The definitive guide to the UK’s multi-let industrial property market
Market overview
Rental growth has cooled but industrial is the only sector with continued momentum. For multi-let, reversion between passing and market rents, prime/secondary spread and ERV premium for London & the South East over the rest of the UK are all at record highs. Low void rates have ticked up since 2021, but this is due to tenant churn rather than current or pipeline development supply, which continues to be very limited. Multi-let default and void rates will “peak” in 2024 but remain well below previous cycles.
Multi-let yields have been remarkably flat over the entirety of 2023 so far. This stability has been driven by investor confidence in the occupier market, though broader investor sentiment has been impacted by recent geopolitical volatility. Interest rates may have peaked but the Bank of England’s “high-for-longer” narrative continues to dampen sentiment and impact pricing. However, there is reason to believe this wording reflects a policy tool rather than an explicit forecast, and interest rates could be cut more aggressively from late-2024 than is currently priced in. This would have positive implications for multi-let returns, which are already forecast to continue to outperform the other property sectors.
CONTRIBUTORS
Multi-let is Gerald Eve’s unique and market-leading syndicated study that quantifies and provides detailed industry reference insight into what would be an otherwise opaque sector. The results are built from the bottom up, using individual tenancy information on units between 500 sq ft and 50,000 sq ft in size.
The information spans 15 years, covering many tens of thousands of individual assets over that time.
Many thanks to the leading UK multi-let industrial property investors who contribute their data to make this important study possible.
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