The need to champion these sectors is more pressing than ever. Over the past 10 to 15 years, there have been a number of trends brewing, namely the growth of online retail and the logistics needed to support that, coupled with the release of vast swathes of industrial land for housing development, that has ultimately led to a significant supply and demand issue in London.
Our research report recently published with CBRE showed that the current vacancy rate in the South East region has compressed to just under 1.8% of the total stock, having been 6.2% at the end of 2019.
These market conditions are causing exponential rental growth and forcing some tenants to move out of London, particularly manufacturing and makerspace tenants. Due to the length of leases and standard break clause terms, it is only now that we are starting to see the true impact of these longer-term market trends. It is not overly dramatic to say that we are rapidly heading towards a crisis point which will have significant environmental and economic impacts on London and the wider South East. Indeed, our report with CBRE concluded that, at the current monthly take-up demand, existing available space in the region (including speculative developments under construction), would only last five months.
As all parts of London continue to densify and experience growth, and with places increasingly becoming home to a broader mix of activities, industrial land and logistics operations must find ways to operate more efficiently and sustainably and be better integrated into the urban fabric of the city. One positive observation of the current situation is that higher industrial land values are providing market pressure to deliver stacked, multi-level schemes. A point ILSB discussed at length with the GLA, which was encouraged by the new London Plan.
At the same time, the sector is undergoing significant structural change, adapting to new technologies that are changing the way it operates and playing its part in tackling climate change. Board members will be establishing a number of task-and-finish working groups to explore issues such as decarbonisation and logistics, last mile logistics demand in Outer London and unlocking industrial/residential c‑location development and the Board will also continue to provide cross-sector input to support the GLA with their workstreams.
If you are a business looking to make a difference in the industrial and logistical sector, the ILSB would be delighted to speak to you about joining the Board. If you are interested in learning more about the group, please get in touch with Sarah Bevan.
