In the industrial property sector, demand continues to outstrip supply: concludes the recent market survey performed quarterly by RICS. After months of uncertainty, caused by the bumpy Brexit process, solid demand growth is reported within the industrial sector, as became evident across all parts of the UK.
As the report state, the availability of vacant industrial space fell back once more during Q2, although the pace of decline has slowed over the past year. At the same time, the availability of office space edged up for a third successive quarterly report.
At the same time, the UK experience shortage of warehouses availability for almost a year.
Moving of goods will face bumps this autumn since, in case of a no-deal Brexit, all pallets will have to meet the strict EU requirements for third-party countries. The majority of wooden pallets used to transport millions of consumer goods will no longer meet EU requirements. Merchants fill supplies for the UK industries using the all available warehouse space.
From a regional property market perspective, the East Midlands, Scotland and the West Midlands display the firmest assessment on the outlook for prime industrial values for 2020. At the same time, retail capital values are anticipated to decline at the sharpest pace in the North East and Greater London in the next twelve months.
Fig.1 Cost of prime industrial rents in selected cities in the United Kingdom (UK) as of Q2 2019 (in EUR per m2 per year)