Demand for e-commerce space to drive rental growth in London boroughs
Dark kitchens and grocers could create 12m square foot of last mile logistics space requirements by 2025.
Knight Frank has found that there will be an increasing need for spaces for same-day delivery firms, like Amazon, as well as ghost kitchens.
A demand for urban logistics units has sharply driven down vacancy rates in urban areas. In Greater London, the vacancy rate for units under 100,000 sq ft is just 3.1 per cent.
Areas in dire need of more last mile logistics spaces include the local authorities Westminster, Wandsworth, Tower Hamlets, Kensington and Chelsea and Lambeth.
An e-commerce boom is driving rental growth for industrial assets in urban areas.
The east London boroughs of Newham and Tower Hamlets, along with south London boroughs of Merton and Southwark, are expected to record more than seven per cent rental growth this year.
Charles Binks, head of industrial & logistics at Knight Frank, added: “The surge in demand for urban logistics space has been mainly fuelled by ecommerce growth, but also the need for supply chain resilience.
“While ‘just-in-time’ supply chains limit the need for storage and thus reduces the need for warehousing space, the pandemic highlighted issues with this model as global supply chains were shut off. As a result, we have seen a re-shoring or near-shoring of operations, with occupiers moving facilities closer to the end consumer.