Is it still an occupiers’ market in Yorkshire & the North East?
The North East has the most available Grade A space in the country, but not all of it is going to suit every occupier; not least because there are still areas within the region that are woefully lacking in supply in one way or another.
According to Robert Whatmuff of Lambert Smith Hampton: “There is a growing shortage of Grade A stock in the small to medium size ranges. In fact there is only one month’s supply for occupiers looking for facilities sub-50,000 sq ft in Yorkshire and Humberside and only three month’s supply in the North East.”
“In stark contrast there is an oversupply of facilities over 100,000 sq ft representing a 16 month supply or 15 per cent of the national availability of Grade A stock over 100,000 sq ft found in Yorkshire alone.”
However, as Roger Haworth of CBRE points out: “That is the lowest it has been for some time.”
The amount of warehousing space even in oversupplied Yorkshire is dropping, especially for Grade A space. According to the latest figures from Lambert Smith Hampton’s Industrial & Logistics report take up of Grade A space in 2012 almost doubled that in 2011 and availability fell by 43.6 per cent to 3.4 million sq ft.
One of the most notable deals was the off market letting of the 750,000 sq ft Nimbus building in Doncaster which saw home retailer The Range secure a 20-year lease at a rent believed to be in the region of £4 per sq ft with a significant rent free period. The facility is expected to support the retailers ambitious expansion plans. Letting agents were CBRE and Jones Lang LaSalle.
The building was originally let to DHL/MFI on a ten-year lease at an annual rent of £3.075 million in 2007. The cross dock property boasts 15m eaves as well as 75 dock and 13 level access doors.
Other deals saw PRUPIM’s 155,000 sq ft warehouse on Elmhirst Park, Barnsley let to Galpharm on a 15-year lease with breaks at year five and year ten at a rent of £3.50 per sq ft while Mount City’s 205,000 sq ft warehouse at Ashroyd Business Park known as Nexus 36 was snapped up by residential and caravan uPVC products maker Ellbee on a 15-year lease. The facility boasts 14m eaves, 12 dock and two level access doors as well as a 50kN/sqm floor loading and was marketed by DTZ and Knight Frank.
Over at Magna 34 in Rotherham Unit 1 totalling 151,123 sq ft is thought to be under offer to Parcelforce. The building which has 12m eaves and 14 dock and two level access doors is being marketed through Knight Frank and CBRE.
There has been a lot of activity in West Yorkshire particularly along the M62 motorway corridor says Haworth. Specialist food 3PL 3663 bought the former 120,000 sq ft MST building at a price of £44 per sq ft or thereabouts, while Prologis has let its 120,000 sq ft DC1 building at Wakefield Europort to Onestop on a 15-year lease at a rent in the region of £4.75 per sq ft.
DC1 totals 120,560 sq ft and is being marketed by Dove Haigh Phillips and Jones Lang LaSalle. It has 12m eaves, ten dock and two level access doors as well as a 48m deep yard with 20 lorry and 84 car parking spaces.
In addition a second hand 167,000 sq ft warehouse in Gelderd has been sold to Global Autocare while the former Hardman Isherwood facility totalling 281,000 sq ft is rumoured to be under offer already. Letting agents are Jones Lang LaSalle and Sanderson Weatherall.
Richard Harris of Jones Lang LaSalle says: “There are still existing enquiries particularly around M62 Leeds and Wakefield but there is little space immediately available.”
Haworth agrees: “The supply of buildings between 100,000 – 200,000 sq ft is very limited round here.”
There is only a few building of note in the area available; Wilton Developments’ Latitude 135, which is on the market through DTZ, Lambert Smith Hampton and Carter Towler.
Standing on a site of 10.3 acre site at junction 31 of the M62 motorway, the 135,000 sq ft high bay distribution warehouse, has ten metre eaves, 11 dock level access doors and three drive in loading doors and 4,000 sq ft of office accommodation.
In South Yorkshire there seems to be plenty of availability but not so much that landlords are going to be giving them away. In addition they are fully wise to the fact that for the larger sheds in excess of 400,000 sq ft they are marketing on a national not just a regional basis.
At Sheffield International Rail Freight Terminal (SIRFT) two buildings of 334,781 sq ft and 291,143 sq ft can be joined to create a mega-shed of some 630,000 sq ft. Both have 15m eaves, 50kN/sqm floor loading and 30 dock and two level access doors. The units are located one mile from Junction 33 of the M1 and are available leasehold or freehold through letting agents GVA, Jones Lang LaSalle, CBRE and Moriarty & Co.
Not to be outdone Evander and Anglesea Capital, the owner of the 1.4 m sq ft Sherburn Distribution Park near Leeds, also has two industrial units that could be combined to provide a 550,000 sq ft “super-shed”.
The 190,000 sq ft and 330,000 sq ft units were originally constructed on a common grid to allow their combination at a future date. The combined 550,000 sq ft industrial unit will join an elite group of only four new build units in excess of 500,000 sq ft, currently available in the UK.
Other larger units in the region include SEGRO and Moorfield’s LPP Sheffield warehouse formerly known as Blade that was developed by Gazeley. The 412,000 sq ft facility offers 15m eaves, 40 dock and two level access doors, and a 50kN/sqm floor loading. It is located half a mile from Junctions 33 & 34 of the M1 motorway. Agents are CBRE and Knight Frank.
There are two buildings at Standard Life’s 930,000 sq ft First Point scheme in Doncaster, Victor and Valiant totalling 246,000 sq ft and 277,000 sq ft respectively. The properties boast a range of features including 14m eaves height, fully-fitted offices with comfort cooling as well as 50m deep secure yards and ample parking for both lorries and cars. Letting agents are GVA and Colliers.
With the emergence of localised shortages Ed Norris of Lambert Smith Hampton notes: “There is a lot more interest in D&B.” Indeed he has just secured an 83,000 sq ft pre-let deal for client Thetford in the Dearne Valley off a 17-year lease at a rent in the region of £4.95 per sq ft.
However, says Whatmuff there are not that many that are oven ready. “A lot of sites are being prepped so that they can be oven ready to provide a bespoke facility within a six month period, however occupiers need to be wise to the fact that it is not a buyers’ market and they will not be able to command a deal.”
Sites available include Prologis Park Bradford, where the developer has a site for 250,000 sq ft. An indicative proposal envisages a self-contained facility on a 12.72 acre site boasting 19 dock and two level access doors, 95 car and 49 HGV parking spaces, two storey offices and a 50m deep yard.
Prologis says it has a design team in place to deliver a sustainable carbon neutral building in less than 24 weeks. Letting agents are Dove Haigh Phillips and Jones Lang LaSalle.
Those looking for larger warehouses might consider PPG Land’s Link 62 which has the biggest immediately deliverable plot in West Yorkshire capable of accommodating up to 480,000 sq ft. Letting agents are Carter Towler and Strutt & Parker.
Of the sites not fully primed there is around 50 acres available at Sheffield Business Park Phase 2 which could take up to 900,000 sq ft of space, there is 120 acres at Muse Developments’ Logic Leeds scheme which is offering warehouses from 25,000 – 1 million sq ft and Bericote Properties and RREEF’s 70 acre Garforth site. Further south there is Gazeley’s 115 acre G.Park Doncaster site which has planning for three units of 650,000 sq ft 530,000 sq ft and 280,000 sq ft.
Bruce Topley of Gazeley says: “The scheme would suit a variety of occupiers who could take advantage of the scheme’s rail connectivity. We are flexible in terms of leasehold, freehold and indeed land sales.” Letting agents are Jones Lang LaSalle and Knight Frank.
Close by is the Rossington Inland Port Scheme being promoted by SEGRO, Helios Europe and Shepherd Alliance. This could accommodate up to 5.8 m sq ft of space. Letting agents are Gent Visick, BNP Paribas Real Estate and CBRE.
There is also Robin Hood Airport totalling 64 acres of developable land which could accommodate buildings up to 300,000 sq ft. Letting agents are Jones Lang LaSalle, Lambert Smith Hampton and CBRE.
North East- Activity increases
According to Lambert Smith Hampton’s latest Industrial & Logistics market report the North East was the only region to register an increase in activity in 2012, with take up rising to 4.3 million sq ft, a five per cent increase on the previous year. The take up of Grade A space accounted for half of the total amount of space let or sold in the region and as a result total availability has reduced by 11.3 per cent to 17.3 million sq ft with Grade A space dropping a whopping 42 per cent to 1.4 million sq ft.
Looking at the take up for logistics properties only BNP Paribas research noted that in the North East, 2.67 million sq ft of logistics properties were secured in 2012, an increase of 114 per cent compared to the 1.25 million sq ft secured in 2011.
Danny Cramman of GVA reckons that the strong occupier demand is all part of the “Nissan effect”. “Undoubtedly the success of attracting Nissan has been the major factor contributing to the economy in the town and the immediate sub region.”
Indeed there have been a number of deals recently on the back of that, not least the pre-let of a 422,000 sq ft facility to Nissan supplier Vantec Europe at Turbine Business Park. BAE Systems occupied a 340,000 sq ft production facility on the 45 acre former Dunlop site at Radial 64 with Rolls Royce taking the balance of 15 acres for a new production plant, relocating from Pallion, Sunderland.
The deal for Vantec, says Cramman: “was one of the largest industrial developments in recent years, leaving limited development potential on the original 55 acre strategic site.
“GVA along with other property agents feel that there is now a shortage of industrial land to accommodate both local expansion and inward investment from outside the region. Only a sporadic supply chain of smaller sites remains which may stimulate further new industrial land allocations by the planning authority.”
Simon Hill of Jones Lang LaSalle adds: “The biggest test facing the region is how the market is going to react to the lack of good quality available stock which has been exacerbated by the fact that there has been no new speculative development for a number of years.”
Aidan Baker of BNP Paribas Real Estate says: “Demand for industrial facilities within the North East has remained resilient due to local demand. Looking ahead, we expect this trend to continue.
“Activity is likely to be focused on the main arterial routes of the A1 and A19 that provide excellent access across the region and this was further illustrated last year with Clipper Logistics acquisition of 350,000 sq ft at Wynyard Park.
“These occupational figures suggest that it may be the right time for new, larger sized, speculative developments, due to the lack of current supply. However, from an economical point of view, those who acquired land at post-crash prices may find it hard to make speculative developments feasible,” adds Baker.