There remains an oversupply of buildings in South Yorkshire, and the empty rates taxes continue to have a crippling effect on landlords.
For a market that was hit so savagely by the economic downturn there seems to be an encouraging renewal of activity in the North and North East regions for sheds around the 50 to 100,000 sq ft mark. Although no-one is foolhardy enough to start whispers of green shoots just yet, the activity is nonetheless a positive sign.
Paul Mack of DTZ says there are a good half dozen deals happening along the M62 corridor; an area which has always been popular because of its strong location – stretching from Liverpool through Manchester, right across to Hull. “Availability is changing very quickly,” he says, “there was a reasonable supply but there has been more take-up, particularly along the M62.”
It’s been rumoured that the 92,000 sq ft Sherburn 92 building, which is located off the M62, is under offer. And 80,000 sq ft at Premier Point is also tipped to be under offer in Normanton at Junction 31 of the M62 motorway.
Spar has taken a site in Normanton of around 80 to 100,000 sq ft at Junction 30 of the M62. And bed supplier Dreams is rumoured to be taking a 60,000 sq ft building at Link 62 distribution park in Normanton.
M&S has also taken the 125,000 sq ft Latitude building in Normanton. And in Sherburn-in-Elmet Gladman Developments has a range of buildings from 50 to 600,000 sq ft, which have been on the market for some time. But there is talk that a business is planning to take 92,000 sq ft there on a 15-year lease.
LaFarge UK Pension Fund has bought Maybrook Industrial Park in Leeds for £5,100,000. DTZ was agent for the sale, acting on behalf of Phoenix Life c/o Ignis Asset Management. Maybrook comprises 13 units totalling 110,321 sq ft, and is fully let by way of 13 tenancies to five tenants including Brake Bros, Clear Channel UK, and Just Car Clinics Group.
DTZ’s James Lawlor says: “The strong asset management programme that had been implemented by DTZ and Ignis during the lead up to the sale allowed us to maximise the price. This disposal demonstrates that investor demand does exist for good quality assets where they are priced correctly.”
Nick Baker of BNP Paribas reckons take up of existing sites is stronger in West Yorkshire than in South, despite the fact that the latter holds more stock. There remains an oversupply of buildings in South Yorkshire, and empty rates continue to have a crippling effect.
Mack says that “less ideally placed” areas, such as the Dearne Valley, have to compete with the stronger locations, and therefore it is possible to get rents for as little as £2 per sq ft. That said, Baker reckons the Dearne Valley isn’t doing too badly, with manufacturing giant Pegler completing a 104,000 sq ft design and build (D&B) deal at Brookfields earlier this year. And Audi has bought some 40 acres in the Dearne Valley, on which it intends to build an RDC (in line with expansion). Baker says it has planning consent for some 700,000 sq ft.
There are rumours of another deal in the pipeline in the Dearne Valley for a 60,000 sq ft building, which is being offered at a “knockdown price”.
And the Car Shop has taken a 140,000 sq ft site at Trax Park, South Yorkshire, for around £41 per sq ft – a site that Baker says would previously have sold for £65 per sq ft.
There are several other D&B deals happening in South Yorkshire. This spring Kroger snapped up an 80,000 sq ft D&B shed at Thorne in Doncaster. And Swedish manufacturer Sandvik has just taken 120,000 sq ft for around £5 per sq ft, at Beighton, Sheffield.
One of the biggest deals sealed in the last few months in the North East, is Nissan’s £200 million deal to build a factory in Sunderland, to supply lithium-ion batteries for electric vehicle production.
Danny Cramman of GVA Grimley reckons this deal has sparked a wave of enthusiasm in the region, and will generate further supply and demand around it. DHL Supply Chain and Vantec are already tipped to be competing for space in the area for just that purpose.
Your Homes Newcastle has just bought a 50,000 sq ft new-build at Gateway West for an undisclosed sum. A 120,000 sq ft unit in Washington, Sunderland, is under offer from RR Donnelley. And an 80,000 sq ft building is under offer from ARC International, also in Washington.
With there being no prospects for speculative development in the North East, certainly for the next 18 months to two years, Cramman reckons that there is a chance that stock may run out in a few year’s time.