The supply of warehouse floorspace in the key Heathrow market is at its lowest level for 11 years, helping to push rents up.
Research by surveyors JLL shows just 9.2m sq ft available in the key Heathrow and M4 corridor markets, the lowest since 2003.
The supply of good quality modern space fell dramatically, down by 24 per cent in the last year.
In the first half of 2014 1.4 million sq ft was taken up in West London and 1 million sq ft in the Thames Valley.
Deals include Asda signing for a new 115,000 sq ft BTS warehouse at Titan in Heathrow for online fulfilment and delivery service.
There are currently eight schemes speculatively under construction totalling around 640,000 sq ft. Most is close to the Heathrow and Park Royal areas.
With landlords now enjoying the upper hand in rent negotiations, typical rent free periods have halved in the last year and prime headline rents in Heathrow for estates around the airport now stand at £13.50 per sq ft compared to between £12.50 and £13.00 last year.
Andy Harding, Head of JLL’s Industrial & Logistics team, said: “The lack of Grade A space is driving rental values up and leading to tightened demand, which simply won’t be met by current speculative development levels. Good economic indicators and the rise of internet retailing mean that the supply crunch looks set to continue.