According to Avison Young’s ‘Big box bulletin’ for Q3 2024, take-up of units over 100,000ft² totalled 4.5 million ft² in the third quarter of the year. This result takes year-to-date volumes to 15.6 million ft², 21% ahead of last year.
Avison Young has noted that this signals that ‘sentiment has seen encouraging improvement and is translating into deals’. It acknowledged that ‘take-up volumes for the quarter do, however, remain below their five-year Q3 average’, but said ‘the comparison is skewed due to the exceptional demand during the global pandemic’.
Furthermore, the data has shown that Grade A supply at the end of Q3 2024 totalled 49.9 million ft², spread across 217 units. This, Avison Young identified, represents an uplift of 5% from the previous quarter.
The commercial real estate services firm described the Midlands as a ‘hotbed of activity’ still, pointing towards the fact that deals in the Golden Triangle ‘account for 51% of all leasing activity this year’.
Andrew Jackson, principal and managing director for industrial at Avison Young, commented: “Despite elevated stock levels and a notable imbalance in available shed sizes, prime headline rental growth remains robust, especially in prime locations.
“Regions experiencing the most significant year-on-year growth include the North West, London and the South East, and the East and West Midlands, where prime headline rents now punch into double digits at £10.25 per ft².”
‘Investment into the single-let big-box distribution market has been limited this year, with investors remaining cautious amid macroeconomic headwinds,’ Avison Young said.
However, it predicts an economic recovery in Q1 2025, driven by the ‘newly elected Labour government, falling inflation and further anticipated interest rate cuts’. This, it anticipates, will ‘spur more activity, as it is already doing across the multi-let asset classes, as investors still believe in the robust fundamentals of the sector’.
For more on the big sheds property market, look out for the features within the dedicated Property section in the November issue of Logistics Manager.
