London has topped a list of 250 global markets as the most expensive city in the world for logistics warehousing space, according to a new report by Cushman & Wakefield.
The capital recorded an average rental price per sq ft of $24.90 (£17.50) per year. Hong Kong was in second place, with pricing of $19.93 per sq ft, followed by the San Francisco Peninsula in the US at $18.25 per sq ft.
Northampton and Bristol were two other UK locations featuring in the top 40, jointly ranking in 31st and 32nd place at a cost of $10.37 per sq ft.
Both ranked higher than Barcelona, Beijing and Boston, respectively at $9.64, $9.59 and $9.48.
London also saw the strongest annual rental growth across Europe in 2020, up by 13% on the previous year. It was followed by central Scotland, which grew by 8%; Northampton, up by 7%; Manchester, up 4%; and Bristol, up 3%.
C&W said the growth rates stood out against a “comparatively fragmented” backdrop globally, with fewer than half of markets recording rises last year.
Meanwhile, vacancy rates stood at 4% in the UK. This narrowed to just 2% in Rotterdam, Lyon, Prague and Budapest, indicating a “severe lack of stock” that has put upward pressure on rents.
Across Europe, take-up surged to 345m sq ft during 2020, boosted by a resurgence in the second half of the year. This was up by 14% on 2019 levels. Its performance was underpinned by a 44% uptick in the UK.
Richard Evans, head of logistics and industrial UK, said: “With the speculative pipeline supply lagging, we expect to see continued rental growth throughout 2021 and the UK to remain one of the top-performing markets in the world.”
Lisa Graham, head of EMEA industrial research, said: “Europe’s logistics sector is grappling with supply constraints, stemming from a combination of a lack of developable land and strict planning regimes.
“In contrast to pre-global financial crisis, when speculative development represented roughly 80% of new construction, post-GFC has been characterised by predominantly built-to-suit development that has led to severe supply shortages in most of Europe’s core logistics markets.
“As speculative construction resumed post-lockdowns, more product came to market, pent-up demand was released and leasing activity accelerated.”
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