At a glance
- Available electricity capacity is an increasingly significant constraint on new development.
- Rents for marketable distribution centres remain under upward pressure.
- Tenants' sustainability requirements are becoming increasingly important in location decisions.
Shortages of land and grid capacity
Suitable land around major logistics hubs is scarce, and new electricity grid connections are not immediately available on many business parks. For tenants and developers, this means that grid capacity is increasingly as decisive as the location itself.
Rental trends
Rents for marketable distribution centres at transport hubs remain under upward pressure, while less marketable locations further from motorways are seeing more moderate trends. Incentives are less common in logistics property than in offices, partly due to the persistent shortage.
Sustainability as a location factor
- Tenants are increasingly requesting rooftop solar panels and sufficient grid capacity for electric vehicle charging infrastructure.
- Energy ratings and BREEAM certification are increasingly taken into account when choosing a location.
- Owners who anticipate these requirements retain a competitive advantage when re-letting.
What this means for owners
Owners of marketable logistics property with a long remaining lease term benefit from the persistent shortage. For owners of outdated or less accessible properties, investment in sustainability and flexibility is often necessary to maintain lettability.
What this means for tenants
Tenants planning to expand would be well advised to have the available grid capacity assessed early in the process, particularly if they plan to electrify their vehicle fleet. Early contact with the grid operator prevents delays in securing premises.
Frequently asked questions
Why has grid congestion become so decisive for logistics property?
Many business parks have limited remaining electricity grid capacity, meaning that new high-capacity connections sometimes involve waiting times of several years. This affects both new development and expansion by existing tenants.
Will rents for distribution centres continue to rise?
For marketable locations with good accessibility and sufficient grid capacity, rents are expected to remain under pressure due to persistent shortages; trends are more moderate in less marketable locations.