Hertfordshire Industrial Market Insights Q4 2024

Hertfordshire is a well-established hub for industrial activity, attracting manufacturers, logistics, and storage companies due to its excellent connectivity via the M1 motorway to London, the North, and the Midlands. The area's affluent and growing population has further boosted demand for logistics, online retailers, and delivery firms.

The industrial vacancy rate, now 5.8%, has risen from below 2% pre-pandemic, partly due to major tenants like Amazon vacating premises. Despite this, options for large warehouses (over 100,000 sq ft) remain limited, with Borehamwood Logistics Park being the only facility capable of meeting such requirements. Recent notable deals include Food Service Logistics leasing a 160,000 sq ft site and Brakes taking over a 465,000 sq ft former Amazon hub in Hemel Hempstead.

Speculative development is concentrated along the M1 corridor, adding significantly to stock levels, now at 55.4 million sq ft. New developments, such as MX Maple Cross in Rickmansworth and Hertford Logistics Hub, continue to expand capacity. However, vacancy remains tight, driving up rents, with warehouse rents averaging £14.30/sq ft—a 20.6% increase over three years. While rent growth has slowed to 3.6% year-on-year, Hertfordshire still outperforms many UK regions, supported by its proximity to London and strong motorway links.

High rents are most pronounced in Watford (£17.50/sq ft), while prime rents in Hemel Hempstead and for mid-sized facilities can exceed £20/sq ft. Rent growth is expected to stabilise in coming years due to rising business costs, though some occupiers may accept higher rents to offset transport expenses.

Industrial investment in Hertfordshire has slowed amid high interest rates, with annual sales volumes at £86.8 million compared to a five-year average of £319 million. Yields have stabilised at 5.5%, reflecting strong investor interest in top locations. Notable recent transactions include the £54 million sale of D25, Waltham Cross, and Aviva's £37.5 million acquisition of Centennial Park, Elstree.

Hertfordshire's diverse economy, driven by services, manufacturing, and technology, has grown faster than the national average in recent years. Its unemployment rate remains below the UK average, supported by strong population and employment growth. Economic expansion slowed to 0.8% in 2023 due to inflation and high interest rates but is forecast to rebound, with growth of 2.3% expected in 2025. The potential expansion of London Luton Airport could further boost the local economy.

Hertfordshire's strong connectivity via the M1 motorway and affluent, growing population have made it a key hub for manufacturers, logistics, and storage companies. Despite a rise in industrial vacancy rates to 5.8% post-pandemic, large warehouse options remain scarce, with Borehamwood Logistics Park being the only facility exceeding 100,000 sq ft. Recent deals include Food Service Logistics leasing 160,000 sq ft and Brakes acquiring a 465,000 sq ft former Amazon hub.

Speculative development along the M1 corridor has increased industrial stock to 55.4 million sq ft, with tight vacancy driving warehouse rents to £14.30/sq ft—a 20.6% rise over three years. Watford leads with rents at £17.50/sq ft, and prime facilities exceed £20/sq ft. Rent growth is expected to stabilise as occupiers face rising costs.

Industrial investment has slowed due to high interest rates, with annual sales at £86.8 million, down from a five-year average of £319 million. Yields have steadied at 5.5%, with key sales including D25, Waltham Cross, for £54 million and Centennial Park, Elstree, for £37.5 million.

Hertfordshire’s diverse economy, driven by services, manufacturing, and technology, outpaces national growth and maintains low unemployment. After slowing to 0.8% growth in 2023, the economy is forecast to rebound to 2.3% in 2025, with the planned expansion of London Luton Airport offering further growth potential.

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