Rents set to rise by up to 10 per cent

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Property agent Lambert Smith Hampton is predicting rent rises in the logistics sector of up to 10 per cent in the coming year.

In its new national Weather Map Report the company said that industrial rents will rise with just over half to UK and Ireland centres experiencing above average rent increases.

Based on information from its national network of 30 offices, Lambert Smith Hampton’s analysis of 35 UK and Ireland centres revealed that rent growth will accelerate from 1.4 per cent in 2006, to 2.9 per cent in 2007 and 3 per cent in 2008, before settling down at 2.8 per cent per annum.

Rent hotspots are headed by Peterborough, where prime rents are expected to increase by 10 per cent to £5.50 per sq ft; Glasgow, with rents up 9.1 per cent to £6 per sq ft, and Birmingham, up 8.7 per cent to £6.25 per sq ft.

As well as the need for cheaper and more available labour the report notes that the demand for distribution space will “continue to create a shortage of sites in many locations and intense competition for sites will drive up land prices, particularly in well-established distribution locations in the South and Midlands – in London land prices have reached £4 to £5m per hectare”.

Planning restrictions also have a part to play as these will “increasingly push distribution operators towards new and less established locations, attractive due to good access to markets, accessibility of transport hubs, availability of sites and a sympathetic planning regime”.

Mike Alderton of Lambert Smith Hampton points out: “The industrial landscape has been shifting over the past 30 years, as the UK economy has moved more towards services. With consumer spending now accounting for 77 per cent of total UK output, it is not surprising that the industrial market has seen a shift towards distribution at the expense of manufacturing.”

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