The Eastern M25 industrial market has been through an unprecedented upswing since the end of the third COVID lockdown, with take up accelerating in the second and third quarters of the year, supply tightening and demand moving to record highs for the region at 28.6m sq ft. The impact on rents has also been unprecedented, with prime rents in East London hitting £30.00 per sq ft by the end of September and other inner M25 locations following suit.

The region has become a focal point for the re-opening of London, with London Gateway to the east of the city providing a major portal for the capital’s economy. The Big Box market has seen a further 2.1m sq ft of activity so far this year on top of the record breaking 4.2m sq ft of space acquired in the previous 12 months. Retailers have been particularly active in this sector of the market, taking 62% of the total floor space acquired, with Ikea’s pre letting of the 450,000 sq ft Powerhouse at Dartford and Made.com adding to their presence at London Gateway. But this is not the only sector of the economy showing interest in the Eastern M25 market, with a significant film production cluster emerging in Herts, led by Netflix, who acquired the entire 232,500 sq ft scheme at Segro Park Enfield.

Supply has obviously been impacted with a number of schemes having been paused during the pandemic and the availability rate across the region is now back down to levels seen at the end of 2019, 3.3%. Big Box units have been particularly hard hit, with only five second hand buildings on the market at the end of Q3, totalling 688,500 sq ft yet demand for units of 100,000 sq ft and above totals 12.7m sq ft across 55 requirements.

This market imbalance will clearly maintain the competition for space across the market creating the conditions for rental growth and further fuelling competitive tensions in the development sector.