According to the findings, which tracks grade A quality distribution units of 100,000 sq ft and over, investor demand in the UK industrial market was particularly strong last year especially for UK logistics assets. A total of £6.7bn was invested in the UK industrial market in 2014 including both single-let and multi-let assets. Investment was up 26% since 2013, making it the highest year since 2008.

Meanwhile, 13.2m sq ft of grade A logistics floor space was occupied in second half of 2014, doubling the level of demand recorded in first half of the year (6.3m sq ft). As a result of the growing demand, grade A availability reported a 23% decline in December 2014 (12m sq ft) compared to June 2014 (15.6m sq ft).‎

Jon Sleeman, head of UK industrial & logistics research at JLL, said: “As the UK economy continues to recover, conditions improved across the main service industries and in manufacturing, which spells good news for the UK industrial and logistics market. Further announcements on speculative big box development are expected this year in key strategic markets facing a lack of supply. Investors will remain focused on acquiring prime product in prime locations but there will also be a strong interest in secondary stock in good locations due to a lack of available prime product. We expect yields to sharpen further in early 2015.”

Retailers accounted for 47% of all grade A take-up in 2014, manufacturers 23% and logistic companies 21% of the total demand. Retailers such as John Lewis and Next agreed to large built to suit (BTS) pre-lets in 2014 as the majority of new floor space take-up comprised new BTS. Around 76% of all new take-up in 2013 was BTS totalling 9.7m sq ft.

Automobile companies were a significant source of demand for big box logistics in the manufacturing arena. Companies such as JLR, Rolls Royce, Aston Martin and DAU Draexlmaier invested in new facilities in 2014 as new car registrations hit a 10-year high.

Grade A availability stood at 12m sq ft, of which 4.7m sq ft was in existing speculatively developed new space. This total includes seven units that were speculatively under construction totalling 1.2m sq ft. The remaining 7.3m sq ft comprised good quality second-hand space.

Richard Evans, joint head of national logistics at JLL, commented:

“The market balance has shifted more towards landlords, and over the course of 2014 incentives have come in and rents have increased in the prime market locations. We expect occupational demand to remain robust in 2015. Whilst it is likely to soften slightly compared to 2014, it should be significantly above the long-term average. With a vacancy rate of 5% nationally last year, new BTS units will continue to dominate take-up of grade A stock. Across the country prime headline logistics rents have risen in a number of core distribution locations. Rents on average rose by 4% between Q4 2013 and Q4 2014.”