Canning Town in the former docklands is not the most glamorous part of London. But such is the clamour for urban logistics, investors are doing deals there at yields more commonly seen on Bond Street.

Throughout the 200 years it has been inhabited, Canning Town in the east has been associated with slums and poor quality housing. It is now a major area of residential-led urban regeneration. But the warehousing on those former industrial sites is particularly catching the eye of investors.

Segro this week announced it completed a deal to buy the 228K SF Electra Park warehouse estate in Canning Town for £133M from Schroders. The estate provides £3.4M a year in rent, and when an impending leasing deal at the last of its 10 units is completed, the net yield on the deal will be 2.58%.

That is the kind of yield at which high-end retail on Bond Street trades. Data from Cushman & Wakefield shows that the five-year average yield for Bond Street retail assets is 2.51%, with the lowest yield ever paid 2.25%.

The reason Segro is willing to pay such a low yield is expected rental growth, driven by the high demand and low supply of urban logistics, led by demand from e-commerce. Canning Town is on the border of London Underground zones two and three, and it has good access to the centre of town. Segro said average rents on the estate are £14 per SF, and estimates this will grow to £21 per SF.