Multi-let Industrial: Still a good bet

Occupier activity continues to be resilient in the multi-let industrial (MLI) sector, amid the wider macroeconomic slowdown.

Recent data from Savills showed that vacant space for warehouses under 100,000 sq ft is currently at an all-time low, sitting at around 3%.

There’s a number of reason for this;

• Firstly structural shifts means it’s not just traditional occupiers seeking space, but e-commerce, and companies onshoring supply chains and storage after the UK’s exit from the EU.

• MLI space also still remains highly affordable, usually accounting for just 2% to 3% of a company’s annual turnover.

• MLI units are in their nature flexible, meaning they easily accommodate different business types. For instance car mechanics can sit adjacent to leisure operators, parcel distributors, dark-kitchen and last-mile grocery operators.

Whilst occupier demand remains strong, supply is dwindling against a backdrop of high interest rates, high build costs and a shortage of labour.

Jonathan Brown at IDRE says, “We believe multi-let industrial, with this diversification of income, and shortage of supply provides continued healthy returns, in these uncertain economic times. Whilst rental growth sits below inflation, we still expect it to outperform most other asset classes.”