While the industrial and logistics market continues to suffer from an acute lack of supply there is no getting away from it, occupier demand in the past quarter has slowed, writes Neil Seager.
Yes typically the summer is quieter, particularly when an international sporting event is on and we’re having the hottest summer for decades. However, I think this time there is more to it; Brexit. Sorry yes this is another article on this topic and no – like everyone else – I don’t have all the answers. Surely though the industrial and logistics property market should be booming as companies stockpile.
While stockpiling is not necessarily a good headline, it would assist the warehouse market. However, its impact has yet to be properly seen as far as property is concerned. The reason for this remains the uncertainty surrounding the Brexit negotiations. UK plc is proficient to adapting to whatever set of circumstances are thrown at it as long as there is a rule book to work from. If Brexit results in imported goods getting stuck for longer at the UK border, the logistics market would simply adapt by reconfiguring their supply chain. At the moment though there is no rule book to work from and like all companies, distributors and indeed manufacturers, they are in limbo as they try and second guess what system they will be working in post March 2019. Ultimately this means no real business planning can be undertaken and no major property decision can be made.
There are clearly benefits to the industrial and logistics sector once we have sight of the Brexit rule book. For instance the potential stockpiling – or at least providing for a longer supply chain timeline – and the positive impact on exporting due to a devaluation in the pound. As a result, together with the continued growth of e-commerce, post-Brexit the industrial and logistics property market should flourish. Thames Valley landlords and developers who are building for the post-Brexit UK will be able to take advantage not only of the above positive fall out, but will also be delivering into a market with limited choice.
The market is keeping its fingers crossed for a material breakthrough in negotiations post Summer which will provide at the very least a draft rule book to work from. If this does not materialise then I fear the uncertainty will continue in the short term ... at least until March 2019.
Neil Seager
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