Hertfordshire Industrial Market Insights Q1 2025

Hertfordshire is a well-established industrial hub, benefiting from strong connectivity to London, the Midlands, and the North via the M1 motorway. The area's affluent and growing population has driven demand from distribution, online retailers, and delivery firms. While the industrial vacancy rate has risen to 6.3% from under 2% pre-pandemic, with large occupiers like Amazon vacating space, options for tenants needing over 100,000 SF remain limited. Food service logistics companies, such as Brakes and Food Service Logistics, have been active in leasing recently. This strong occupier demand has fueled speculative development, particularly along the M1 corridor, with 56.2 million SF of industrial stock in the region and 620,000 SF currently under construction. Notable recent developments include MX Maple Cross and the second phase of Hertford Logistics Hub.

Tight vacancy rates and high tenant demand have driven rents up, with average warehouse rents reaching £14.30/SF—18.3% higher than three years ago. Although rent growth has slowed, the area's robust economy suggests the potential for stronger-than-expected rental growth in the future.

Industrial rents in Hertfordshire have been rising due to tight vacancy and high tenant competition, with average warehouse rents reaching £14.30/SF, an 18.3% increase over the past three years. Despite a recent slowdown in rent growth to 2.9% year-over-year, Hertfordshire has outperformed the national market, with an average growth of 6.6% over the last five years. The region benefits from its proximity to London and the national motorway network, making it a top performer in the East of England and South East regions.

Watford has the highest rents, averaging £17.50/SF, while areas like East Hertfordshire and North Hertfordshire have lower rents. Prime rents for large warehouses in Hemel Hempstead are around £17/SF, and for mid-sized facilities, they can exceed £20/SF. Looking ahead, rent growth is expected to stabilise, though high operational costs, including fuel, energy, and business rates, may dampen tenant demand for significant rent increases, despite some occupiers being willing to absorb higher rents if they can offset transportation costs.

Industrial investment in Hertfordshire has been subdued, reflecting the broader national trend amid high interest rates. Annual sales volumes have dropped to £97.8 million, compared to £263 million a couple of years ago and a five-year average of £319 million. While yields have stabilised at 5.5%, they have decompressed by around 120 basis points since early 2022. Notable transactions include Crossbay's purchase of The Heights in Potters Bar for £19.8 million, reflecting £286/SF, and Tritax and Abrdn's acquisition of D25, Waltham Cross for £54 million at a 4.8% yield. Aviva also acquired Centennial Park, Elstree for £37.5 million, capitalising on its transport links and potential for nearby residential development.

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