Growth in internet sales is likely to underpin the logistics property market this year, according to King Sturge’s Property Predictions 2011.
The research revealed that retailers accounted for 74 per cent of take up on new logistics units of more than 100,000 sq ft in 2010, of which at least 1.7 million square foot was linked to internet operations.
It is expected that activity levels will continue to improve in 2011, and King Sturge reckons this will be driven by retailers reconfiguring or expanding storage capacity to cope with the growth in internet sales, rather than in the high street.
In fact, Mintel forecasts have suggested that UK internet sales could grow by seven per cent per year faster than all retail sales from 2010 – 2014, to reach 9.1 per cent of all retail sales in 2014.
As such Tim Johnson, partner, industrial agency, King Sturge, said a growing number of warehouse requirements to service internet operations, from both multi-channel and internet only retailers, have been seen.
Johnson reckons the market is improving, but he expects this year to remain fairly subdued on the whole. Demand for prime property in prime locations is high and overall the mood is “optimistic” but according Johnson there is a 35 per cent reduction in available space.
As such, King Sturge anticipates there will be a gradual increase in speculative development towards the end of 2011, providing there are no further major setbacks in the economy.
Any development that does take place in the big shed market is likely to be in the London and South East, and possibly in the Midlands and Golden Triangle area.
