Warehouses gear up for another record despite pandemic

This year is likely to be the best for the warehouse and industrial market with leasing activity already setting an all-time high in Q1-Q3 2020, predicts real estate advisory firm Savills. Occupier take-up predominantly came from food retailers operating without any disruption despite restrictions imposed on other retail sectors and from e-commerce, including logistics operators serving e-retailers.
In the first nine months to September 2020, warehouse and industrial take-up set an all-time high for the first three quarters of a year, reveals Savills latest report. The leasing transaction volume hit 3.7 million sqm, representing a 33 percent increase on the same period last year. The third quarter alone saw 1.3 million sqm transacted (up by 50 percent y/y), which is also an all-time high for the July-September period.
Savills notes that contrary to some fears in the early days of the pandemic and office market trends, the record take-up figures were hardly boosted by massive renegotiations of lease agreements. Even excluding lease renewals, the transaction volume was the highest on record.
According to Savills, 2020 is shaping up to be an absolute record year with its total annual leasing volume likely to surpass the 2017 peak of close to 4.3 million sqm. This year’s take-up is only around 615,000 sqm short of this level, which is well below the quarterly average in recent years and is very likely to be achieved.
“The very good health of the warehouse market is hardly surprising given the boost provided by the pandemic to the supercharged growth of e-commerce. So far in 2020, the strongest demand for warehouse space has come from the food sector, which has been less affected by lockdown restrictions, and the logistics industry supporting online retail,” Kamil Szymański, Head of the Industrial Agency at Savills in Poland, said.
(WBJ)