Changing dynamics in the North East and Yorkshire market could prove beneficial for occupiers, says Liza Helps.
Demand is definitely on the up in the region with John Clements of Verdion noting ‘a marked increase in enquiries’. Knight Frank’s Iain McPhail agrees: “There has been a marked rise in enquiries and occupier activity since the turn of the year and with several larger buildings already under offer in the region.”
According to Toby Vernon of CPP: “Take up this year has hit 800,000 sq ft already and a further 2.6 million sq ft is under or expected to go under offer shortly. Obviously there is transactional risk but where we currently stand at the moment is way above the average three million sq ft annual take up figures.”
Andrew Gent of Gent Visick says: “There is more activity for the larger units over 200,000 sq ft and good local demand for units under 100,000 sq ft.”
One of the biggest properties to go under offer is Logicor’s Sheffield 615. The former Polestar unit, built originally by Gazeley, has undergone a significant refurbishment and is rumoured to have been snapped up by online clothing retailer PrettyLittleThing.Com.
Located close to J34 of the M1 motorway, Sheffield 615 is able to serve 90 per cent of the UK’s population within a 4.5 hour drive time. The 614,497 sq ft warehouse benefits from 15m clear eaves height, 33 dock and 15 level access loading doors, 360 degree circulation, a new additional yard, 229 car parking spaces and a 3MVA power supply. CBRE, CPP and DTRE are joint letting agents.
“With all that going through there is currently very little supply and as these deals transact this will become more exacerbated,” says Vernon.
Rob Oliver of GVA agrees and notes: “there is very little available above 200,000 sq ft”. Indeed Mike Baugh of CBRE says: “There is less than 12 months supply of immediately available warehousing across the Yorkshire market.”
In the North East the supply situation is far more worrying. Richard Scott of Cushman & Wakefield says: ‘There is one building above 100,00 sq ft at the moment on the Foxcover Industrial Estate – there is basically a chronic lack of supply. There are enquiries but the stock just is not there.”
Simon Haggie of Knight Frank is of the same opinion: “The North East continues to suffer from a lack of good quality stock. The statistics show that there is around 4.2 million sq ft currently available, however only 485,000 sq ft of that space could be considered modern.”
According to Knight Frank’s latest LOGIC report for the North East, demand is good for larger units between 50,000 sq ft and 150,000 sq ft and is partly being fuelled by Nissan’s launch of a new model in 2020.
In terms of land supply, the International Advanced Manufacturing Park (IAMP) proposed for land north of Nissan (370 acres) has cleared most of the planning hurdles to release it from the greenbelt and Henry Boot has been chosen as the preferred developer by Sunderland and South Tyneside Councils.
Scott says: “There are quite a few developers promoting new sites but large scale speculative development does not really stack up in the region at present.”
Aside from Sunderland Council’s scheme; Richardson Barberry – a joint venture between Barberry Development and Richardson Capital – has been chosen by Durham Council to bring forward a 1.8 million sq ft scheme at Forest Park in Newton Aycliffe
A planning application for the 116-acre Forrest Park will be submitted shortly. The proposals include a range of office, industrial and distribution units varying in size from 30,000 sq ft to 500,000 sq ft, as well as an 11-unit trade park and leisure and amenity facilities.
Meanwhile Canmoor is pushing forward Dynamo Park in Stockton with build-to-suit opportunities from 35 – 462,000 sq ft. Joint letting agents are HTA and Cushman & Wakefield.
Further south just off the A1 motorway, dbSymmetry is set to secure planning for a 1.6 million sq ft scheme on a 94-acre site in Darlington to be known as Symmetry Park Darlington.
A major international retailer is thought to be in talks already for space on the site, which could accommodate units from 75,000 sq ft. Joint agents are Gent Visick, Carter Jonas and Colliers.
With supply tight in Yorkshire as well Vernon says: “It is lucky there are more developments coming through that will help address the supply problem but it will also mean that a lot of this is pre-let driven. There are the sites available but with this rate of activity even those sites will quickly come absorbed.”
That being said there is a marked move in speculative development across South and West Yorkshire on the back of a shift in rental values making speculative development more appealing.
Gents notes: “Rents for decent large sheds is in the region of £5.50 – 5.75 per sq ft at present while higher rents can be achieved on smaller units. Recently a 12,000 sq ft unit was let at £6.50 per sq ft.”
Baugh says: “Rent levels are steadily creeping upwards with landlords looking at £6 per sq ft for units over 100,000 sq ft – though that has yet to happen.”
For occupiers not quite up to that level of rent, second hand warehouses of a good quality are moving at rents of £4.75 to £5.25 per sq ft. The former TK Maxx unit known as Wakefield 31 totalling 176,000 sq ft and the 193,000 sq ft Euroway26 in Bradford are both on the market at £4.75 per sq ft. CBRE and GVA are joint agents on Euroway 26 while GVA is sole agent on Wakefield 31.
Verdion is speculatively developing two warehouses at iPort Doncaster – one of 120,000 sq ft and one of 60,000 sq ft.
The units are due for completion in the third quarter of 2018 in the next phase of speculative development at the 6 million sq ft logistics and rail freight hub.
Clements says: “This new space is designed to cover the full spectrum of requirement sizes in the market. Despite having the ability to build units of one million sq ft we are not planning to go larger but will never say never…”
It is thought that Gazeley is considering a 270,000 sq ft speculative scheme at its Doncaster Distribution Park site where it has 70-acres remaining. Letting agents are JLL and Knight Frank.
Further south at Blyth, dbSymmetry is progressing with a 150,000 sq ft speculative development, which is expected to complete by July 2018.
This article first appeared in Logistics Manager, May 2018