Analysis conducted by Avison Young has highlighted a rebound in the uptake of grade A big-box distribution units over 100,000ft² in 2024.
A total of 21.2 million sq ft was leased throughout the year, an 11% increase from 2023, despite remaining 33% below the five-year average – a comparison skewed by an upsurge of demand during the pandemic.
At the close of 2024, grade-A supply stood at 51.6 million sq ft across 220 units, representing a 9% increase from the previous year.
Of this, 41% are newly completed speculative units, while 39% are second-hand units and 20% are still under construction.
However, a significant shortfall remains in the supply of larger units, particularly mega sheds of 400,000ft² and above, with only 10% of the current pipeline meeting this demand.
Investment in single-let big-box distribution units saw a dip in 2024, with total spending amounting to £1.04bn, down 12% from 2023 and 62% below the five-year average.
£423m was invested in single-let distribution units in Q4, up by 116% compared to the previous quarter.
Avison Young reports that this resurgence suggests a more favorable outlook for 2025, with further activity anticipated in the coming year.
Principal and managing director, industrial and logistics at Avison Young, David Willmer, said: “Looking ahead to 2025, the outlook is more positive, driven by a decline in inflation and anticipated interest rate cuts, although at a more gradual pace than originally expected.
“This should stimulate greater activity in the capital markets, while the sector’s potential for delivering strong returns compared to its peers remains clear.
“Despite high stock levels and an imbalance in shed sizes, prime headline rental growth continues to be resilient, particularly in prime locations, underlining the strength of the industrial and logistics market.”
