Developer Prologis has acquired a site in south London for around £3 million per acre as industrial land prices in the capital continue to rocket.
The US developer has struck a deal with landowner Thames Water to buy 10 acres of land on Beddington Lane in Croydon. Prologis beat a long list of bidders for the site, which is located in a severely supply-starved market and can accommodate around 200,000 sq. ft. of industrial and logistics space The deal comes only weeks after a site in Borehamwood, just north of London, was sold for a record price of around £3.2m per acre to First Panattoni, reflecting both developer appetite to build around London and the scarcity of land.
“All the big developers want to get building; the only thing holding them back is the scarcity of land,” one agent said. “That’s why, when a well-located site comes to market, practically every developer – as well as some occupiers – are piling in to secure it. These prices are just about sustainable as rents are also being driven up because of the supply/demand dynamic, but it will only take a hiccup in the market for it to become unsustainable.”
Market sources suggest a new record price for industrial land could be set when a 14-acre site near Heathrow, the former home of the British Airways (BA) training academy, comes to the market. BA has yet to start marketing the scheme but is being advised by Savills on options for the site. “For a site at Heathrow of that size and scale, I would expect strong appetite from developers and believe it would easily blow the £3m-per-acre price mark,” a source said. “These opportunities are rare and with a number of UK and overseas developers looking to place money in the industrial sector I’d expect a very aggressive bidding process.”
Savills advised Thames Water on the Croydon land sale. All parties declined to comment.