According to real estate advisor Knight Frank, rents for prime UK open storage properties have increased by 24% over the past year, significantly ahead of the 6.8% rental growth recorded for prime industrial and logistics units.
Knight Frank describes open storage assets as ‘typically uncovered industrial-zoned sites featuring concrete surfaces capable of supporting the movement of heavy goods vehicles’, noting that they are ‘utilised for a range of purposes on a long- and short-term basis including car parking, housing large vehicle fleets, last-mile distribution, waste processing and electric vehicle charging’.
The real estate advisor explains that ‘a lack of supply is likely to support further rental growth moving forward’, with fewer than 10 available primes sites for open storage across London.
It says that ‘reallocation of industrial land for residential and other uses has limited the land available for development, while a significant increase in construction costs – including a 58% rise in the cost concrete since 2015 – has impacted viability’.
Deirdre O’Reilly, associate in Knight Frank’s commercial research team, commented: “In recent years, growing occupier demand for better quality open storage sites has led to this nascent sub-sector’s emergence as a specialised and distinct asset class.
“New and larger operators are expanding the scope of open storage requirements, using sites for a broader range of purposes and longer-term components of their operational strategies.
“Like the wider industrial market, prime open storage sites offering higher operational quality, superior features, and excellent connectivity to large urban centres, motorways and ports are the most attractive and increasingly sought-after. However, the supply of prime sites is highly constrained, driving up rental values for the limited number of prime opportunities that are available”.
