UK Shed Investment: Has It Gone Off The Boil?

Data dumps from Colliers and Cushman & Wakefield provide reasons to suppose that the UK has now reached, or passed, peak shed. It also provides reasons to suppose it hasn't.

Investment data from Colliers showed that £3.4B was invested in UK industrials in Q1 2021. This is down on the £5.6B reported in Q4 2020.

Overall, the last six months saw total investment of £9B, a shade up on the five-year average for this time of year, which is £8.7B, thanks to the strong final quarter of 2020.

The slowdown in the pace of investment is perhaps not a surprise: There are only a limited number of sheds to buy.

Colliers said that around 30M SF of standing stock is available, meaning a vacancy rate of just 5.3%. It says this is expected to continue to push growth in rental values by between 2.3% and 3% depending on location and stock type. Prime units in London and in key South East markets will witness rental growth above 4% in 2021.

Data from Cushman & Wakefield, which measures a slightly wider range of unit sizes, suggests a more stable picture. Its figures showed Q1 2021 take-up was 12.5M SF, up 115% compared to the same period in 2020 and 70% higher than the medium-term average. It is also up on the 14M SF recorded in Q4 2020.

A further 16M SF was under offer at the end of March 2021, with e-commerce accounting for over 50% of the total.

Most regions performed reasonably well, with the North West as standout performer, recording its strongest Q1 on record with 3.1M SF transacted. The largest deal of the quarter was Amazon’s letting of 700K SF at Knowsley Business Park.

The data reveals that 12.7M SF of speculative space has already been delivered or is due to complete later this year.