Research released today (Tuesday 8th September) by surveyor JLL shows that tightening supply in the West London M4 corridor will help push rents up.
JLL predicts further rental growth with standard properties in both London and the inner South East set to grow by an average of 3.6% per annum over the five-year period from 2015 to 2019.
This is considerably faster than inflation – and faster than UK economic growth of around 2.6%.
According to JLL’s research, take-up of industrial and distribution floorspace in the Western Corridor during the first half of 2015 was 6% above the half-year average over the past five years. 1.5 million sq ft was taken-up in West London with 1.3 million sq ft taken-up in the Thames Valley. New modern floorspace accounted for around one-third of deals.
Andy Harding, director UK Industrial & Logistics at JLL, added: “With a good level of transactions already completed in Q3, we expect industrial and distribution floorspace take-up in the second half of the year to exceed H1’s level. Supply has continued to diminish and Grade A availability is low, although further speculative development is expected in the next few years.
"There are currently 13 schemes under construction in the Western Corridor totalling around 888,000 sq ft.”
Concluding the briefing, Harding made a few predictions for the year ahead, saying that a return to 25-year leases could be on the cards, that rental highs of £20 per sq ft may be hit towards the end of the year in high-demand areas such as Park Royal and Heathrow, and that we may witness the advent of multi-storey warehousing in the UK, driven by an increase in London population, a shortage of land suitable for development, and a heavier dependency on e-commerce.