US funds are increasingly targeting open storage – land to let or storage yards – as demand and rents reach record levels.

Fresh data from Carter Jonas, shared exclusively with EG, reveals a 315% increase in demand for sites over the past two years. Carter Jonas’s figures show a demand of 312 acres in 2019, rising to 537 acres in 2020, before more than doubling last year to reach 1,294 acres (see chart 1).

The average size of sites required has also continued to increase, from 3.3 acres in 2019 and 3.8 acres in 2020 to 5.2 acres in 2021.

With burgeoning demand and a structural shortage of sites, rents have increased significantly over the past year. Carter Jonas found that in London and the inner South East, rents for prime sites rose by an average of 46% over the past six months (see chart 2). In the regional markets, where the demand/supply imbalance is less acute, the rate of growth has been lower, but still strong at 29% over the past six months (see chart 3).

Investors seeking the strongest rents should look to Croydon in south London, said Carter Jonas, where an average rent of £9 per sq ft can be achieved. Elsewhere in the London region, rents average £7.75 per sq ft in Heathrow and £6 per sq ft in Park Royal. In central London, open storage rents are understood to have recently topped £20 per sq ft.

Carter Jonas said this rising demand and associated rental growth was presenting new opportunities for investors in real estate, with numerous US-backed funds being set up to target the sector.