest Industrial Rents Map update identified that average prime rents across the UK for large distribution warehouses (100,000+ sq ft) rose to £11.50 per sq ft, reflecting a 5.4% y/y increase, while prime headline rents for mid-box and multi-let units reached £15.15 per sq ft, up 4.3% y/y. Land values also remained stable with the UK average figures stationary at £2million per acre during the last 12 months.

Len Rosso, Head of Industrial & Logistics at Colliers said: “Due to global economic headwinds, the past few years have been somewhat challenging for occupiers and investors alike. What it is encouraging however, is the robust demand for prime space in core markets, is translating in take-up figures in line with the long-term average and generating significant rental growth.”

Speculative development of 100,000+ sq ft warehouses declined to nine million sq ft in 2024, from 20m sq ft in 2023. Colliers’ data shows that a similar amount will be developed speculatively in 2025. 

Supply of readily available units is currently sitting at 48 million sq ft, up five per cent q/q due to a combination of secondary space coming onto the market and the delivery of four million sq ft of speculatively build warehouse space. The vacancy rate now stands at 8.0%.

Andrea Ferranti, Head of Industrial & Logistics Research at Colliers added: “We have long observed that there would be a slowdown in speculative development as a result of market conditions. High borrowing costs for developers have kept a lid on land values and while recent Bank of England rate cuts signal a potential turning point, current financial market expectations of higher inflation and subdued GDP growth are driving bond yields upward, tempering optimism and slowing the pace of recovery.”