Take-up has hit a record level for industrial and logistics spaces measuring more than 100,000 sq ft during H1 this year, according to new research from Savills.
Total take-up for these types of facilities has totalled 22.4m sq ft, 66% above the long-term average.
Of this, 43% of take-up can be attributed to online retailers, with Amazon alone accounting for up to 84% of this figure.
In the meantime, 3PLs accounted for 15%, with many undertaking contracts for the NHS.
A further 11% were short-term lease agreements as a result of Covid-19, including space to hold excess stock by retailers with a dominant high street presence.
Savills also noted that the average deal size by sq ft has risen substantially in the past decade. It has surged by 84% to 362,000 sq ft, from an all-time low of 197,000 sq ft in 2009.
Overall supply rose to 36.2m sq ft during the first half of the year, with a vacancy rate of 6.6%.
However, grade-A supply has declined by 7.8% to 18.8m sq ft, on the back of a dip in build-to-suit stock.
As a proportion, the beginning of the year saw 55% of all available supply being classified as grade-A. This has now fallen to 52%
Savills expects that the availability of grade-A space will continue to decline, with just 900,000 sq ft of speculative announcements being made in Q2, the lowest level seen since the first quarter of 2017.
Kevin Mofid, head of industrial and logistics research at Savills, said: “While take-up has continued to increase, supply has not, meaning we could see vacancy rates drop below the current level of 6.58%.
“While it is too early to establish a clear trend, we believe occupiers are preparing to move towards a “just in case” supply chain rather than “just in time”, meaning that existing units or ready-to-go plots for BTS construction will be in high demand. This will put further pressure on grade-A supply and has the potential to mean vacancy rates will continue to fall.”
Richard Sullivan, national head of industrial and logistics at Savills, said: “The industrial and logistics sector has proven incredibly resilient, even in the face of unprecedented uncertainty.
“Online retail has undoubtedly played a crucial role during the lockdown period, as well as occupiers who have reconfigured their supply chains to provide PPE and essential items to both the NHS and vulnerable members of our communities, all of which has translated into additional take-up.”