Industrial property market at critical tipping point
THE lack of speculative development is stifling Yorkshire’s industrial property market and has resulted in a “critical tipping point”, according to new research.
Property consultancy, Lambert Smith Hampton (LSH), said the absence of grade A industrial space across Yorkshire has led to a slow-down in overall take-up, with the reduction of stock leading to a fall in investment volumes of 18%.
In a review of the first half of 2013, results showed that that total industrial investment across Yorkshire and the North East stood at £69.59m, compared to £85m in H1 2012.
Notable transactions included Tritax’s purchase of The Range at Nimbus Park in Doncaster for £37m, a UK investor’s purchase of Maplin Distribution Warehouse at Brookfields Park in Rotherham for £11.5m and Valad Europe’s purchase of the Micheldever Unit at Lowfields Business Park in Leeds for £5.57m.
Despite a good supply of large, grade A warehouse and logistics facilities over 100,000 sq ft in the region, LSH said there is less than one month’s supply left of the traditionally more sought after smaller sheds.
Rob Whatmuff, director and regional head of industrial and logistics agency for the North, said: “We have reached a critical tipping point where we need new developments on site to ensure that SME and mid-box occupier demand can be met.
“There are several large-scale distribution units on the market, but we have little to offer those occupiers seeking any units less than 100,000 sq ft. It’s a dangerous situation as businesses that want to expand or move into Yorkshire will have no choice but to look elsewhere for existing buildings.”
The Government has recognised that the development market is stalling and has introduced an incentive whereby all newly built commercial property completed between October 1 2013 and 30 September 2016 will be exempt from empty rates for the first 18 months.
Whatmuff said: “Strong demand for speculative development coupled with the new Government initiative should go some way to kick-starting development. We would hope to see new facilities springing up in hotspots such as Leeds, Sheffield and Wakefield in the next 12 to 18 months.”
According to research by property advisors BNP Paribas Real Estate, in Sheffield, Yorkshire has larger units in supply, ideal for the Yorkshire logistics market, which is showing optimism.
It said take up was at 2.9m sq ft for the half year in Yorkshire and the Humber, against a total of 4.25m sq ft in 2012, which was already the highest take up in five years.
One of the biggest deals this year has seen Parcelforce commit to a 152,421 sq ft facility at Magna 34 in Rotherham, which had previously been vacant since it was built in 2008.
BNP said Yorkshire still has a large supply of warehousing/industrial accommodation from 150,000 sq ft upwards and is also home to the majority of existing distribution centres which offer single footprints of 500,000 sq ft plus. These include LPP Sheffield and Humber 750 at Barton Upon Humber, a 750,000 sq ft headquarters, reported to be attracting interest from Wren Kitchens.
