London West encompasses three key areas: Slough, Park Royal and London Heathrow Airport. These strategic locations predominantly serve the London consumer and business markets and dominate the logistics and distribution market in the West London. The region is home to several large-scale industrial parks, which, alongside the airport, have led to high levels of economic and employment activity. Whilst a portion of the Heathrow market will suffer from the significant impact the pandemic has had on the aviation industry, the broader west London market is a very attractive location for last mile logistics uses.
London West is a favoured destination for logistics operators, as evidenced by occupiers such as SIG Distribution, Royal Mail and Hermes letting space in 2020. Such activity forced the availability rate down further which ended the year at 3.7%, with little in the way of supporting speculative development activity. Outside of SEGRO speculatively developing a unit at Slough Trading Estate and activity at Prologis Park West, development volumes have been weak. These attractive fundamentals and positive prospects for further rental growth have attracted investors such as SEGRO, Hines, Blackstone and Valor, and driven prime yields down further to a record-low 3.25%.
