UK logistics market - occupier market H1 2021 summary

Record levels of take up
Preliminary figures for H1 2021 show 30.8 million sq ft of take up (units over 50,000 sq ft Distribution firms and online retailers continue to take space as they expand their online and home delivery capacity Retailers and distribution companies collectively accounted for 76% of take up so far this year.

Online sales accounted for 28% of retail spend in 2020 up from 19% in 2019 and in the first five months of 2021 this rose to 32%. As lockdown measures ease further in the second half of the year, the proportion of internet sales will decline, yet online platforms will continue to play a much bigger role in the retail market than they did pre pandemic and this will necessitate more structural changes in retail supply chains.

Online retail sales are forecast to rise over the next few years. The rest of 2021 will see continued demand driven by long term strategic planning from operators, bringing forward their ecommerce growth strategies.

Manufacturing demand rising
The Covid 19 pandemic and associated economic uncertainty weighed heavily on the UK manufacturing sector in 2020. Manufacturing orders dropped sharply, supply chains were disrupted and some production lines were shut down Brexit only added to the worries for many manufacturing firms and expansion or relocation plans were put on hold.

However, many manufacturing firms have seen a reversal in fortunes in H1 2021 and this has led to an uptick in take up. Manufacturing firms have accounted for 19% of take up in the first half of 2021.

New Sources Of Demand
In the first half of the year, electric vehicle manufacturers LEVC and Arrival both took additional space Arrival recently expanded their existing base at Axis 9 in Bicester London. Electric Vehicle Company (agreed a lease on 166,000 sq ft at DC5 Prologis Park Ryton, Coventry Both Arrival and LEVC focus on the production of electrically driven vehicles for the commercial sector, with firms increasingly demanding smarter, more sustainable fleet vehicles.

There have been other growing sources of occupier demand, such as film studios Both Warner Brothers and Garden Studios have taken space in London and the South East in the first half of 2021 The media sector has also been a growing source of demand in Wales, with Great Point Media and Urban Myths Filming both taking space last year.

Construction industry producers and suppliers have also been active in acquiring space so far this year.

Find out more in our UK Logistics Market Mid Year Review.