1、 and considerations of the UK Industrial&Logistics Real Estate Market for the year aheadUK Logistics Real Estate The year ahead UK LOGISTICS REAL ESTATE THE YEAR AHEAD21.6.2.7.3.8.4.9.5.10.RENTAL GROWTH TO CONTINUE BUT AT A SLOWER PACEPRICING HAS STABILISED BUT DOWNSIDE RISKS REMAIN FOR SECONDARY AS

2、SETSVACANCY RATES TO RISE BUT REMAIN LOW RETURNS TO OUTPERFORM OTHER SECTORSCONSTRAINED DEVELOPMENT ACTIVITY WILL IMPACT AVAILABILITY OF NEW SPACEINVESTMENT VOLUMES TO IMPROVE,BUT REMAIN MUTEDTAKE UP LEVELS TO RETURN TO PRE-PANDEMIC NORMSINFLATION HEDGING POTENTIAL WILL SUPPORT INVESTMENTOPERATING C

3、OSTS TO RISEBIFURCATION OF PERFORMANCEKey expectations for 2023/24UK LOGISTICS REAL ESTATE THE YEAR AHEAD3Source:MSCI,Oxford EconomicsRENTAL GROWTH TO CONTINUE BUT AT A SLOWER PACEWe expect continued rental growth through 2023 and beyond.Despite the reduced levels of occupier take-up and enquiry lev

4、els we have recorded in recent quarters,the market remains supply constrained,and this is continuing to drive rental growth.The MSCI monthly index indicates that 1.1%growth was recorded in the first two months of 2023,with further growth anticipated throughout the rest of the year.Average rental gro

5、wth for UK industrial is expected to reach around 4.2%in 2023(Oxford Economics).While this is below the levels recorded over the past two years,it is in line with pre-pandemic years.If we exclude the pandemic years(2020-2022),the five-year average(2015-2019)rental growth was 4.3%per annum(MSCI).Whil

6、e rental growth is set to continue,the feverish levels of occupier demand seen in 2020/2021 have subsided and a shallower pool of demand is likely to drive up the incentives offered by landlords.We expect rent-free periods to return to more normal,pre-pandemic levels,which will have the effect of mo