Take-up in the region - which covers areas like Norwich, Felixstowe and Peterborough, and is known as the ‘Eastern Distribution Corridor’ – reached 3.9 million sq. ft in 2022.
Record-breaking demand and a chronic undersupply of purpose-built space have driven headline rents to £9 per sq. ft. in the region for warehouses exceeding 250,000 sq. ft, a 44% percent increase on 2021.
- Region only has 1.2 million sq. ft of lettable warehouse space (units >100k sq ft), of which 400,000 sq. ft is currently under offer, despite a huge 18 million sq. ft of demand.
- Supply and demand mismatches continue to drive rents to record-highs in the ‘Eastern Distribution Corridor’
- Rising build costs and a lack of labour expected to slow the development of new purpose-built space in 2023.
The data, collected by property consultancy Bidwells, suggests that market activity remained resilient last year despite a slowdown in the wider real estate market, which took hold because of rising interest rates, spiking inflation and Liz Truss’s disastrous mini- budget.
Among some of the region’s biggest deals were:
- Jaynic selling 1.1m sq. ft to The Range @ Gateway14, Stowmarket
- Trebor Developments LLP 625,000 sq. ft freehold design and build for Crown Holdings, Inc. at Delta Park, Peterborough
- Fiera Capital letting the 736,708 sq. ft former Debenhams warehouse at Kingston Park, Peterborough to Amazon.
- Tritax Symmetry leasing over 390,000 sq. ft at Symmetry Park, Biggleswade to Noatum Logistics & Bidfood UK
The build to suit sector was the most active occupier type across the region, accounting for more than 67% percent of total take-up.
The impact of the coronavirus pandemic has led to people buying online a lot more than they used to. Online shopping as a percentage of all retail sales peaked at nearly 38 percent in January 2021, having stood at eight percent at the start of 2011 and 19 percent in February 2020. According to the Office for National Statistics, internet sales accounted for 30.2 percent of total retail sales in November 2022.
Patrick Stanton, Head of Logistics and Industrial at Bidwells, said:
“Structural changes in retail have driven demand for purpose-built logistics space to record-highs in 2022. This has resulted in a sharp rise in new warehouse construction projects.
“But while market data makes clear that more speculative development is needed to satisfy anticipated levels of demand, developers remain exposed to a worsening macro-economic environment.”
“With currently no speculative development coming forward in the first half of 2023 for ‘big box’ logistics we expect the supply/demand imbalance to worsen still. This will inevitably lead to more pre-let/pre-sale transactions which will drive the market in 2023”
