North West rents start to increase

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Following a long period of stagnation, industrial rents across the North West are increasing. That’s the conclusion of property adviser DTZ.

Its research says that occupier demand for industrial, warehousing and distribution space in key locations across the North West has been going up and up in the last 12 months. This, combined with other factors, has created the environment for industrial rents in the region to start growing.

“The North West industrial market is currently benefiting from an overall UK and global trend of increasing levels of corporate consolidation, mergers, acquisitions and company restructuring,” says DTZ’s head of industrial agency Brian Birtwistle.

“Businesses are now actively seeking to rationalise their distribution networks to streamline their operations and enhance efficiency to perform in an increasingly competitive marketplace.”

North West based Patrick Properties, for example, is asking £4.25 per sq ft for the 475,000 sq ft warehouse facility at Knowsley Industrial Park, Merseyside, which it will complete in July. King Sturge, GVA Grimley and Dunlop Haywards are letting agents at the site which adjoins junctions 4 and 5 of the M57 and links directly with the M62 and M58, about nine miles from the M6.

According to DTZ, company restructuring is happening on a global basis and initial relocation decisions are based around countries and regions rather than specific sites or developments. For instance, a company will make a decision to rationalise its distribution network and centralise its UK or European operation in the North West rather than another area of the UK because of the region’s location and superb transport links. The market is also seeing a drive for quality in its industrial space. High specification units on well maintained estates are in demand due to the perception of increased efficiency that quality brings, for example, cost savings through greater energy efficiency. A company’s stakeholders, such as customers and staff, are also demanding increased quality.

Birtwistle says: “Companies appreciate that property has an important role to play in attracting and retaining staff so are adding quality to their list of occupier requirements.

“Another key factor that is set to have an impact on rents in the region is the increase in building and construction costs,” says Birtwistle.

“The increased demand for quality industrial space is one of the reasons behind this but another key factor is the revised part L of the UK Building Regulations, which have just come into force.

“The regulations place greater emphasis on the energy efficiency of buildings and explicitly relate to reducing carbon dioxide emissions aiming for a 25 per cent improvement on the previous Part L targets.

“The new regulations affect all areas of the construction and property industry from builders, owners, tenants, designers, and manufacturers to building control bodies and maintenance contractors.

“All new buildings will have to meet a minimum energy performance requirement and will be issued with a certificate detailing their energy performance, allowing comparisons to be made between different buildings according to their energy profile. This will have a direct impact on developer build costs and potentially on rental levels in the region.”

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