Industrial land values 'go through the roof'
By Richard Wright | 31st August 2021
Industrial land and rental values in Gloucester continue to rise as the great logistics boom shows no signs of slowing.
The increase in ecommerce and the appetite for quick last mile logistics is continuing to drive demand for logistics space, pushing values across the UK to record levels.
In Gloucester, the price per square foot has increased to £6.75 for new prime industrial properties, and £5.50 for second-hand sites. The estimated value of industrial land now stands at £600,000 per acre.
That's according to Colliers' Industrial & Logistics experts who this week released their interactive UK Rentals Map which tracks prime and secondary rents and land values across more than 100 UK locations.
Colliers' Rents Map shows a dramatic acceleration of average land values across England, posting a 40% increase year on year to July 2021, as investors compete for sites.
While this is underpinned by strong rental growth, investor appraisals are also supported by a continuation of future expected demand, coupled with further rental growth and moderate yield compression over the coming quarters, the analysts say.
Andrea Ferranti, head of Industrial & Logistics Research at Colliers, said: "We're not seeing a situation of this magnitude anywhere else in Europe.
"Sustained demand for logistics space to meet the appetite for online retailing and last mile logistics has caused land values to go through the roof.
"However, this increase in land values will have a knock on effect far beyond the logistics market and will impact a range of sectors from general industrial through to residential and in some instances leisure and hospitality outside of city centres."
Meanwhile, average prime rental growth for logistics units larger than 100,000 sq ft in England posted a positive 13.5% year on year growth in July as the provision of new schemes, accompanied by a low supply environment, is prompting a step change in rental values.
Similarly, smaller units of more than 10,000 sq ft, recorded a 14.5% rental growth.
Len Rosso, Head of Industrial & Logistics at Colliers, said: "We expect rental growth for prime and secondary units to continue due to a combination of factors such as strong tenant demand, dwindling supply, a rise of the Consumer Price Index and the shortage of construction materials which, in some cases, is challenging the delivery of design and build and speculative schemes."
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