Warehouses experienced a significant downturn in 2023. According to data from property agency Cushman & Wakefield, the UK industrial real estate market saw a 27% decrease in investments compared to the pre-pandemic era. This decline was attributed to a variety of challenges, not least of which were higher debt costs and a mismatch in pricing expectations between buyers and sellers.

Last year’s transactions in warehouse properties totaled a mere £6.4 billion, a steep fall from the £14 billion recorded in the previous year. This figure was also lower than the pre-pandemic five-year average of £8.8 billion, indicating a notable shift in the market dynamics.

A Glimmer of Hope for 2024

However, there is a silver lining as experts anticipate a resurgence in investor interest in 2024. Ed Cornwell, an international partner at Cushman & Wakefield’s UK logistics and industrial team, suggests a more optimistic outlook for the warehouse property market. He predicts that rental growth, although at a slower pace than before, will continue. This trend is expected to draw in a broader range of investors, including institutional investors, private equity, Real Estate Investment Trusts (REITs), and developers.

Cornwell highlights the stability in finance rates and bond yields as key factors that will reignite investment enthusiasm. Moreover, he points out that there is still a substantial amount of capital waiting to be invested in the logistics and industrial sector. The strong fundamentals of the occupational market also play a crucial role in bolstering investor confidence.

Urban Logistics

Supporting this optimistic view is Urban Logistics, a FTSE 250 company specialising in the last mile and last touch delivery of essential goods in urban areas. The company has observed a more active occupational market in recent months, with demand for space consistently outstripping supply in its niche market.

Since the beginning of October, Urban Logistics has successfully completed seven lease events. Additionally, two more leases are in the final stages of negotiation, showcasing the underlying strength and potential of the warehouse property market.