By Mia Hunt

Rents south of the river on the up

A lack of warehouse space in south London has led to rising rents as occupiers compete for available units.

Traditionally, the markets north of the river in London have outperformed those to the south, especially in terms of rents achieved for warehouse space over 50,000 sq ft. However, Savills has started to see a shift
in the past three years with rents to the south of the Thames, in areas such as Belvedere and Dartford, now exceeding those to the north, such as Thurrock and Purfleet, by up to 15%.

In 2014, industrial rents north of the river averaged £8.20/sq ft, significantly more than the average of £5/sq ft achieved in south London. Since then average rents south of the Thames have caught up with and surpassed those in north London - in 2017, average rents stood at £7.50/sq ft in the south and £7.10/sq ft in the north.

“This can largely be attributed to the lack of supply on the southern side, which in turn has seen rents soar as occupiers compete for a limited number of available units,” says Jack Booth, an associate in Savills’ industrial and logistics team.

The lack of space is partly due to the migration by businesses further south as they are pushed out of premium industrial hotspots such as Charlton, Lewisham and Greenwich, according to Booth.

Competition for land is another factor. “Housebuilders in these locations have capitalised on rising residential land values and bought up swathes of former industrial land that has recently been reallocated for residential uses,” says Booth.

Unprecedented take-up

While take-up in the 50,000 sq ft-plus size bracket to the north remains strong (skewed somewhat by Amazon’s 2.2m sq ft warehouse in Tilbury), the south is now also seeing unprecedented levels of take-up. And with only four schemes in the development pipeline between Greenwich and Dartford, Savills calculates that there is just over one year’s supply remaining in these increasingly popular markets.

“As London’s population continues to grow, occupiers need to move to locations best placed to serve customers,” says Booth. “For example, the growth of online retail and the expectation from consumers that deliveries be made within hours has put pressure on businesses to find warehousing that offers excellent connectivity. For this reason, schemes in the east, on both sides of the river, are ideal.

“However, high demand coupled with a critical lack of supply, particularly on the south side, means that rents are likely to carry on rising.”

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