The South East
In My View – South East & London Logistics and Industrial By Heather Harvey-Wood, Partner, National Logistics & Industrial,Cushman & Wakefield
The logistics and industrial sector has seen robust levels of activity nationally. In London and the South- East demand levels are 10% above pre-pandemic norms as of H1 2024. There is good demand for properties
along the M1 corridor, with notable
activity in Hemel Hempstead, Luton and Dunstable, particularly for larger regional distribution facilities. In addition, the M4 and M3 corridors remain a key target for developers looking to acquire land or sites for redevelopment, to capture pent up demand due to a lack of good quality stock.
Rents have risen significantly over the past three years, with the growth attracting investment from both traditional UK investors together with international money keen to invest in the strong fundamental drivers of the UK logistics market, particularly in London and the South-East, albeit investment volumes have reduced over the past eighteen months.
Whilst a recent pause for thought from occupiers has tempered rental growth, we expect growth to continue at a more steady and less sporadic pace than we had seen throughout the pandemic; much below the 11% and 8% average annual growth seen over the last three years in London and the South-East respectively.
The strength of the sector, coupled with the pursuit of new and Grade A space from occupiers has resulted in a programme of speculative development across the region. There has been a diverse range of sizes delivered across core London and South-East locations which benefit from good road connectivity, access to ports of entry into the UK and key consumer markets.
Cushman & Wakefield have been involved with a number of key deals and instructions within the region, all of which point to strong conviction
in the markets performance and signal a cautious return of speculative development activity.
These include the sale the 8.1 acres former Dell site in Bracknell – the largest site sale in the Thames Valley in a number of years – where new owners Jansons Property will be redeveloping a former office building to provide Grade A logistics and industrial space. Cushman & Wakefield have also sold the former EON Call Centre in Bedford, which extends to 5.88 acres and will be developed by new owners Graftongate with Paloma Capital.
In addition to this sale activity, Cushman & Wakefield are marketing a number of the largest speculatively developed single units across the region - at GPark Basingstoke (208,000 sq ft) developed by GLP, Purfleet343 (343,000 sq ft) developed by Goodman and The Base Crawley (150,000 sq ft) owned by NFU, all of which are ready for immediate occupation.
Whilst demand levels of ‘mid-box’ logistics has fluctuated and been increasingly location nuanced, post-pandemic the smaller MLI sector for units below 30,000 sq ft has remained robust with good levels of demand and transactional activity across the region. We have seen a trend of occupiers willing to be more ‘footloose’ on location to secure the right property at the right price, with both ESG and staff wellbeing being of increasing importance.
As we look forward, the logistics industry is undergoing significant transformation, with sustainability emerging as a key driver of innovation and operational efficiency. Cushman & Wakefield’s recent report focusing on Sustainable Logistics provides a thorough analysis of how the sector is evolving to respond to environmental challenges while maintaining cost competitiveness.
Build it Well…and they will come! James Shillabeer, Partner at Bray Fox Smith comments
It’s been an interesting time for southeast regional offices since the pandemic. Whilst many businesses have enforced a return to the office, there are still a large number of businesses that are allowing staff to continue to work from home and the trend over the past couple of years has been companies taking lease event opportunities to consolidate offices and significantly downsize their office footprint, in some cases by as much as 50%. However, the opportunity to downsize is seeing many occupiers take significantly better space than they previously occupied which is being driven by two factors, the war for talent to retain and recruit the best staff, and to assist with getting staff back to the office.
The drive from occupiers to take better space has in turn driven Landlords to deliver better buildings and there is now a new category of building above the typical Grade A offer which is referred to as ‘Prime’ or ‘Best in Class. These buildings typically offer the modern-day office occupier everything they and their staff could ever need from being uber sustainable and assisting with an occupiers drive to Net Zero in 2050, to the abundance of amenities that staff absolutely love which include a good quality f&b offer, a gym, end of journey facilities, dedicated external spaces (private & communal) and a well thought out community events programme.
Those who have been brave in delivering these ‘best in class’ buildings have reaped the rewards. Legal & General hit the button on the repositioning of the old Hutchinson Three building in Maidenhead town centre, now re-branded Tempo. The Sutton CA designed scheme measuring 140,000 sq ft, includes 13,000
COMMERCIAL PROPERTY MONTHLY 2024
sq ft of amenity space inclusive of an 8,000 sq ft communal roof terrace and 127,000 sq ft of ‘really cool’ office space. The sustainability credentials are also on another level with an EPC A, BREEAM ‘Excellent’ and a NABERS ‘Design for Performance’ rating of 5.5 stars. The combined offer has seen L&G fully let the building ahead of PC of the works, with Johnson & Johnson taking 97,000 sq ft and Stanley Black & Decker taking 30,000 sq ft with record rents for both Maidenhead and the wider Thames Valley set on both deals.
Regal (Regal London) hit the button on The Clarendon Works in Watford, which saw the demolition of the old Hannay House to make way for a new 140,000 sq ft, 11-storey, amenity rich and super sustainable office building which PC’d in July of this year. Regal’s original planning consent was for a 9-storey office building however they were so convinced about their ability to let the space that early on during the construction phase, they sought consent to add an additional two floors on to the building and eventually delivered an 11-storey building that dominates the Watford skyline. Similar to Tempo, the building offers and abundance of amenity with 5,500 sq ft communal roof terrace, a gym and two on-site cafes, one on the ground floor and one on the 11th floor with the latter being more of café come restaurant, and open only to those that work in the building. Regal have let 9 out of the 11 floors to Allwyn who took 63,500 sq ft, Epson who took 30,500 sq ft and YoooServe who provide the buildings co- working/flex offer. Again, record rents were set for both Watford and the wider northwest M25.
Build it, build it well…and they will come!! 29
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