Warehousing and manufacturing butt heads over industrial floorspace
The ruse of manufacturing demand will push up already fast-rising rents, and cut supply of industrial floorspace. The change has been driven by reshoring, as manufacturers return activities to the UK from increasingly challenging off-shore bases. BNP Paribas Real Estate say that manufacturers accounted for 53% of the take-up of big box warehouses over 100,000 sq ft in the first half of 2022. That is the highest proportion since 2017, and follows a long lull in manufacturer interest in industrial floorspace. “Reshoring is bringing ‘Made in Britain’ back to our products. There are a number of driving factors behind this including inflation, Brexit, the pandemic, the Ukraine war and the blockage of the Suez canal, which have massively impacted supply chains and overheads,” said Vanessa Hale, Head of Research and Insights at BNP Paribas Real Estate. “As these occupiers fight harder for industrial floorspace, the activity will continue to put pressure on chronically short supply levels. Even so, acute supply-demand imbalances are likely to continue, especially as elevated construction costs start to weigh on future development pipelines. In turn, this will fuel further rental growth, albeit at more moderated levels.”
