UK logistics Investment market H1 2021 summary

Investment market activity

Strong occupier market dynamics continue to drive activity in the investment market Investment into UK industrial and logistics totalled a record £60 billion in H1 2021 more than double the £2.7 billion recorded in H1 last year and up 54% on the previous record H1 in 2018.

Overseas investors have accounted for just over half of the total spend so far this year. This is higher than in previous years, in 2020 overseas investors represented 44% of investment and 38% in 2019. While buyers from the US continue to dominate, there has been a rise in capital coming from Middle Eastern investors. In February,  Bahraini Investcorp acquired a portfolio of industrial assets in South Wales for £69 million.

The favourable structural trends in the online retail market and robust occupier market are also attracting new sources of capital to the UK logistics market. Investors that have traditionally focused on retail and office are increasingly seeking to diversify their holdings and tilt their portfolio towards logistics. For example, British Land recently announced a shift in their strategy, seeking to target fulfilment and urban logistics. They acquired their first logistics asset, a Waitrose fulfilment centre located in North London for just under £90 million earlier this year. 

Portfolios and platforms

Portfolios have also been an important part of the investment market of late, accounting for a third of the total transacted in H1 2021 on a par with the level recorded in 2020 and up from 21% of the total in 2019. Most individual industrial and logistics assets lack the scale required by institutional investors who look to deploy large amounts of capital through a single transaction. Bundling assets into a portfolio can provide institutional investors with the required lot size. One of the largest portfolio deals so far this year is the BentallGreenOak acquisition of seven assets located across the UK, for £303 million in February 2021.

Blackstone have been highly acquisitive in the first half of 2021. They are currently in the process of finalising a c.£1.27 billion take over bid of property development company St Modwens. Half its portfolio by value is focused on industrial and logistics assets, while the remainder is dedicated to housebuilding and regeneration projects.

Blackstone also acquired the Albion Portfolio from Westbrook Partners for £283 million in May 2021 and purchased the Vantage Portfolio from Infrared Capital Partners for £187 million for Mileway their European last mile logistics platform. Blackstone are currently in talks to acquire Asda’s logistics portfolio for around £1.7 billion, the assets are to be sold on a sale and leaseback basis, on a 25 year full repairing and insuring lease (FIR) lease yielding 4%.

For more details please read our UK Logistics Market Mid Year Review 2021