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London tops Hong Kong for world’s priciest warehouse space

This Dec 9, 2020 photo shows a warehouse used by LogsNearMe.co.uk, in Shepton Mallet, UK. (LUKE MACGREGOR / BLOOMBERG)

London is the most expensive city in the world to rent a warehouse, with price growth outstripping Hong Kong and San Francisco as the pandemic fuels a dash for space.

Logistics properties cost US$24.90 a square foot in the UK capital in 2020, soaring 13 percent in a year, according to data from real estate firm Cushman & Wakefield Plc published Wednesday. Consumers responded to COVID-19 lockdowns by shopping more online, pushing retailers to bolster their delivery services, particularly in Europe where suitable logistics sites were already scarce.

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Demand for space is getting “ever stronger,” Nick Preston, fund manager for Tritax EuroBox Plc, which owns warehouses across Europe, said in an interview. “That is all about the demand from ecommerce and supply chain refinement.”

Across Europe, companies rented a record 345 million square feet of warehouse space last year, 14 percent higher than 2019 despite strict lockdowns that partially closed the market in the first half of the year. In the UK, the total space rented jumped 44 percent, according to the report.

READ MORE: Pandemic boosts demand for logistics and industrial space

Rents in Hong Kong, meanwhile, were about 10 percent lower than the prior year, while property hotspot San Francisco was broadly flat.