Making the most of industrial space demand
The industrial property industry has seen the current shortage of industrial or warehouse properties within M25, and in light of this, we continue to see an increase in occupiers looking outside of the M25 and up the M11 corridor, mentioned here in our previous market update. The Strettons industrial team has worked with clients to help them respond to the shift for space outside of the M25 and protect their investments through a creative approach to disposing of larger premises.
The space shortage in London has been a result of the capital losing industrially zoned land at a rate of 260 acres per year. This is despite online retail being a high growth sector and the supporting the infrastructure to provide nearly one in ten of London's jobs. The industrial floor space supply in London is reportedly around 6.1m sq ft, which allows for approximately eight months of supply at current levels of take-up. For comparison, in 2010, there was 15.5m sq ft available.
London is releasing about 100 hectares (247 acres) of industrial land for other uses each year, a rate almost three times greater than the 37-hectare annual target set out in 2010, according to the Greater London Authority (GLA). Over the past 30 years, there has been a nearly 50% reduction in London industrial land, and according to GLA, this trend is expected to accelerate by an estimated 33% decrease over the next 25 years.
Furthermore, a UK Logistics report which included contributors from FTSE 250 warehouse investor found that more than 18 million sq ft of new industrial space is needed annually in the UK to satisfy "exponential" e-commerce growth. However, only 3.5 million sq ft of warehouse space is due to be built over the next 12 months.
How we're maximising industrial space demand
Both in inner and outer London, our industrial agency team have been advising clients on how they can maximise their assets and improve their income stream over the last few years. Advice included subdividing industrial buildings to small easy in, easy out units offered on flexible terms, which allow occupiers to expand or retract as necessary.
Smaller units are higher yielding than larger standalone units and also help to de-risk the landlords of large void space if vacant. Currently, in the UK, over 21 million sq ft of warehouse space is sitting empty, costing property owners a significant amount of money.
Once we have successfully completed these unit conversions, our agency teams were involved in letting the units with 100% occupancy at Georgiou Business Park, Edmonton & Armitage House, Hertfordshire, along with 50% under offer at Advance House Business Mews, Harlow.