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Investment market transactions

Investment market turnover peaked in H2 2020, with a total of £740m of transactions completing, despite the increased uncertainty created by the pandemic.  This pushed activity in the Eastern M25 industrial market to £893m for the year as a whole.  The largest transaction in the year was SEGRO’s purchase of Electra Park, Canning Town E16 for £133m, reflecting a net initial yield of 2.58%.  The 13 acre 230,000 sq ft estate consists of 10 units, which are let on an average rent of £14.00 per sq ft, with the current ERV in the region estimated at £22.50 per sq ft.  Activity slowed in Q1 2021, with a total of £114m of industrial property changing hands.    

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Prime Investment Yields

Average prime industrial yields have continued to harden over the past nine months as the weight of money targeting the industrial sector has intensified during the pandemic.  Yields edged down to 3.69% on average across the Glenny region, with both the East London and North London and Herts markets seeing yields shift down to 3.50%.  The South East London & Kent and Essex markets also saw yields harden, moving down to 3.75% and 4.00% respectively.  Prime industrial rents have grown by 7.7% per annum on average across the Glenny Region.

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Essex

Key Deal

West Thurrock Trading Estate – Mirastar REIM purchased the 250,000 sq ft Marks & Spencer distribution facility at West Thurrock Trading Estate from Lothbury Property in December 2020 for £38.0m.  The property is let to Marks & Spencer until late 2021, with the purchase price reflecting a net initial yield of 4.35%. 

Prime industrial yields Essex

East London

Key Deal

Electra Park, Canning Town E16  – SEGRO purchased the 10 unit 230,000 sq ft industrial park from Schroders UK Real Estate Fund for £133m in October 2020, with the price reflecting a net initial yield of 2.58%.  The investment is highly reversionary, being currently let at an average rent of £14.00 per sq ft when the current prime industrial rent in Canning Town stands at £23.50 per sq ft.       

Prime industrial yields East London

North London & Herts

Key Deal

Templefields, Harlow – Warehouse REIT, the AIM listed e-commerce and urban logistics investor acquired two distribution warehouse units at Templefields, Harlow totalling 177,000 sq ft for £13.9m in February 2021.  The two buildings extending to 115,000 sq ft and 62,000 sq ft respectively are currently let at an average rent of £6.72 per sq ft with the lease on the larger unit expiring in 2025 and the smaller unit let on a short term lease.  The purchase price reflects a net initial yield of 8.60%.    

Prime industrial yields N London & Herts

SE London & Kent

Key Deal

Quarry Wood Industrial Estate, Aylesford – Patrizia Immobilien AG purchased the 457,000 sq ft 27 unit multi let industrial estate for £37.6m from Rias Investments.  The estate is let to 18 tenants, with occupiers from the manufacturing, distribution and e-commerce sectors.  Current income reflects on average a rent of £4.90 per sq ft, with a net initial yield on the purchase price of 5.76%. 

Prime industrial yields SE London & Kent
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Philip Colman

Philip Colman

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020 3141 3520
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