A recent report released by London Assembly member Jenny Jones suggested that London is currently losing industrial land at twice the rate forecast by the currently adopted London Plan.

By contrast however, industrial and logistics property arguably has never been in such strong demand, in the most part driven by the well documented structural change in the nations shopping habits. The concept of ‘urban logistics’ has created demand from a number of sectors, including online retail, last mile delivery, parcel/courier businesses, and demand for warehousing to be located closer to its catchment area. Indeed, latest Savills research estimated that online retailer Amazon accounted for 23% of all UK warehouse space taken in the last quarter.

In North London, its proximity to the key transport nodes such as the North Circular, the M25 and proximity to a vast population catchment, the implications of the current balance between supply and demand are causing rents to rise. For example, rents in Enfield have increased by over 8% in the last six months and now stand in excess of £9.75 per sq ft for units over 50,000 sq ft.

With average take-up levels close to 500,000 sq ft per year and current supply at just 350,000 sq ft, equating to less than a years’ worth of supply it is no surprise therefore that further rent rises are forecast for prime warehouse units.

There is currently c.3 million sq ft of warehouse space in the Enfield development pipeline. Of this, c.2 million sq ft has planning permission including one scheme with outline planning consent for 500,000 sq ft in 'supply-starved' North London.

The 26-acre site fronting the North Circular, in Edmonton, will be known as 'UrbanLogistics.London', and is being brought forward by La Salle Investment Managers with Fairacre as development manager. The site could provide a single building of 300,000 sq ft, the only unit of that size within the North Circular, as well as an 80,000 sq ft unit fronting this main arterial route.

However, we estimate that the majority of this scheme cannot be delivered until post-2017, therefore not adding to the immediate built stock supply and keeping the upward pressure on rental levels.

Navigation Park, located off Morson Road, is currently the largest speculatively developed scheme in North London, totalling over 175,000 sq ft in 3 units being undertaken by Segro. The scheme received outline planning permission in late 2013 and construction started on site in October 2015. Along with other developments, such as Enfield Distribution Park, which provides space for units up to 300,000 sq ft, this will help offer some much needed supply in the short term.

Developers, however, are mindful of the current supply and demand dynamics and we envisage that any new speculative development will be considered and timed accordingly to capture the anticipated rental growth, which we project to reach £11 per sq ft by 2019.

Further information

For more details contact Savills Industrial & Logistics