Completions of logistics units set to reach highest level since global financial crisis
Total completions of speculatively developed logistics units, more than 100,000 square feet, throughout 2018 are set to surpass this cycle’s peak, according to BNP Paribas Real Estate.
There is currently 3.6 million square feet under construction that is due to complete over the remainder of this year. Taking into account that more than 5.5 million square feet was delivered by September-end 2018, it is anticipated that newly completed units for the full year will total 9.1 million square feet, representing a high for this cycle, with another 3.8 million square feet currently scheduled to complete over the first half 2019.
The new data from BNP Paribas Real Estate also shows that 3 million square feet of speculatively developed units have been taken up so far this year, and a further 1.4 million square feet is currently under offer. Occupier demand remains strong for the best class A units in core locations.
The research also shows that national average void rates for buildings that are completed and let currently stands at 6.2 months, with the void for units that have completed and are available to let at 10.7 months. Regionally, the West Midlands has been the best performer, with the average void periods at 3 months and 10 months, respectively.
“While developer confidence in current market dynamics has led some to believe that increased speculative development could lead to a softening of rental levels, the occupier market has instead gone from strength-to-strength,” said Ben Wiley, head of industrial and logistics agency at BNP Paribas Real Estate. “The ongoing demand for good quality logistics units continues unabated and void periods remain subdued in core locations.
“This encouraging replenishment of new development has been matched by occupier demand and, in some instances, this has resulted in new rental benchmarks being set on newly-developed units.”