Industrial and office rents scale new heights across Eastern M25 region

Prime industrial rents in the Eastern M25 region have been on an upward trend for the best part of seven years, rising by 46.5% (6.0% per annum) and surpassing previous peak levels set in 2006/07.  All sixteen locations reviewed in Glenny’s biannual Databook have set new rental peaks this quarter, with the most significant increases being in Charlton/Woolwich (50% above previous peak rent) and Tottenham/Edmonton (43%). The office market has also followed suit, with prime rents growing by 53.3% (10.0% per annum) since the up phase of the current rental cycle began in 2014. Increases in industrial rents have been driven by the rise in demand from the upsurge in online retailing and order fulfilment companies, who have escalated competition for space. John Bell, Managing Partner at Glenny, said: “The depth of demand for industrial space has intensified over the past few years and the dynamics of the market have changed substantially.  Demand has been outstripping supply for three years now and rents have been driven up as a consequence.” Average prime rents have increased by 7.5% per annum over the past three years, while secondary rents have risen by 10.2% per annum. The Eastern M25 office market has also seen a significant change in fortunes over this period, although the upturn demand has not been as significant.  At the forefront of the surge in office rents has been the East London market, where the arrival of the Elizabeth line has meant that certain locations can offer an alternative to the more expensive Central London markets. Improved communications, coupled with tightening supply due to permitted development rights have pushed prime office rents up by 10.9% per annum over the past three years, with the secondary market seeing growth of 13.0% per annum. Bell continued: “We are optimistic about activity for the remainder of the year, with a number of new industrial schemes expected to be completed.  Around 2m sq ft of new space will be completed by the end of this year, which will help to meet the growing demand from occupiers for grade A space.”