Warehouses were not immune from headwinds hurting commercial property last year, with the amount spent on UK industrial real estate down by 27% on pre-pandemic levels.
Property agent Cushman & Wakefield said the market has been impacted by higher debt costs and a "detachment" between buyers and sellers over acceptable pricing.
Transactions of warehouse properties totalled £6.4 billion in 2023 according to the firm's preliminary data, which is down from £14 billion in the prior 12 months and below the £8.8 billion pre-pandemic five-year average.
But Ed Cornwell, international partner in Cushman & Wakefield's UK logistics and industrial team, pointed to expectations of more buyer appetite in 2024.
He said: "Rental growth is likely to persist, albeit at lower levels than previously seen."
Cornwell said: "As investors start to see more stability in finance rates and bond yields, we expect to see appetite grow. This growth in activity is expected across the board, from institutional investors, private equity, REITs and developers."
He also said: "Large amounts of capital remains available and is ready to be injected into the logistics and industrial sector. Occupational market dynamics remain fundamentally good, which is also having a positive impact on investor confidence."
The research comes on the same day warehouses investor Urban Logistics said it has observed a more active occupational market in recent months.
The FTSE 250 company said: “Demand for space continues to outstrip supply in the company's specialist sub-sector of last mile, last touch delivery of essential goods in urban locations.”
Since October 1 it has completed seven lease events and it added that two further leases are either in solicitors' hands or under offer.
