London is the world's most expensive industrial location

12 Mar, 2007, London

The area around London's Heathrow airport retains its position as the world's most expensive industrial location in this year's edition of Industrial Space Across the World, a report by global real estate consultancy Cushman & Wakefield.

One square metre of prime industrial space at London Heathrow costs €252 per square metre per year to occupy. London is followed by the Me'ouyan Soreq district in Rishon Le-Zion in Israel in second place and Tokyo in third.

Industrial Space Across the World looks at 85 of the world's top industrial locations. The main global ranking is compiled by taking the most expensive location in Euro terms in each of the 45 countries monitored.

In this year's survey, 90 per cent of the locations showed rising or stable occupancy costs for industrial space in 2006, with only 10 per cent showing a fall. Globally rents, which form the main part of occupancy costs, increased by an average 6.5 per cent in 2006 compared with 1.9 per cent in 2005.

Elaine Rossall, Cushman & Wakefield's Head of Business Space Research & Consultancy in Europe, the Middle East and Africa, says: "Many of the world’s top industrial locations are continuing to benefit from the globalisation of manufacturing and from the internationalisation of the main logistics networks. Occupancy costs are also being driven up in many locations because of competing pressures from other, more high-value land uses, in particular from residential and retail."

Regarding Heathrow, Kevin Storey, Cushman & Wakefield's Head of Industrial Space in the UK, comments: "With the opening of Heathrow airport's new Terminal 5 in March 2008 leading to the so-called 'T5 effect', we can expect an even greater demand for airport-related industrial and warehouse space. Already the pressure for development in the immediate Heathrow area, coupled with the lack of available land, is pushing developers to introduce two-storey warehouses. As an occupier, you have to need to be in Heathrow in order to justify such high occupancy costs."

The biggest riser in the ranking is India and the city of New Delhi, which has gone up ten places to reach 14th position. India also accounts for three of the top ten locations in terms of percentage rises of rents in local currency terms, with prime industrial rents up 50 per cent in Mumbai, 33 per cent in New Delhi and 25 per cent in Bangalore.

Sanjay Verma, Executive Managing Director of Cushman & Wakefield in South Asia, comments: "Manufacturing is undergoing a renaissance in India as export volumes rise rapidly, with the sector becoming increasingly attractive. Central Government is continuing its commitment to legislative reforms and improving infrastructure, which in turn is backed by the availability of private capital, strong domestic demand and a large pool of skilled and unskilled labour."

"In Mumbai and New Delhi, a shortage of space has pushed up rents and led to manufacturing and logistics activity shifting to industrial parks outside the main cities," Sanjay continues. "Meanwhile, international manufacturers in such sectors as automobile, biotech, pharmaceutical and telecoms are particularly favouring setting up of operations in the economically flourishing states of Gujarat, Maharashtra, Andhra Pradesh and Tamil Nadu."

Ends

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