Record breaking year for logistics driven by e-commerce demand

Take-up of logistics space in the UK reached record breaking levels by the end of 2020, as e-commerce continued to be the undisputed driving force behind the sector’s growth.

Take-up volumes for the year reached 49.8 million sq ft eclipsing the previous record of 40 million sq ft achieved in 2008 and 2018, , according to Cushman & Wakefield.

Take-up levels in the West Midlands during 2020 hit 6.4 million sq ft, an increase of 70% on 2019, not including several short-term transactions to satisfy immediate pandemic related issues.

E-commerce, led by the likes of Amazon, was the driving force of demand throughout the year as the sector rushed to secure additional space to meet soaring online sales during the COVID-19 pandemic.

It accounted for almost 38% of total annual take-up (including parcel delivery and postal operators), an all-time high. The two largest deals in the West Midlands were to 3PLs and retailers and accounted for over 1.1m sq ft of floorspace.

Cushman and Wakefield’s Birmingham team concluded ten acquisitions across the West Midlands with an average size approaching 60,000 sq ft during 2020, for high-profile clients such as HMRC, UPS, Truflow Marine, ERIKS and EON. These acquisitions included 100,000 sq ft for UPS Polarspeed and 120,000 sq ft for ERIKS.

Simon Lloyd, partner in the logistics and industrial team at Cushman & Wakefield in Birmingham, said: “2021, like 2020, is going to be a year of uncertainty. Post-Christmas trading figures are yet to be released and, as such, there may be some businesses that are forced to scale back which could bring back some supply to the market. The retail market maybe further impacted by the Lockdown 3 restrictions, benefitting those with a significant online presence.

“Whether or not we will see the high level of take-up in 2021 which was evidenced in 2020 remains to be seen, and it is possible that the overall level of take-up will reduce because supply has decreased. Indeed, Cushman & Wakefield is aware of occupiers with significant expansion programmes for 2021 which is likely to further reduce supply as developers finalise their speculative development plans for the year and beyond. In turn, this is likely to result in rental growth during the year.

“Brexit is also likely to start to play a new role in the Industrial market during 2021 and then into 2022 once new trading conditions and regulations are settled into. 2020 saw very little in terms of Brexit market activity in the Midlands apart from some Government related acquisitions relating to maintaining trade flows with the EU.”