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Industrial land values are reaching record levels in London and South East

25 03 22 Industrial land values are reaching record levels in London and South East hero

Commercial real estate firm publishes its latest Industrial and Logistics Viewpoint.


The London and South East markets continue to be characterised by a lack of development sites, which is driving land values to new record levels, according to Colliers’ latest Industrial and Logistics viewpoint. 

The report details how land values in the South East rose by 60.5 per cent (y/y) in January 2022 from £1.6 million per acre to £2.5 million per acre. London values witnessed even stronger average growth of 79.9 per cent (y/y) from £3.9 million per acre to £7.1 million per acre in January 2022. Key land transactions include Trammell Crow paying approximately £2 million an acre for 19 acres in Milton Keynes; Panattoni paying circa £3.7 million an acre for 10 acres in Crawley and Bridge Industrial purchasing 2.6 acres in Croydon for approximately £5.7 million an acre.

Rents are also rising with the latest MSCI data showing an average annual rental growth of 13 per cent for London and 7.9 per cent for the South East in 2021. 

Across Greater London, average prime rents have risen by 78.5 per cent over the five-year period 2016-2021 but this growth accelerated dramatically in 2021 when the average prime rent reached £22.30 per sq ft in December, up 25.4 per cent y/y. The West London market is witnessing similar market dynamics with headline rents for units of between 40,000 – 100,000 sq ft at around £21 - £25 per sq
ft, depending on size and unit specification. For example new build units in West London, subject to size and location, headline rents have reached circa £30 per sq ft.

Len Rosso, Head of Industrial and Logistics at Colliers commented:“Looking into 2022, Colliers expects a continuation of these market dynamics with strong rental growth and increasing demand for good quality units within London and the South East. Occupiers will continue to struggle to fulfil their requirements and some will become less location-sensitive, given the rising rents and lack of availability resulting in them looking further afield to secure space.”

Demand for warehouse space for 100,000+ sq ft in the London and South East market reached a new record of 9.2 million sq ft in 2021, up 16.4 per cent year-on-year as occupiers raced to secure space, according to Colliers’ Industrial Viewpoint. 

The report demonstrates that when analysed within the national context, take-up in the wider South East market (including London) accounted for a national share of 18.2 per cent, the second largest share after the Midlands (38.8 per cent).

Third party logistic provides (3PLs) and retail related businesses continued to be the main drivers of activity last year. In terms of pure online players, Amazon acquired more than 2 million sq ft of space across 13 warehouses in the market; agreed a pre-let for 387,000 sq ft of space at London Gateway Logistics Park; Ocado took the speculatively developed unit at Panattoni Park Luton (346,132 sq ft) and the online food delivery company, Getir, acquired three units totalling 110,925 sq ft at Waltham X in Waltham Cross, London.

Elsewhere, Colliers advised on high-profile deals including Ikea taking the speculatively developed Powerhouse 450 (450,000 sq ft) unit in Dartford prior to completion in August. Tritax Symmetry disposed of two units of 198,750 sq ft and 144,800 sq ft to the electric vehicle manufacturer, Arrival, at Central M40 Banbury, while Ideal Bathrooms and Tutti Bambini agreed to pre-let two speculatively developed warehouses of 108,587 sq ft and 77,307 sq ft at Baytree Milton Keynes. Furthermore, in London, Colliers also let the entirety of the speculative SEGRO Park Enfield scheme (49,171 sq ft, 65,806 sq ft, and 117,476 sq ft) to Netflix.

The wider West London market remains a key UK hotspot for industrial occupiers which operate in London. Amongst some of the most notable deals of 2021, DPD took an assignment of 112,298 sq ft at Colnbrook 112 in Slough, Ocado expanded operations at Segro Park Origin in Park Royal when taking additional 52,806 sq ft at the scheme, and the data centre provider, Global Technical Realty, agreed phased pre-lets of two purpose-built units of 132,575 sq ft and 268,136 at Slough Trading Estate, to name a few.

Elsewhere, Colliers was involved in several lettings which included the 10-year lease of Unit 2 Southern Approach (70,261 sq ft) in Feltham to Hermes; the letting of the refurbished Unit E Premier Park in Park Royal (45,787 sq ft) to The Big RD Ltd and the pre-let of Unit 4 Segro Park Hayes (97,600 sq ft) to Japan Food Centre in Q1 2021. Supply of industrial land and existing units in West London core locations is scarce due to the current occupational supply/demand imbalance. Segro is developing the four-unit scheme, Segro Park Hayes, which is scheduled for practical completion in May. However, the remaining three units are already under offer.

In terms of supply, the London and South East market had 4.3 million sq ft in Q4 2021 representing circa seven months’ supply. These figures also include speculative space marketed for completion in Q1 2022. To put this data into context, 2021 saw the delivery of 3.8 million sq ft of speculative space, but only a handful of units either remained available or were not under offer by the middle of January this year.

Industrial assets in London and the South East continued to remain high on investors’ wish lists with competition as high as ever due to the lack of development land and strong occupier demand throughout 2021. Total investment volumes in London and the South East reached record volumes of £2.4 billion (+137 per cent y/y) and £2.2 billion (+142 per cent y/y), respectively. Amongst some of the key deals in the South East, Colliers advised a confidential buyer on the acquisition of 56,953 sq ft of single-let warehouse at Festival 57 in Basildon while Realty Income Corporation purchased a speculatively developed 364,132 sq ft unit at Panattoni Park, Luton. The unit was let in Q4 last year to Ocado on a new 20-year lease with CPI-linked uplifts and set a benchmark level at around 3 per cent net initial yield. In London, Valor acquired in January this year Gemini Business Park in Beckton for £155 million at a net initial yield of 2.1 per cent.

Yields are at historic lows with the MSCI net initial yield for London industrial assets compressing by 61.2 bps to 2.69 per cent in December 2021, while South East assets recorded a NIY of 3.35 per cent (-56 bps y/y). Annual total returns as a result reached 43.5 per cent in London and 35.5 per cent for assets in the South East.

Supply of investable stock in the wider West London market remains scarce. As a result, following a competitive bidding process, the limited amount of investment opportunities becoming available are trading well above asking price. Consequently, prime equivalent yields have moved in from 3.75 per cent and are now at around 3.00 per cent. A few examples of this include Aviva’s purchase of two reversionary warehouses (Rock & Roll) totalling 58,684 sq ft in Park Royal for £41.03 million (2.49 per cent NIY) from Abrdnand Segro buying Matrix Park in Park Royal as part of property swap transaction with Schroders (£140 million/2.5 per cent NIY). The most eye-watering deal of the year occurred when GLP acquired the highly reversionary with development potential, 12 Waxlow Road scheme in Park Royal (41,781 sq ft) for circa £51 million at a NIY of 1.05 per cent. Looking forward, considering our rental growth predictions, we expect a continuation of this strong investor appetite for well-located investment opportunities.

Andrea Ferranti, head of Industrial and Logistics Research at Colliers commented:The performance of the UK Industrial market is breaking numerous records, driven by occupiers expanding operations, eye-watering rental growth figures and investors betting on the long-term performance of the sector. Looking forward, prime warehouse rents will rise by 12.5 per cent in 2022 and 8.5 per cent in 2023. In addition, increasing rents and land values, construction costs, logistics and labour costs will not dissipate in 2022 and occupiers will need to act swiftly to secure a deal. From an investor perspective, there will be more bidding at uncomfortable levels and purchasers might need to consider speculative funding to seek higher returns due to yields being at historic lows.

“The warehouse of the future will require more highly skilled people, a robust power supply, a good pool of labour and also Grade A workspace to not only attract and retain talent but also investors. More ESG regulations will also be introduced which will further affect the sector from a cost perspective as investors seek to purchase net-zero properties and occupiers are required to adopt more sustainable technologies.”

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Len Rosso

Head of Industrial and Logistics

Industrial and Logistics

London - West End

Len has more than 30 years' experience in the commercial property sector. Having started out as a trainee surveyor in 1983 he moved on to set up Jansons in 1990, a niche agency specialising in industrial in North and West London. In 2004/5 the business was voted Industrial Agency of the Year, this being the first ever non West End national practice to have won this prestigious award. In that same year the business transacted in excess of 3.5 million sq ft which accounted for in excess of 50% of the total transactions for the North and West London market.

Since joining Colliers International, as the Head of the UK Logistics and Industrial Department, the objectives are the same as always, to outperform all competitors whilst providing the highest level of service to all our clients. In 2018, the Colliers International UK Industrial & Logistics team completed over 250 deals totalling over 15 million sq ft. 

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Andrea Ferranti

Director for Industrial Client Engagement

Research and Forecasting

London - West End

Head of Industrial & Logistics Research working closely with the Research & Forecasting team whilst supporting the Industrial and Logistics teams nationally in providing research and advises to clients. Andrea leads on the division’s key research papers which include, but not limited to, the Industrial & Logistics Barometer and the UK Speculative Development Map – both of which have become key benchmark publications highly valued by UK investors and developers alike.

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Hannah Zitren

Associate Director

Marketing & Communications


I am responsible for media relations and generating coverage in top tier broadcast and print media. I work across a range of Colliers’ UK & Pan-EMEA business lines advising on their strategic and tactical PR needs.

My role includes:

·         Developing and executing PR plans for the various business lines to help promote their key messages across all aspects of the media - print, broadcast and social.

·          Media evaluation and reporting objectives, targets and successes across the business.

·         Reputation management and crisis management.

·         Media training.

·         Media engagement: setting up meetings with top tier media and various internal spokespeople to continuously expand and build a presence with property and vertical media network.

·         Consistently delivering service excellence, meeting with business heads of a regular basis and trying to influence the research as much as possible to ensure our content has a strong enough news hook.

·         Key campaigns that I work on include MIPIM; MAPIC; REVO; Midsummer Retail Report; IHIF; Cities of Influence in addition to a host of all alternative property sector research reports.

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