Industrial Market Review

Yorks and North East industrial market review H1 2013

The lack of grade A availability across Yorkshire and the North East has led to a slow-down in overall take-up. Pent-up demand for quality space means that the market is ready and waiting for those who have the ability to provide speculative product.

You can download a PDF version of this market review, or to read and sign-up to receive updates from other UK centres, click here.

In this issue:

Strong demand for grade A space strengthens rents

Continued occupier demand for grade A industrial space has led to an acute shortage in the SME and mid-box sectors. There is now less than one month’s supply remaining. Big shed supply is also continuing to fall.

Headline rents are rising and incentives are hardening as demand for quality space outstrips supply.

Occupier demand is focussed on Leeds, Sheffield, Wakefield and the Team Valley but the lack of supply has stifled take-up.

For a detailed breakdown of prime headline rents for H1 2013, please click here or on Table 1 to the left of this article.

Key occupational transactions, H1 2013


Property
 

Size
(sq ft)


Landlord / Vendor
 

Tenant / Purchaser
 

Rent
(per sq ft)

Gelderd One, Leeds 157,000 Volvox Group

Global Autocare

 £27.00 (FH)

Unit 1 Magna 34, Rotherham 151,000 Finnegans  Royal Mail

£4.30

Prologis Wakefield 120,000 Prologis One Stop Stores

£4.75

Former MST, Wakefield Europort 110,000 M&S Toiletries 3663 Group

£45.00 (FH)

Unit 1 Traynor Way, Peterlee

91,500

Tritax Durham Police Authority

£20.00 (FH)

Drum Three, Durham

84,000

Evander Parcel Force

£45.00 (FH)

Sprint 70, Leeds

70,204

F&C REIT Symington's

£4.25

Quantum, Leeds

38,500

Marshalls Store First

£57.00 (FH)

Unit E Confederation Park, Leeds

25,000

Cemex Brown & Tawse

£4.50

Source: Lambert Smith Hampton

Fortune favours the brave - a kick start to speculative development?

Property Alliance Group commenced work on the next phase of speculative development at Victory Park. 

The £3m scheme in the Lower Don Valley in Sheffield is the first major speculative industrial and logistics development to take place in the region since 2008. 

Construction works commenced early this year and with strong interest generated immediately, the building was put under offer halfway through the build programme.

To encourage further speculative development, all newly built commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty rates for the first 18 months under a new Government initiative.

For a detailed breakdown of key grade A availability for H1 2013, please click here or on Table 3 to the left of this article.

Predictions for H2 2013

Landlords who undertake refurbishment of well-located, secondary space will benefit from pent-up occupier demand. 

Further speculative development is anticipated in the SME and mid-box sectors.

Terms will continue to harden as demand significantly outstrips quality supply.

Growth is expected within the manufacturing sector, with enquiries focussing on Design & Build opportunities at established and specialist locations, such as Rotherham’s Advanced Manufacturing Park (pictured left).

Retailers will focus searches on dedicated e-commerce facilities, particularly along the M1 and M62 corridors.

Investment volumes drop back as good quality product remains in scarce supply

The industrial investment market across Yorkshire and the North East dropped back during the first half of 2013. 

While total investment volumes fell by 18% to £69.59m compared to £85m, there continues to be healthy demand for quality product. The most notable transactions include:

  • Tritax Assets purchase of Nimbus Park in Thorne for £37m, reflecting a net initial yield of 7.66%;
  • A UK-based institutional investor’s purchase of Maplin Distribution Centre at Brookfields Park in Rotherham for £11.55m, reflecting a net initial yield of 8.2%; and
  • Valad Europe’s purchase of Lowfields Business Park in Leeds for £5.57m, reflecting a net initial yield of 9.33%.

To view our latest UK Investment Transactions (UKIT) report, please click here.

Definitions


Term

Size range
(sq ft)

Small units

<10,000

Medium units

 10,001-50,000

Mid box 

 50,001-99,999

Large units / distribution warehouses

 >100,000

Source: Lambert Smith Hampton

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0113 887 6721

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Matthew Scrimshaw
Head of North Region

0113 887 6721

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