Knight Frank report sees continuing growth for UK e-commerce space

Investment into industrial and logistics property expected to reach record level in 2021

Knight Franks’ latest analysis of UK hub and spoke networks servicing online retail indicates that vacancy rates in urban areas have been driven down significantly because of the demand for urban logistics units.

The current vacancy rate for units under 100,000 sq. ft in urban locations is now just 3.2% nationally, and 3.1% in Greater London. 23.5% of space is now allocated to “spoke” facilities servicing last-mile deliveries.

Strong rental growth is seen in London. However, Sheffield in the North if England has the highest rental growth forecast for this year, seeing an annual growth rate of 7.8%.

Investment in the UK industrial and logistics sector has already exceeded the 2020 full-year total. Total investment turnover for the full 2021 year is expected to reach a record £13bn.

The industrial and logistics sector has exceeded other real estate sectors in terms of returns. Urban-based logistics assets have outpaced those outside large population centres.

According to Knight Frank’s head of Industrial and Logistics the surge in demand for urban logistics space has not only been driven by the growth in e-commerce but also by the need for supply chain resilience.

If e-commerce demand continues to grow as predicted, additional requirements for last-mile fulfilment could reach 12m sq. ft. However, urban space is limited and rents are rising so retailers and logistics operators are looking at operational efficiencies and use of space, via automation.

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