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Q2 2024 Forecast for Industrial and Logistics Property

The forecast for industrial and logistics property during Q2 2024 sees positive trends continuing, likely they will define the market during 2024.

The UK industrial and logistics market is performing strongly and there are signs that the challenges of 2023 may be behind us. In fact, the data shows that the market is not only performing more healthily now, but it is also set to continue doing so in the years to come.

Over the course of Q1 2024, Cushman & Wakefield recorded 55 transactions of logistics and industrial units sized at 50,000 sqft or larger. In total, more than 9 million sqft was transacted in the first three months of the year – a total which puts 2024 so far at a higher level than Q1 2023 and the 10-year average for the quarter.

Botany Bay Business Park Chorley

In turn, the total available space fell for the first time since 2022, with 64.8m sqft of space available. Interestingly, this fall was driven not just by high levels of take up.

A large factor in the amount of available space falling is the quantity of Grade C and B space being taken off the market for refurbishment. The ‘flight to quality’ has been a feature of all sections of the UK property market in recent years, and it appears that developers and property owners are responding by upgrading their existing assets.

Lambert Smith Hampton reported in Q1 that Grade A space accounted for 70% of all take up last year, and the same appears to be the case so far in 2024.

Reasons for this include the growing demand for ESG compliant space and a growing aversion to ‘second-hand’ stock. Environmental concerns are more important than ever and older stock simply does not meet the standards that many companies now seek.

If you need to cut your carbon emissions, why would you choose a building that is leaky, inefficient and not up to the job? Instead, spaces like those at Wrexham Industrial Estate with strong BREEAM ratings will continue to be more popular.

Wrexham Industrial Estate

Turning to the latest market report from CBRE, we can see that another popular area in the market is smaller box units. The average deal size in the quarter according to the data was 223,000 sqft which is lower than the 12-month rolling average and points to an increase in two things. Firstly, smaller firms moving around more, and secondly larger firms taking smaller spaces to diversify their stock.

CBRE also notes that the majority of take up in Q1 2024 was for third-party logistics firms and manufacturing businesses. This is, again, a continuation of 2023 trends where major distributors such as Amazon are growing their warehouse space in preferable areas to deal with increased capacity thanks to the e-commerce boom.

That means spaces located centrally like Hay Hall Business Park in the West Midlands, or spaces with outstanding transport links like Botany Bay Business Park in the North West, are likely to prove incredibly popular over the rest of the year and beyond.

Hay Hall Industrial Business Park

Finally, looking ahead we can see that overall investment volumes into new stock are down according to Cushman & Wakefield. Total investment into industrial and logistics property in Q1 2024 was £1.3bn, significantly down on the 5-year average for the quarter of £2bn.

This means that companies looking to secure new industrial property to rent should move quickly. Combine the lack of new investment with the drive for Grade A space and you get a sector where the best spaces will be in extremely high demand in the coming months and years.

It also means that companies can’t rely on the same volume of new space coming to market in the near future – another reason the rent industrial property and logistics property now if you are planning to do so in the next few years. Getting ahead of the game is likely to pay dividends in the future.

Want to learn more about industrial property to rent near you? Browse our availability and get in touch with the team today.

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