Logistics space shortage pushes up prices

The battle for logistics space is continuing to intensify despite the cost of living crisis and shoppers’ return to the high street, according to new data.

Demand for warehouses soared during the pandemic as shoppers increasingly moved online.

However, new figures from real estate experts at Colliers reveal that take-up and prices for logistics space have continued to increase despite the easing of restrictions and pressure on consumer spending.

Andrea Ferranti, head of industrial and logistics research at Colliers, said the development of new sites is unable to keep up with demand.

“The demand is huge and the speed of developments means we don’t see any significant change in the next 18 months,” he said.

“It’s really difficult to get planning for these sites and there are a lot of requirements when it comes to locations and size, so that limits the ability for growth too.

“Construction costs are soaring and there are other cost pressures on the occupiers, so this becomes the latest pressure if they want to keep up with online momentum. And most can’t afford to miss out.”

Colliers said take-up for large units – more than 100,000sq ft – grew to a total of 11.3 million sq ft this year.

The company said this represents an 11% rise on the five-year average for the quarter, and a 1.9% monthly increase.

It added that logistics site availability meanwhile has dropped by 22.4% year.

Len Rosso, head of industrial and logistics at Colliers, said: “The supply and demand imbalance for industrial space shows no sign of lessening despite the efforts of developers.”