Glenny’s latest research into the Eastern M25 industrial market reveals that demand continues to outstrip supply, despite available space increasing to its highest level since 2014 at 15.8 million sq ft.
In recent years, the supply of industrial floor space in the region where Glenny operates (North London and Hertfordshire, East London and Essex, and South East London and Kent) has seen steady growth, as several new developments have completed. However, the ‘post pandemic boom’ surge in demand for space has led to a persistent shortfall of stock.
John Bell, Head of Business Space at Glenny, commented, “The biggest change in the market over the past few years has been the rise in supply, now at 15.8 million sq ft. Initially, this was driven by new developments completing, but over the past six to 12 months, we’ve seen an acceleration in the supply of second-hand space returning to the market as occupiers either upgrade or rationalise their space requirements. By the end of Q3 2024, total available supply includes 6 million sq ft of new or refurbished space and 9.8 million sq ft of second-hand space, but this remains 35% below the market peak in 2012, when supply reached 24 million sq ft, with only 1.8 million sq ft of grade A space available. Meanwhile, demand peaked above 28 million sq ft in 2021 and has settled at just above 22 million sq ft in the three years since – still well above the demand of 9.1 million sq ft in 2012.”
The shortfall in floorspace across the Eastern M25 has returned to levels last seen before the pandemic, although variations exist depending on unit size. Whilst there is an oversupply of units below 25,000 sq ft, there continues to be a shortfall of larger units measuring over 25,000 sq ft.
Bell added, “There are certain locations across the Eastern M25 where supply has been boosted and letting activity has slowed, but this is not a trend that is repeated across the whole region. There are still locations and sizes of units, particularly new space, where stock is in short supply. The ‘Big Box’ market has seen slightly reduced take up in the first three quarters of this year, yet demand remains strong, with nearly 10 million sq ft of requirements across the Glenny region.”
“Take up in the year to date is at 3.8 million sq ft and we expect full year activity to reach 5-5.5 million sq ft, which is an improvement on the previous two years”, Bell continued. “Most occupiers remain focused on new and refurbished space, which should be the first to reduce as we move through the next 12 months, though lower-grade spaces with less favourable ESG credentials and specifications may take longer to lease.”
The office market has shown signs of recovery in the first three quarters of the year, with take up reaching up to 800,000 sq ft and full year take up expected to reach 1.2-1.4 million sq ft. This is an improvement on the disappointing performance in 2023, when take up was down to 1.1 million sq ft. The strongest levels of activity have been recorded in the Docklands, which saw the first 100,000 sq ft letting since the pandemic with Revolut taking 113,900 sq ft at the recently refurbished YY London 30 South Colonnade, E14.
Supply, particularly of grade A space, remains tight, with only 1.75 million sq ft of new or comprehensively refurbished space available across the region. However, 80% of this space is concentrated in the Docklands and East London, while a lack of supply outside East London has led to rent increases in isolated locations over the past six months.
