Despite continued economic & political uncertainty, demand for space in the ‘big box’ logistics sector is at an all-time high. There is an ever-increasing demand for construction of distribution centres, leading to excellent job opportunities for those in the construction industry. We take a look at what’s happening in the sector, and where the opportunities are;
How much distribution space are we building in the UK?
The record for the most amount of speculative distribution space constructed in 1 year, was 9million sq ft in 2016. Colliers’ bi-annual report estimates that this will be topped in 2019.
Which regions are performing well?
Colliers’ Rents Map suggests UK prime rents for multi-lets have increased by 6.6 per cent year on year, led by growth in the London (+10 per cent), West Midlands (+9 per cent) and South East (+8 per cent) markets.
Which clients have the most demand for space?
The research has pointed to a diversified eCommerce portfolio – while Amazon dominated the demand for space two years ago, a much more varied number of retailers are taking space to meet eCommerce demand now, including Pretty Little Thing, Asos and Wayfair.
Is Brexit affecting the market?
Reports about retailers stockpiling for a no-deal Brexit are sparking fears that warehouse space is running out. This is resulting in higher demand.
Len Rosso, Head of Industrial & Logistics, Colliers International, said in a statement: “While uncertainty around Brexit continues, in the Industrial & Logistics sector we are witnessing almost record levels of take-up as occupiers compete to future-proof their supply chains."
What patterns do we expect to see in 2019-2020?
In 2018, the retail sector accounted for a record breaking 54 per cent share of total take-up as the change in consumer behaviour continues to drive demand. Combined with growing land prices, this high level of occupier demand is putting upward pressure on rents and is encouraging developers to build speculatively.
Moreover, Savills have predicted that this pattern of growth will continue into 2019 as retailers continue to get their supply chains fit for purpose in order to compete with online giants such as Amazon in a new multi-channel world, with both Next and Marks & Spencer’s making significant financial commitments to upgrade their supply chains over the next few years. Savills notes that the average deal size is at its highest level ever, now standing at 281,000 sq ft which reflects this drive for expansion.
According to Savills latest Big Shed Briefing, take-up of industrial & logistics space (units of 100,000 sq ft + hit 34.1 million sq ft in 2018, a 32% increase on 2017 figures and 14.1 million sq ft above the long-term average. Despite the recent negative headlines retailers accounted for up to 53% of this demand.
What’s more, new entrants such as Wayfair are increasing their warehouse space exponentially. The US furniture retailer, who commenced its UK operations in 2016 from a 258,503 sq ft unit in Magna Park Lutterworth, has since agreed a pre-let for a 1 million sq ft build-to-suit facility. This signifies a 286% increase in floor space in just two years.
Richard Sullivan, national head of industrial & logistics at Savills, comments: “The industrial & logistic sector continues to remain robust despite recent headlines about the high street. Instead, retailers have woken up to the importance of focusing on efficiencies in their supply chains, which has resulted in an increase in take-up activity.”
So what’s in it for you?
The construction & fitout of distribution centres has consistently been one of the best performing and most profitable sectors of the industry in recent years. This trend looks set to continue for many years to come. With this, comes opportunity.
Demand for professional Project Management, Site Management, Site Engineering, Design Management, Quantity Surveying and Project Planning and Pre-Construction staff is at an all-time-high in this sector. With some extremely attractive packages on offer, it’s the perfect time to consider a move into distribution.
So how can you benefit?
I specialise in the recruitment of professional construction staff within this sector. My client portfolio consists of the Top-5 main contractors operating in this space, and also some smaller fast-growth privately owned firms seeking to bolster their teams.
If you’d like to hear about some of the fantastic job opportunities available, or just require some free impartial career advice, I’d really like to hear from you.
Please contact me directly via phone, LinkedIn or email – my contact details are;
Recruitment Consultant (Industrial & Distribution Sector)
07384 469 840