A report from Jones Lang Lasalle suggests rents will rise around Heathrow in 2011.
The Western Corridor report says that headline rents in the Heathrow and Western corridor industrial market will rise in 2011, with prime pre-let rents reaching £14 per sq ft on key sites.
Bridget Outtrim, director, Jones Lang LaSalle’s National Industrial & Logistics team, said: “The immediate vicinity of Heathrow’s cargo terminal is an exceptional location where, to date, there has been no premium stock available to set rental levels but there are two key sites coming through for development which could push up pre let rents. Like the rest of the UK however, the gap between grade A and grade B space will widen, with headline rents continuing to fall for secondary stock”.
According to the report the industrial and warehouse markets around Heathrow and the Western Corridor have proved to be relatively resilient and whilst occupier activity has slowed since 2006 it has at no point dropped close to 2002 or 2003 levels. With just under 2 million sq ft let during the first nine months of this year – evenly split between the West London and Thames Valley sub markets – Jones Lang LaSalle predicts occupier take up is on track to match or maybe exceed 2009 levels (3.2million sq ft).
Bridget Outtrim continued: “2010 looks like it will have a strong finish. There are a number of air cargo operators in the market who are considering sites around Heathrow and activity from retailers seeking large units along the A40 will give a welcome boost to the year end take up figures”.
Jones Lang LaSalle anticipates future occupier demand in the region will be generated by further corporate activity in the logistics sector, as occupiers continue their quest for greater efficiency and cost savings. Food and drink will remain as key staples in this market and the retail sector will become more prominent as its new business processes evolve. Recycling and waste disposal businesses have emerged in 2010 and their need for large sites and open storage land, away from residential areas, possibly with railway access, will persist.