FORWARD-COMMITMENTS BY RETAILERS AND DATA CENTRE OPERATORS DRIVE THE STRONGEST QUARTER FOR OCCUPIER DEMAND IN TWO YEARS
Build-to-suit activity by retailers and data centres drove a 15% quarterly increase in take-up in Q4. Overall annual demand was up 6% in 2024. In the up-and-built lettings market, occupiers are still adjusting to the higher rental tone, which has protracted deal times and has put upward pressure on incentives.
Occupiers continue to seek productivity gains, given the increased operational costs that continue to weigh on confidence and the decision-making process. Some have consolidated multiple buildings into one larger and more energy-efficient space. In the Midlands and North West in particular, larger occupiers are increasingly interested in freehold land options and there is heightened competition for land with planning and suitable power provision.
As occupiers upgrade, the return of secondhand space pushed the availability rate further up to 7.2% in Q4. This will likely mark the peak in overall availability for the current cycle. New-build availability has been edging down since the start of 2024 in line with subdued speculative development activity. This underpins a positive outlook for prime rents despite annual headline prime rental growth slowing to 4.4% in Q4.
A strong second half of the year in the portfolio market propelled annual industrial investment to almost 拢8bn in 2024. Income remains a key focus for investors and there is greater demand for multi-let industrial assets over larger logistics units. Single-let logistics accounted for around a quarter of industrial investment in 2024, with demand focused on assets with relatively near-term lease events.
