Warehouse rents to continue to rise in London in event of no-deal Brexit
Warehouse space in London is set to see the highest amount of rent growth in the event of a no-deal Brexit, according to the latest analysis from Savills.
The property advisor is suggesting rent rises of 1.1 per cent in 2020 because ‘London industrials have a vacancy rate of just 2.4 per cent’.
Kevin Mofid, head of industrial research at Savills, said: “Even in the event of a no-deal downturn, London in particular continues to have historically low vacancy rates and occupier demand continues to rise. As online retail continues to grow the need to have more warehousing located near population centres will remain.”
According to research earlier this year from Savills, London is set to require up to 6.49 million sq ft of warehouse space per year, a 419 per cent increase on current levels, in order to keep up with the delivery of new homes in the capital.
The British Property Federation’s (BPF) ‘What Warehousing Where?’ report states that, at a national level, 69 sq ft of additional warehouse space will be needed per home in order to fulfil deliveries generated by the growth in online retail, which now accounts for as much as 21.4 per cent of all retail transactions in the UK.
Savills has calculated that in order to meet current demand for housing in the capital, London will need to build up to 94,000 homes per year. At present, based upon the five-year average, only around 1.25 million sq ft of industrial development is completed annually in London, suggesting a potential short fall of 5.24 million sq ft of warehouse space.