Companies looking for warehousing to the west of London will increasingly face an uphill struggle to find anything suitable as supply heads towards an all-time low.
The Western Corridor Industrial & Logistics Market Report from real estate advisory firm JLL found that record levels of demand in H1 2018 were being met by a decreasing pool of available properties.
The report calculated that take-up was 2.8 million sq ft in H1 across the Western Corridor, which includes towns in the Thames Valley such as Reading, Slough and Basingstoke as well as West London locations such as Heathrow and Park Royal. This was a rise of 32% on the same period last year and 6% up on the five-year average.
In the same period the supply of available space has fallen across the region by 10% to 7 million sq ft with top quality Grade A space falling by 21%.
Jon Sleeman, JLL’s director of UK research, believes that the strong take-up could continue.
“The market could be heading for a record year overall. However, supply is at its lowest level for three years and we predict that it will continue to fall. Vacancy levels across some locations in the Corridor are likely to reach all-time lows and in some locations could approach zero,” he said.
The imbalance between supply and demand has led to an increase in rents of 10% over the last year.
“In our view, this supports a case for more speculative development, especially in the small to mid-size bracket where there is very little Grade A availability,” Sleeman commented.
So far, however, there are only limited signs of this happening, with six speculative schemes totalling 710,000sq ft under construction in the Western Corridor at the middle of the year.
These included a 152,000sq ft development at Prologis Park West London in Hayes (pictured), 167,000sq ft being built by Aviva at Uxbridge Industrial Park and 134,000 sq ft being developed by Valor and Canmoor in Poyle.
