London revealed as most expensive city in the world for logistics space

Richard Evans, Head of UK Logistics and Industrial at Cushman & Wakefield

London tops a ranking of 250 global markets as the most expensive city in the world for logistics warehouse space at $24.90 per square foot (psf)/year, according to a new report from real estate advisory Cushman & Wakefield. The UK’s capital tops both Tokyo and Hong Kong which occupy second and third place, priced at $20.07 and $19.93 retrospectively.

The inaugural report: Global Logistics Outlook, ranks the top 250 cities by average rental price per square foot (psf) and annual rental growth. Accompanying London in the top 10 are three European cities, with Geneva ranking fifth ($17.97), Olso sixth ($14.68) and Zurich ninth ($13.97).

Northampton and Bristol feature in the top 40 most expensive cities and follow London as the top UK cities, ranking in places 31 and 32 and both costing $10.37 psf/year. This is considerably higher than prominent global cities Barcelona, Beijing and Boston at $9.64, $9.59 and $9.48 retrospectively.

UK leads rental growth

While characterised as the most expensive city, London also saw the strongest annual rental growth across Europe in 2020, up by 13% on the previous year, followed by Central Scotland at +8%, Northampton at +7%, Manchester at +4% and Bristol at +3%.

The level of growth is impressive against a comparatively fragmented global backdrop, with less than half of the markets tracked recording growth in 2020. The report states that although this is a symptom of the Covid-19 pandemic, it also points to a longer-term stagnation in rents, with less than half of global markets achieving more than 2.5% rental growth per annum since 2017.

Demand outstrips supply

Strong rental growth in Europe and the UK can be pinned to significant supply constraints, stemming from a combination of a lack of developable land and strict planning regimes. Compounding the dilemma further, low vacancy levels and a pause in speculative development during the first half of the year (H1) contributed to a growing supply-demand gap.

In fact, based on year-end data, vacancy continues to trend downward in most of Europe’s key logistics hubs. The report shows vacancy rates of approximately 4% in UK and Dutch markets and hovering around 2% in Rotterdam, Lyon, Prague and Budapest. This points to a severe lack of stock which a rise in speculative construction has been unable to alleviate, putting an upwards pressure on rents.

Record take-up across Europe

While many markets experienced a lull in activity during the first half of 2020 due to strict lockdowns, a resurgence in activity during Q3 and/or Q4 resulted in record European-wide total take up of 345 million sq ft during 2020, 14% higher than 2019 levels of 301 million sq ft. The level of take-up was underpinned by the UK, with +44% uptick in 2020 compared to the prior year.


The global logistics sector not only showed resilience during the strict H1 lockdowns but went on to benefit from consumer and business reactions to the pandemic during H2. Broadening e-commerce, both geographically and by product range, will be a key driver of new space demand over the next decade.

In a post-COVID-19 world, there will be greater focus on using real estate to leverage cost across the whole supply chain, better positioning businesses as they navigate a B2C business model, reshoring, inventory management, labour issues, transportation and ESG. Together, these factors will govern location strategy.

Richard Evans, Head of Logistics & Industrial UK at Cushman & Wakefield, said: “Our data reflects the incredibly strong turnaround we witnessed last year. Post-COVID demand trended at approximately double our annualised average and has continued this year. With the speculative pipeline supply lagging, we expect to see continued rental growth throughout 2021 and the UK to remain one of the top performing markets in the world.”

Simon Lloyd, Partner, Logistics & Industrial at Cushman & Wakefield covering the Midlands, added: “Northampton’s location on the M1 means that it has unrivalled accessibility to the majority of the UK in a day, and also provides an immediate and direct link to the important South East market.”

Lisa Graham, Head of EMEA Industrial Research for Cushman & Wakefield, said: “Europe’s logistics sector is grappling with supply constraints, stemming from a combination of a lack of developable land and strict planning regimes. In contrast to pre-Global Financial Crisis when speculative development represented roughly 80% of new construction, post-GFC has been characterised by predominantly built-to-suit development that has led to severe supply shortages in most of Europe’s core logistics markets. As speculative construction resumed post-lockdowns more product came to market, pent up demand was released and leasing activity accelerated.”