Retailers Continue to Drive Demand for UK Logistics Property - Latest Market Insights from JLL's Research Team

In the 12 months to the end of March 2015, some 18.4 million sq ft of warehouse floorspace was taken up for occupation in Grade A facilities of 100,000 sq ft and over across GB,  according to JLL’s latest statistics.

Retailers were at the forefront of this demand, directly accounting for 42% of all floorspace transacted.  Logistics companies, who manage facilities primarily on behalf of retailers and manufacturers, accounted for 27%, whilst manufacturing companies made up another 24%. The remaining 7% of floorspace was taken by ‘other’ companies including wholesalers, parcel operators and the Royal Mail.

Retailer demand continues to be driven by requirements to service stores (for example to cater for sales growth or new stores openings) as well as growing online retail sales. According to the latest official statistics, total retail sales volumes (excluding automotive fuels)  increased by 4.7% in the 3 months to February 2015 compared with the same three months a year ago, and online spending represented 11.6% of sales in February 2015 compared with 10.8% 12 months earlier.

The Sheffield City Region continues to be an attractive location for retail logistics due to its access to the motorway network, an availability of good quality sites and its labour supply. However, recent activity suggests that its appeal is broadly-based with retailers, manufacturers, logistics companies and distributors all signing up for new buildings in recent months.

In the past few months the region has secured a number of new investments from retailers and others including Next and Victoria Plumb at Doncaster, and Inspirepac and Great Bear at Markham Vale.  In addition, Universal Components has placed a building at Barnsley under offer.

Next originally purchased some 30 acres from IDI Gazeley (advised by JLL) for a new facility of 915,848 sq ft, adjacent to its existing facility at G-Park, West Moor Park, just off Junction 4 of the M18 motorway. The new warehouse represents an expansion of Next’s national storage and distribution warehouse for its furniture range. Its plans include a conveyor link bridge from the building to connect with its existing warehouse. The new development is being funded by Legal & General with whom Next agreed a sale and leaseback.

Victoria Plumb agreed a lease on the 277,232 sq ft Victor building at Standard Life’s First Point scheme in Doncaster. The Valiant unit here (246,755 sq ft) is still available.

Henry Boot Developments’ Markham Vale site (which JLL is marketing on behalf of Henry Boot) is attracting strong interest from occupiers. At the start of this year Inspirepac, a manufacturer of cardboard packaging, leased a speculative building of 100,250 sq ft just six weeks after it started construction and, more recently, Great Bear, the logistics contractor, agreed a 15-year lease on a new built to suit facility of 479,285 sq ft. Markham Vale benefits from a dedicated junction on the M1 (junction 29a).

Finally, Universal Components, a distributor of truck, trailer and light commercial vehicle parts and components, has placed a unit of 165,000 sq ft under offer at Ashroyd Business Park, Barnsley, 1.5 miles from junction 36 of the M1.

With retail sales showing sustained growth and with the overall economy expected to grow by 2.7% this year and 2.4% next year (according to the latest average of independent forecasts published by HM Treasury) we expect continuing strong levels of demand for new warehouse facilities from retailers and other occupiers in the next 12-24 months.



Jon Sleeman, JLL
April 2015