Rental growth eased in the Eastern M25 industrial market in Q2/Q3 2019 for the first time in almost eight years. Across the region as a whole, only one location in Glenny’s twice yearly Rent Survey saw values edge upwards, leading to average rental growth of 0.1% for the period, an increase of 2.1% on the year.
John Bell, Head of Business Space at the Eastern M25 specialist, Glenny said, “The rate of growth in prime industrial rents slowed over the past six months after one of the strongest phases of growth the market has ever seen. But rather than this signalling the end of the cycle, we think the market is drawing breath, and rents will continue to advance with the demand for stock remaining strong and supply still tight.”
The latest Glenny research shows that market dynamics in the region remain positive for further rental growth, with the availability rate across the region below 3.0% (representing 8m sq ft of floor space) and the demand for space close to a record high at just under 15m sq ft.
Bell adds, “Market dynamics remain positive across our region. Our research which reports across all size brackets indicates that the depth of demand for industrial floor space is stronger than it has ever been, with a record number of occupier requirements registered over the past six months especially in the multi-unit mid box sector where despite the uncertain economical and political backdrop the number of applicant enquiries registered on our system has increased by 12%. Supply has been boosted by the completion of a number of new schemes and these have, in general, been met with a healthy response. In fact, take up in the first three quarters of 2019 has already reached 4.8m sq ft, already surpassing the previous year’s total, and almost 50% of the figure has been directed to grade A space.”
The East London and Docklands office markets are still the main impetus behind the Eastern M25 office market, accounting for more than two thirds of the year to dates take up of 1.8m sq ft.
Docklands has seen a strong period of activity in both the occupational and investment markets, with almost 1m sq ft of lettings at Canary Wharf and £1.3bn of investment activity. Outside of the East London market, the largest deal was the 55,000 sq ft pre let to Metaswitch which has provided a major boost to the Enfield office market.
Bell concludes, ‘The East London and Docklands office markets continue to attract large scale occupiers from the more expensive Central London locations. Canary Wharf have just secured the European Bank for Reconstruction & Development, whilst HMRC have signed for the remaining space at their Stratford hub.’
