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LONDON-Heathrow is the most expensive industrial/warehouse location in the world for occupiers. That is one of the findings from a new research publication on UK and European Airports, Busy Skies, published by property consultant King Sturge..

Prime industrial rents have remained stable in this market despite the turbulent economic conditions. In contrast office rents around Heathrow have fallen by at least 12.5% as the Thames Valley market bears the brunt of the uncertain equity markets and the slowdown in the TMT sector. The propensity of hi-tech occupiers to locate close to airports has accentuated the impact on off-airport office markets.

The fastest growing European passenger airports are regional airports boosted by low-cost carriers. These airports are increasingly important to regional economies. Many do not have established off-airport commercial property markets, at least in part attributable to the poor surface infrastructure around many of these airports. However, airports such as Prestwick have significant plans for aviation-related commercial activity.

Despite the low-cost boom King Sturge has not observed an increase in demand for industrial/warehouse premises around the fastest growing airports. Although the budget airlines do carry freight this is constrained by short turn-around times and operating on short-haul routes. In addition, the ‘no-frills’ approach requires less catering support than the traditional airlines.

Public transport links to many airports continues to be inadequate. Only nine of the 29 UK airports reviewed in the King Sturge report have direct rail links and only two of the top 10 fastest growing European airports have a direct rail link.

The Government forecasts that demand for air travel in the UK will triple by 2030 to around 500 million passengers per annum. As part of the Government consultation prior to the publication of a White Paper (due in late 2003), various capacity options have been considered including a third runway at Heathrow, expansion of Stansted, a new airport at Cliffe, a new airport near Rugby and a new airport in the South West, with Pilning, Bristol identified. Following a judicial review, expansion of Gatwick will now also be considered. Longer-term, whichever options are favoured; the commercial property market will be influenced.

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