The UK is in need of more good quality industrial and logistics stock to stimulate property investment deals. According to a report from Jones Lang LaSalle, total take-up of floorspace across the country was down 15 per cent in Q3 compared to Q2. This is 22 per cent lower than the penultimate quarter of 2011.
In the first nine months of 2012, total take-up stood at 58.6 million square feet, which is a reflection of "fragile economic conditions and limited good quality supply in certain markets", Jon Sleeman, industrial research director at Jones Lang LaSalle, explained. "Based on this evidence, we predict that the total level of take-up in 2012 overall is likely to undershoot last’s level by around a fifth," he continued.
At the end of Q3, total availability stood at 332.8 million square feet, with almost three-quarters of this supply made up of units below 100,000 square feet. This is 0.7 per cent lower than at the end of September 2011 and, compared to recent levels of take-up, is the equivalent of just over three years' worth of demand. The East Midlands registered the largest fall in availability in the six months to September 2012 at -10.6 per cent.
Across the country, new or refurbished stock made up the majority of available units, from 1,000 to 99,999 square feet. Nevertheless, construction remains down on the peak level recorded in mid-2007, with just 558,000 square feet of industrial floorspace under construction as of November 2012. This equates to 13 schemes nationally and is considerably lower than May 2012, when roughly 783,000 square feet was speculatively under construction.
However, Jones Lang LaSalle expects the market to pick up in 2013, with occupier demand experiencing a gradual recovery. Nevertheless, with "limited speculative development taking place nationally, the availability of prime new and good quality supply is likely to fall," they wrote. As occupiers go in search of better properties, the availability of poor stock will increase.