Member Article

Team Valley in demand

The uplift in interest in taking industrial space, as seen in the final quarter of last year, is continuing with Gateshead’s Team Valley currently being a focus of much post-Christmas activity says Mark Proudlock, industrial partner, Knight Frank.

January and February have seen at least five modern units in excess of 15,000 sq ft on the Valley either let or under offer. Unit B Aquarius located on Kingsway (17,897 sq ft) is one of few modern units still available and given its high specification and prominence it is expected to attract strong interest.

At the end of last year we reported we had 658,000 sq ft of industrial space ‘under offer’ in 14 transactions spread across the region from Teesside to Tyneside and south east Northumberland. So far this year the momentum has increased with a continuing shift in favour of the landlord. Incentives are still available but they are quietly reducing which makes it imperative for occupiers to make their decisions as quickly as possible.

With diminishing levels of stock incentives are reducing by as much as 50% and it is this positive sentiment that is seeing some developers resurrecting or bringing forward new schemes. This of course is a result of the improving macro-economic picture which is increasing demand for industrial space. As a result it is likely that there will be a shortage of modern stock, particularly at sizes in excess of 20,000 sq ft.

The solution for occupiers is to consider the purpose-build route or to pre-let space in schemes coming forward. For example UK Land Estates (UKLE) is about to start its Dukesway Central development on Team Valley, Gateshead. The first phase of which will provide three units of 12,000 sq ft, 20,000 sq ft and 26,750 sq ft, with asking rents likely to be between £6.50 to £6.75 per sq ft.

Further UKLE is bringing forward its masterplan for the 10-acre site at the former Huwood factory. The cleared 10 acre site, one of the best in the region given its location close to the A1 western bypass, will offer high quality manufacturing accommodation as well as a mix of office and retail space. The focus of the site is the delivery of prominently located advanced manufacturing and engineering units which will set new standards for such space in the North East and meet the needs of the region’s strong performing industrial sectors.

Another positive point which may come from this is that rental levels for purpose-built space will inevitably be higher than current market levels. Such developments should assist developers across the region in establishing new rental levels at which speculative schemes may become viable. The acid test is whether businesses will break the market rent levels to secure the quality of property they desire to operate from.

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This was posted in Bdaily's Members' News section by Chris Dobson .