Region bucks positive trend of industrial take-ups
LACK of quality, built industrial space in the region meant that take up in the North West fell in 2014, in what was otherwise a record-breaking year for the UK.
Property group DTZ’s Industrial Property Times report for 2014 reveals 23 national and regional records were broken as total UK take-up reached 32.6m sq ft over 2014, the highest since 2010, driven largely by improving economic sentiment and retailers expanding their logistics networks in response to the growth in online shopping.
Take-up in the North West totalled just over 4 million sq ft in 2014, down 2.7m sq ft from the previous year.
DTZ said a lack of grade A space had suppressed take-up, contradicting a positive trend in occupier sentiment in the region. This situation will be helped, the firm said, as developers have begun speculative development with four schemes in Heywood, Knowsley, Chorley and Manchester Airport due for completion by Q3 2015.
Tony O’Keefe, director, industrial agency at DTZ in Manchester said: “Whilst overall take-up figures were down on 2013 this can be explained by limited availability of quality built space and delays associated with land and pre-let deals, as opposed to a reduction in demand. This will show in significant transactional activity in Q1 2015.
“The continued strength of the logistics sector is demonstrated by Evander Properties and BA Pension funds speculative development at their Revolution scheme in Chorley.
“A new wave of speculative development will see over 500,000 sq ft of new development this year over four schemes, with another 1.6 million sq ft across seven schemes in the development pipeline. This provides an excellent yard stick measuring confidence in the region.”
He added: “Confidence is underpinned by restricted supply and continued occupier demand as demonstrated by the recent success of the region’s largest development sites. Logistics North being a pertinent example. Outline consent was granted last year for 4 million sq ft of development, construction is underway to provide onsite services and road infrastructure and already 25 % of the scheme (over 1 million sq ft) has been taken.”
Nationally, the report highlights the re-emergence of speculative development in 2014.
Industrial prime rents are beginning to increase, given the rise in activity and low level of grade A availability, which is driving competition between occupiers. Investor demand was strong in 2014, resulting in a record £6.1bn transacted in total.
Michael Green, research analyst at DTZ commented: “Looking ahead to 2015, the need for speculative development will continue with more schemes across the UK set to be announced.
“We also anticipate high levels of take-up in 2014 to be maintained over the next five years as industrial output increases and occupiers look to increase their UK footprint, although continued difficulties in the Eurozone may have a dampening effect.”
