Following the announcement that MPs have backed plans to build a third runway at London's Heathrow airport, Len Rosso, Head of Industrial and Logistics at Colliers International offers his views on the implications this will have upon the neighbouring industrial sector:
“Industrial land values and rents are already at record highs around Heathrow, reaching well in excess of £3.5 million per sq ft and £16 per sq ft, respectively. The positive outcome from Monday’s vote on a third runway has removed any uncertainty regarding development and it is likely to help propel demand and rents to even more stratospheric levels as occupiers adapt to the increased traffic flowing through the airport. While this is fantastic news for our economy, both in West London and the UK as a whole, I have deep concerns that the industrial sector will quickly find itself incredibly challenged by the severe lack of suitable land around the airport and the dearth of speculative space in the development pipeline.
“In the face of increased demand, landlords may look at the possibility of two storey warehouse units again, but the industry was slow to take to SEGRO’s X2. Another possibility is creating warehouse space underground, such as what is being planned at Rectory Park in Hounslow, but the costs are significant and the market appetite for this type of space hasn’t yet been tested.
“We need to find a way to ease the development pipeline pressures and I urge local councils and planners to work closely with our industry to deliver a smart and strategic industrial development plan around Heathrow. Not least, a reassessment of the considerable amount of green belt land around the airport that is under council jurisdiction, which has strong potential to be converted for industrial use.”