Research article

The industrial and logistics market in London and the South East

London & The South East

There has been an unprecedented demand for larger units across the region

Panattoni Park, Luton, 345,000 sq ft due in 2019

Panattoni Park, Luton, 345,000 sq ft due in 2019

Strong occupier demand and the lack of stock in London continues to drive rental growth across the region

Savills Research
Figure 3

Key statistics 
Source: Savills Research


The quality balance of the supply has shifted as speculatively developed units have come to the market. Grade A stock now makes up 69% of all space on the market totalling 3.83m sq ft across 17 units, a 108% increase on the amount of Grade A space available in 2017.

Increased speculative development paired with large second-hand units returning to the market such as Tectonic 620 comprising 617,393 sq ft has caused supply to rise. Current supply totals 5.54m sq ft, representing a 42% rise from 2017, 71% of this supply is under 200,000 sq ft, which correlates with long-term take-up trends with 64% of deals being in the same size band. Unit sizes increase as you move north with the largest units, Tectonic 620 and Altitude both being in Milton Keynes.

Figure 4

Supply rises in smaller units
Source: Savills Research


Take-up levels increased 33% in 2018 reaching 6.35m sq ft through 20 separate deals, the highest amount of activity since 2014. The average deal size has risen by 66.4% from 2017 reaching a record high of 312,379 sq ft for the region, a 40% increase above the long-term yearly average.

Build-to-suit transactions accounted for 45% of deals within the region, totalling 4.58m sq ft. The largest deal in the region was Lidl acquiring land and self-building 1.1m sq ft in Dunstable.

We are expecting a strong start to 2019 with 1.5m sq ft of warehouse space already under offer.

Figure 5

Take-up rolling average reaches new high
Source: Savills Research

Development pipeline

There are eight units under construction totalling 1.52m sq ft, but there are no units under construction inside the M25, and just two in the Home Counties. The largest unit due for delivery in 2019 is Bedford 405 where Goodman are speculatively developing 405,000 sq ft, set to reach practical completion in Q3 2019.

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