Grocery delivery boom pushes up London’s commercial property prices


The online grocery delivery space which was one of this year’s pandemic winners has meant that London’s commercial property rental prices have skyrocketed.

Startups including Getir, Gorillas and Zapp all took advantage of the booming need for on-demand grocery delivery through networks of “dark stores”.

Dark stores are small warehouses which are used by firms to house the groceries that are picked and then delivered by gig economy riders and are off limits to customers.

As a result of the number of startups that have attempted to get a piece of the sector, London’s estate agencies say they have watched the average commercial rent in prime central locations soar.

READ MORE: The 5 rapid grocery delivery brands that have come out on top this year

Prime rents for small industrial units of around 20,000 square feet in West London rose to £35 per sq ft, marking a 75% increase from the same period a year ago, according to data from Knight Frank.

East London saw a similar picture emerge, with average rents for small industrial properties climbing to £25 per sq ft in the third quarter, up 47% year-on-year.

The pandemic has “accelerated the industrial and logistics market by five years,” Knight Frank associate Tom Kennedy, told CNBC.

“They’ve hit our industrial market hugely in that inner-city zone, which in turn has increased the rents massively.

“It’s a big arms race for space, and there’s only certain areas in London that work for them. So that, in turn, has created bidding wars as well.”

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