Research article

London & The South East

London & the South East is a geographically large region and levels of supply remain critically low in many sub markets across the region, particularly around the northern and southern M25

▲ Valor Park MK203

Supply

■ Over the last seven quarters the amount of logistics units on the market has fluctuated between 23 and 27 units and currently stands at 24. This equates to a current supply of 3.94m sq ft, up from 3.57m sq ft in Q1 2017.

■ There are just four units on the market over 200,000 sq ft. Unit sizes increase as you move north of London as highlighted by Valor's MK203 and MK360.

■ Within the M25 supply of units over 100,000 sq ft remains severely limited, particularly in the North and South quadrants with no units currently on the market.

■ The level of Grade A supply has however fallen dramatically. The current speculative and second hand grade A supply is 1.8m sq ft across 10 units, down 50% from 3.6m sq ft in Q1 2016.

Figure 3

FIGURE 3Supply by grade

Source: kamaco Research

Take-up

■ 4.37m sq ft of warehouse space was transacted in 2017 across 23 separate deals. Whilst this was one more transaction that 2016, there was 5% less build to suit transactions meaning take-up was in line with the long-term average rather than the 6.2m sq ft transacted in 2016.

■ The level of second hand space transacted fell to its lowest proportion of the market since 2012, accounting for just 35% of all deals.

■ As with the national trend the level of build to suit fell by 1.01m sq ft, which equates to just 39% of the market, compared to 44% in 2016 and 42% based on the long-term average.

■ Over the year, seven units were let that had been constructed speculatively, which combined accounted for 1.12m sq ft. These included XPO logistics who leased 275,000 sq ft at DC2 Marston Gate and Coopervison who leased 100,000 sq ft at Mountpark Southampton and UK Mail who took 100,000 sq ft at Magna Park Milton Keynes. During 2017 the average void period for speculatively constructed units fell from 10 months to nine.

Figure 4

FIGURE 4Take-up

Source: kamaco Research

Development Pipeline

■ There are five units under construction and due to reach practical completion in 2018, which total 1.07m sq ft. Aside from Altitude, which is being developed by Gazeley and totals 574,000 sq ft, all units are under 200,000 sq ft.

Figure 5

FIGURE 5Development announcements

Source: kamaco Research

Table 1

TABLE 1Key stats

 

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Simon Smith

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