Total share : xxxx% XXXXXXXXXXXXXXXXXXX Agent H1 2019 ...
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propertyweek.com 04|12|20 31 30 04|12|20 9 The responses to Property Week, Savills and Tritax Symmetry’s fourth annual market census, in association with Analytiqa, suggest the industrial and logistics sector is in good health and has a positive future outlook T he property industry has endured a gruelling 2020. The hospitality and retail sectors have taken a battering as operators were forced to close for months on end due to Covid-19 pandemic restrictions. And millions of square feet of office space has lain empty as companies ordered their workforce to work from home. However, one sector that has not only survived but seemingly thrived during the pandemic and ensuing recession is industrial and logistics. This year has seen the sector’s highest-ever recorded take-up (46.8m sq ft) and the UK’s biggest-ever warehouse investment deal with Blackstone paying £473m for Prologis’ Platform portfolio in October. The industrial and logistics sector appears to be in rude health and the future outlook looks pretty rosy as well judging by the findings of Property Week, Savills and Tritax Symmetry’s fourth annual Industrial and Logistics Census, in association with Analytiqa. The census canvassed the opinion of industrial and logistics occupiers, developers, land owners, investors, asset managers, advisers/consultants and agents to create a rounded picture of the current state of the market; and given the economic issues caused by the pandemic and uncertainties surrounding the UK’s future trading terms with the EU, the findings are pretty impressive. The major talking point of 2020 has undoubtedly been the Covid-19 pandemic, which has had such a detrimental impact on most other property sectors. However, industrial and logistics appears to have bucked the wider property industry trend with 25% of respondents stating there had been no real change to their business and 27.7% saying it had actually had a positive impact. There is plenty of room for optimism about the future as well, with 19.6% of census respondents stating the current business conditions versus the last six months were much more favourable, 22.6% saying they were slightly more favourable and 11.6% saying they were the same. Seismic effect The pandemic may not have significantly impacted the business performance of many companies in the industrial and logistics sector, but it has had a seismic effect on the way they operate. Some 64% of respondents said their top priority was increasing the ability to allow staff to work from home while 30% said they had had to redesign their existing facilities to take into account social distancing practices. The good news for the industrial and logistics sector is despite the current economic headwinds affecting the wider UK economy, 41.1% of occupiers still anticipate requiring more space over the next two years while 48.2% think they will need the same amount of space and only 10.7% believe they will need less space. As a result, it is not surprising to discover that 47% of agents think industrial and logistics take-up will increase in the next 12 months, with a whopping 81% of developers, investors, land agents, advisers and agents believing that take-up will rise (27.1%) or remain similar (53.8%) next year. Investment activity in the sector is also anticipated to remain strong over the coming months. Sixty two per cent of agents, investors and asset managers expect investment into the sector to increase or stay the same in the next 12 months. Although this figure is slightly softer than last year, given the fallout from the Covid-19 pandemic, the deepest recession in UK history and Brexit on the horizon, investor sentiment is surprisingly robust. That is not to say that the industrial and logistics sector is without its challenges. Covid-19 (21.1%) Brexit (20.3%) and the lack of supply of new buildings (18%) all scored highly in response to the question of what the biggest challenge facing the industrial and logistics sector at the moment is. Employment within logistics facilities (13.5%) and risings rents of logistics facilities (11.3%) also emerged as key concerns. As for what the key factors impacting their own businesses at the moment are, Covid-19 (20.7%) and Brexit uncertainty (10.5%) again scored highly among occupiers, with more propertyweek.com Given the economic repair work required in 2021, it is reassuring that the sector is rising across the board to the demands being placed on it Christian Matthews Source: Analytiqa What is the biggest challenge facing the industrial and logistics sector? What has been the effect on your business of Covid-19? Negative 47.3% Positive 27.7% No change 25.0% 0% 5% 10% 15% 20% 25% The planning system for logistics facilities Rising rents of logistics facilities Power supply to logistics facilities Lack of supply of new buildings Employment within logistics facilities Covid-19 Brexit 20.3% 21.1% 13.5% 18.0% 6.8% 11.3% 9.0% Industrial and logistics census In depth In depth propertyweek.com LOGISTICS SET TO BUCK DOWNTURN 41% of occupiers anticipate requiring more space over the next two years 47% of agents think that industrial and logistics take-up will increase in the next 12 months
Transcript of Total share : xxxx% XXXXXXXXXXXXXXXXXXX Agent H1 2019 ...
propertyweek.com 04|12|20 3130 04|12|20
9 The responses to Property Week, Savills and Tritax Symmetry’s fourth annual market census, in association with Analytiqa, suggest the industrial and logistics sector is in good health and has a positive future outlook
The property industry has endured a gruelling 2020. The hospitality and retail sectors have taken
a battering as operators were forced to close for months on end due to Covid-19 pandemic restrictions. And millions of square feet of offi ce space has lain empty as companies ordered their workforce to work from home. However, one sector that has not only survived but seemingly thrived during the pandemic and ensuing recession is industrial and logistics.
This year has seen the sector’s highest-ever recorded take-up (46.8m sq ft) and the UK’s biggest-ever warehouse investment deal with Blackstone paying £473m for Prologis’ Platform portfolio in October.
The industrial and logistics sector appears to be in rude health and the future outlook looks pretty rosy as well judging by the fi ndings of Property Week, Savills and Tritax Symmetry’s fourth annual Industrial and Logistics Census, in association with Analytiqa.
The census canvassed the opinion of industrial and logistics occupiers, developers, land owners, investors, asset managers, advisers/consultants and agents to create a rounded picture of the current state of the market; and given the economic issues caused by the pandemic and uncertainties surrounding the UK’s future trading terms with the EU, the fi ndings are pretty impressive.
The major talking point of 2020 has undoubtedly been the Covid-19 pandemic, which has had such a detrimental impact on most other property sectors. However, industrial and logistics appears to have bucked the wider property industry trend with 25% of respondents stating there had been no real change to their business and 27.7% saying it had actually had a positive impact.
There is plenty of room for optimism
about the future as well, with 19.6% of census respondents stating the current business conditions versus the last six months were much more favourable, 22.6% saying they were slightly more favourable and 11.6% saying they were the same.
Seismic effectThe pandemic may not have signifi cantly impacted the business performance of many companies in the industrial and logistics sector, but it has had a seismic
effect on the way they operate. Some 64% of respondents said their top priority was increasing the ability to allow staff to work from home while 30% said they had had to redesign their existing facilities to take into account social distancing practices.
The good news for the industrial and logistics sector is despite the current economic headwinds affecting the wider UK economy, 41.1% of occupiers still anticipate requiring more space over the next two years while 48.2% think they will need the same amount of space and only 10.7% believe they will need less space.
As a result, it is not surprising to discover that 47% of agents think industrial and logistics take-up will increase in the next 12 months, with a whopping 81% of developers, investors, land agents, advisers and agents believing that take-up will rise (27.1%) or remain similar (53.8%) next year.
Investment activity in the sector is also anticipated to remain strong over the
coming months. Sixty two per cent of agents, investors and asset managers expect investment into the sector to increase or stay the same in the next 12 months. Although this fi gure is slightly softer than last year, given the fallout from the Covid-19 pandemic, the deepest recession in UK history and Brexit on the horizon, investor sentiment is surprisingly robust.
That is not to say that the industrial and logistics sector is without its challenges. Covid-19 (21.1%) Brexit (20.3%) and the lack of supply of new buildings (18%) all scored highly in response to the question of what the biggest challenge facing the industrial and logistics sector at the moment is. Employment within logistics facilities (13.5%) and risings rents of logistics facilities (11.3%) also emerged as key concerns.
As for what the key factors impacting their own businesses at the moment are, Covid-19 (20.7%) and Brexit uncertainty (10.5%) again scored highly among occupiers, with more
propertyweek.com
Given the economic repair
work required in 2021, it is reassuring that the sector is rising across the board to the demands being placed on itChristian Matthews
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Source: Analytiqa
Source: Analytiqa
Source: Analytiqa
What is the biggest challenge facing the industrial and logistics sector?
0%
20%
40%
60%
80%
100%
OtherEmployment within logistics facilitiesLack of supply of new buildings
Power supply to logistics facilitiesRising rents of logistics facilitiesThe planning system
AdvisersAgentsAssetmanagers
Landowners
InvestorsDevelopersOccupiers
Is pre-Brexit stockpiling distorting the market?
How do you view current business conditions compared with the past six months?
What is the biggest challenge facing the industrial and logistics sector?
What has been the e�ect on your business of Covid-19?
0%
10%
20%
30%
40%
50%
60%
2019
2018
Much more di�cultSlightly more di�cultThe sameSlightly more favourableMuch more favourable
What is your forecast for industrialand logistics take-up in the next year?
How much do you plan to speculatively develop next year?
Do you envisage requiring more or lessspace over the next two years?
Game changers: technological developments that will have a big impact onindustrial logistics real estate?
Developers
Do you think developers willspeculatively develop next year?
Agents and consultants
Occupiers
Yes – it is signi�cantly impacting take-up �guresYes – but only on a short-term basisNot yet – the impacts will be felt further down the lineNo – the reality has not lived up to the hype
Occupiers: Is your business stockpiling product ahead of Brexit, or if you are a 3PL, are your customers stockpiling product ahead of Brexit?
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
We are stockpiling, using existing capacityWe are stockpiling, taking short-term space from manufacturers/retailersWe are stockpiling, taking short-term space from logistics operatorsWe/our customers are not stockpiling ahead of Brexit
How important are the following industry issues to logistics investment?
Where in the UK would you like to invest?What are the key factors impacting your business at the moment?
Which issues are most important whenconsidering new industrial and logisticsdevelopments?
Developers and landowners
0%
10%
20%
30%
40%
50%
60%
Not importantSlightly importantModerately importantImportantVery important
Length ofplanningsystem
Continued investmentin robotics/automation
Brexit uncertainty
Availability ofdevelopment
land
Healthof UK
economy
Consumercon�dence
Continuedstructural change in
retail market
Agents Advisers/consultants Developers/landowners Occupiers
How do you view current business conditions versus the last six months?
Predictiveanalytics
Greater supplychain stock
visibility, RFID
Dronedelivery
Wearabletechnology for
pickers/packers
Warehouse automation
Warehouserobotics
Autonomousvehicles
Electricvehicles
% vi
ew te
ch as
big i
mpac
t and
game
chan
ging
1%yoy -50%
Increased �oor loading Yard depths Eaves heights
Occupiers requiring shorter leases Power supply to new developments
Pace of change in tenant requirements Availability of �nanceLength of planning process Lack of development sites
9%yoy +110% 21%
yoy -31%
16%yoy -29%
7%yoy -15%2%
yoy -80%
28%yoy +72%
4%yoy -2%
12%yoy +500%
More space30.3%yoy -42%
Negative47.3%
Positive27.7%
No change25.0%
Less space10.7%
The same48.2%
More spce41.1%
Less space15.2%yoy +117%
Remaining similar54.5%yoy +33%
More space60%yoy +11%
Less space6%yoy +20%
Remaining similar34%yoy -17%
Rising30.5%yoy -10.3%
Falling13.5%yoy +4%
Remaining similar56%yoy +6%
Rising20.2%
Falling37.4%
Remaining similar41.4%
55%
64%
24%
31%
21%
36%
16%
31%
55%
74%
50%
59%
70%
63%
85%
60%
33%
26%
36%
55%
30%
37%
13%
22%
31%
55%
44%
56% 60%
69%
50%
54%
0%
5%
10%
15%
20%
25%
The planning system
for logistic
s facilit
ies
Rising rents of
logistics fa
cilities
Power supply to
logistics fa
cilities
Lack of supply
of new build
ings
Employment with
in
logistics fa
cilities
Covid-19Brexit
Advisor/ConsultantAgentInvestorDeveloperOccupier
0 20 40 60 80 100
Asset manager
Investor
Scotland
Yorkshire
North west
North east
West midlands
East midlands
South west
South east
London
0 5 10 15 20 25State of the retail market
Rising costsPace of change towards new retail channels
More online purchasesIncreased customer demand for delivery
End consumer price issuesCovid-19
Brexit uncertaintyAvailability of warehouse space
Availability of labour
How much warehouse space do you envisage requiring over the next two years?:
Much more di�cult
Slightly more di�cult
The same
Slightly more favourable
Much more favourable
Advisor/ConsultantAgentInvestorDeveloperOccupier
0
20
40
60
80
100
Much more di�cult
Slightly more di�cult
The same
Slightly more favourable
Much more favourable
Advisor/ConsultantAgentInvestorDeveloperOccupier
20.3% 21.1%
13.5%
18.0%
6.8%
11.3%
9.0%
7.2% 65.0%67.0%
71.0%
25.8%22.2%
48.3%
61.2%
33.3%
11.1%
22.5%22.2%
41.9%0.0%
32.3%11.1%
19.3%0.0 %
89.0%
19.6%
22.3%
29.5%
11.6%
17.0%
11.1%
37.0%
14.8%
26.0%
11.1%
5.0%15.0%
12.5%
57.5%
10.0%
9.8%
37.0%
23.5%
25.4%
4.0%
8.0%
38.0%
12.8%
31.7%
9.5%
7.6%10.5%
3.9%13.5%
14.8%6.9%
6.6%8.2%
20.7%
Industrial and logistics censusIn depth In depth
propertyweek.com
LOGISTICS SET TO BUCK DOWNTURN
41%of occupiers anticipate requiring more space over the next two years
47%of agents think that industrial and logistics take-up will increase in the next 12 months
propertyweek.com propertyweek.com 04|12|20 3332 04|12|20
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXX-XX%H1 2019: xxxxxxx sq ftTotal share : xxxx%
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Source: Analytiqa
Source: Analytiqa
Source: Analytiqa
What is the biggest challenge facing the industrial and logistics sector?
0%
20%
40%
60%
80%
100%
OtherEmployment within logistics facilitiesLack of supply of new buildings
Power supply to logistics facilitiesRising rents of logistics facilitiesThe planning system
AdvisersAgentsAssetmanagers
Landowners
InvestorsDevelopersOccupiers
Is pre-Brexit stockpiling distorting the market?
How do you view current business conditions compared with the past six months?
What is the biggest challenge facing the industrial and logistics sector?
What has been the e�ect on your business of Covid-19?
0%
10%
20%
30%
40%
50%
60%
2019
2018
Much more di�cultSlightly more di�cultThe sameSlightly more favourableMuch more favourable
What is your forecast for industrialand logistics take-up in the next year?
How much do you plan to speculatively develop next year?
Do you envisage requiring more or lessspace over the next two years?
Game changers: technological developments that will have a big impact onindustrial logistics real estate?
Developers
Do you think developers willspeculatively develop next year?
Agents and consultants
Occupiers
Yes – it is signi�cantly impacting take-up �guresYes – but only on a short-term basisNot yet – the impacts will be felt further down the lineNo – the reality has not lived up to the hype
Occupiers: Is your business stockpiling product ahead of Brexit, or if you are a 3PL, are your customers stockpiling product ahead of Brexit?
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
We are stockpiling, using existing capacityWe are stockpiling, taking short-term space from manufacturers/retailersWe are stockpiling, taking short-term space from logistics operatorsWe/our customers are not stockpiling ahead of Brexit
How important are the following industry issues to logistics investment?
Where in the UK would you like to invest?What are the key factors impacting your business at the moment?
Which issues are most important whenconsidering new industrial and logisticsdevelopments?
Developers and landowners
0%
10%
20%
30%
40%
50%
60%
Not importantSlightly importantModerately importantImportantVery important
Length ofplanningsystem
Continued investmentin robotics/automation
Brexit uncertainty
Availability ofdevelopment
land
Healthof UK
economy
Consumercon�dence
Continuedstructural change in
retail market
Agents Advisers/consultants Developers/landowners Occupiers
How do you view current business conditions versus the last six months?
Predictiveanalytics
Greater supplychain stock
visibility, RFID
Dronedelivery
Wearabletechnology for
pickers/packers
Warehouse automation
Warehouserobotics
Autonomousvehicles
Electricvehicles
% vi
ew te
ch as
big i
mpac
t and
game
chan
ging
1%yoy -50%
Increased �oor loading Yard depths Eaves heights
Occupiers requiring shorter leases Power supply to new developments
Pace of change in tenant requirements Availability of �nanceLength of planning process Lack of development sites
9%yoy +110% 21%
yoy -31%
16%yoy -29%
7%yoy -15%2%
yoy -80%
28%yoy +72%
4%yoy -2%
12%yoy +500%
More space30.3%yoy -42%
Negative47.3%
Positive27.7%
No change25.0%
Less space10.7%
The same48.2%
More spce41.1%
Less space15.2%yoy +117%
Remaining similar54.5%yoy +33%
More space60%yoy +11%
Less space6%yoy +20%
Remaining similar34%yoy -17%
Rising30.5%yoy -10.3%
Falling13.5%yoy +4%
Remaining similar56%yoy +6%
Rising20.2%
Falling37.4%
Remaining similar41.4%
55%
64%
24%
31%
21%
36%
16%
31%
55%
74%
50%
59%
70%
63%
85%
60%
33%
26%
36%
55%
30%
37%
13%
22%
31%
55%
44%
56% 60%
69%
50%
54%
0%
5%
10%
15%
20%
25%
The planning system
for logistic
s facilit
ies
Rising rents of
logistics fa
cilities
Power supply to
logistics fa
cilities
Lack of supply
of new build
ings
Employment with
in
logistics fa
cilities
Covid-19Brexit
Advisor/ConsultantAgentInvestorDeveloperOccupier
0 20 40 60 80 100
Asset manager
Investor
Scotland
Yorkshire
North west
North east
West midlands
East midlands
South west
South east
London
0 5 10 15 20 25State of the retail market
Rising costsPace of change towards new retail channels
More online purchasesIncreased customer demand for delivery
End consumer price issuesCovid-19
Brexit uncertaintyAvailability of warehouse space
Availability of labour
How much warehouse space do you envisage requiring over the next two years?:
Much more di�cult
Slightly more di�cult
The same
Slightly more favourable
Much more favourable
Advisor/ConsultantAgentInvestorDeveloperOccupier
0
20
40
60
80
100
Much more di�cult
Slightly more di�cult
The same
Slightly more favourable
Much more favourable
Advisor/ConsultantAgentInvestorDeveloperOccupier
20.3% 21.1%
13.5%
18.0%
6.8%
11.3%
9.0%
7.2% 65.0%67.0%
71.0%
25.8%22.2%
48.3%
61.2%
33.3%
11.1%
22.5%22.2%
41.9%0.0%
32.3%11.1%
19.3%0.0 %
89.0%
19.6%
22.3%
29.5%
11.6%
17.0%
11.1%
37.0%
14.8%
26.0%
11.1%
5.0%15.0%
12.5%
57.5%
10.0%
9.8%
37.0%
23.5%
25.4%
4.0%
8.0%
38.0%
12.8%
31.7%
9.5%
7.6%10.5%
3.9%13.5%
14.8%6.9%
6.6%8.2%
20.7%
Industrial and logistics censusIn depth In depth
>>
online purchases (14.8%) and increased customer demand for delivery (13.5%) also at the forefront of their minds.
Supply/demand imbalanceTo some extent, the industrial and logistics sector has been a victim of its own success with the high levels of take-up the sector has enjoyed in recent years and particularly 2020 swallowing up both existing, built supply and space in the delivery pipeline.
There is a looming danger of a supply/demand imbalance due to a shortage of new-build schemes being brought forward – a problem that has been further exacerbated by the pandemic, which has seen some proposed schemes delayed.
Of those developers, investors and asset managers still planning to deliver industrial and logistics schemes, London and the South East are the locations of choice, with
the Midlands also featuring strongly.Christian Matthews, director at Tritax
Symmetry, says that for those people who work at the coalface of the logistics sector, and have been working fl at out throughout 2020, the results of the census will come as little surprise.
“Perhaps more interesting is to stop and consider why there has been so much positive activity in the sector,” says Matthews. “Clearly, the further migration to online retail by us all accelerated by Covid has been a signifi cant factor, which seems unlikely to reverse as we have become used to the ease of the process and its benefi ts. The ability to hold more stock to withstand supply-chain failures is another factor. We have also seen increased take-up from previously relatively quiet sectors such as fi lm, TV and data centres.”
He adds that the mantra used within Tritax
The results of our fourth annual
census come at a time when the UK logistics industry is gearing up for a Black Friday and Christmas like no otherKevin Mofi d
Symmetry is: ‘Logistics is the glue that binds the UK economy together.’ He says: “Given the economic repair work required in 2021, it is reassuring that the sector is rising across the board to the demands being placed on it.”
Kevin Mofi d, head of logistics and industrial research at Savills, concurs with Matthews that the sector is well-positioned as we move into an unprecedented period of uncertainty and an acceleration of trends.
“The results of our fourth annual census come at a time when the UK logistics industry is gearing up for a Black Friday and Christmas like no other,” says Mofi d. “The industry has proved adept at managing the fallout of what 2020 has thrown at it, but into 2021 I expect more strategic thinking will emerge.
“Retailers and manufacturers will move away from mitigating the fallout from Covid, to reorganising their supply chains to take
into account the new demands for how consumers want to shop and the potential near-shoring of manufacturing.”
The big challenge at the moment for those looking to reorganise supply chains or near-shore manufacturing is the aforementioned shortage of supply, with Savills recently publishing data that suggests the sector is undersupplied.
“Our data on the market identifi es that
vacancy rates are falling in all markets and it’s therefore no surprise that occupiers have highlighted the availability of warehousing as a major concern regarding the market,” says Mofi d. “The results of this census combined with our market data should give developers the confi dence to deliver speculative development in the right locations and size bands to meet the demand that the census identifi es.”
