Member Article

Yorkshire sees record levels of logistics and industrial take up

Yorkshire’s industrial and logistics sector could see the return of meaningful speculative development for the first time since 2008, according to new research from Lambert Smith Hampton.

The latest edition of the company’s annual Industrial & Logistics Market report reveals that take-up in the region increased by 63% to 12m sq ft in 2013 – the highest level on record and the second largest rise of any UK region.

This is in response to the economic recovery, an improving manufacturing sector, the ongoing drive by retailers to maximise their supply chain efficiencies and growing appetite from logistics businesses serving the burgeoning e-commerce industry.

The Industrial & Logistics Market report also finds that improving occupier demand, combined with a lack of development activity that stretches back to before the global financial crisis, has led to a shortage of top quality (grade A) space in the sub 100,000 sq ft size bracket, representing just 4.7% of the region’s total available supply.

Robert Whatmuff, director and regional head of Industrial and Logistics at LSH, (pictured left) said: “Our region saw one of the largest upturns in activity in 2013, with take-up rising by 63% to 12.1m sq ft.

“Take-up was dominated by the logistics sector, which accounted for 41% of overall activity in the region.

“Availability reduced to 37.1m sq ft over 2013, a fall of 9% from the end of the previous year. The region has one of the best supplies of grade A space, with 4.5m sq ft however, the majority of this is contained within the large building (100,000 sq ft+) size band.

“There is an acute shortage of grade A stock in the small, medium and mid box size brackets (sub 99,000 sq ft). We expect to see the return of meaningful speculative development in these categories in 2014 and current demand would certainly support new product being built.

“Prime rents across the region remained stabled during 2013, with the exception of Leeds where values increased by 4.2% to £6.25 per sq ft. Secondary rents remained under pressure, falling by 1.9% on average, although this was due to weakness in Doncaster and Rotherham.

“The availability rate continued to trend downwards in most of the key locations across Yorkshire, with supply of quality stock diminishing.”

The largest deal to complete in the region during 2013 was the letting of the 647,000 sq ft SIRFT to Marks and Spencer in Sheffield.

Robert added: “The market has staged a strong recovery and the outlook for the industrial and logistics sector over the next 12 months is more encouraging than at any time since 2008.

“The continued growth of internet shopping will remain an important driver as logistics operators work out how best to respond to evolving consumer habits.

“Traditional retailers are also looking to streamline their supply chains in order to improve speed to market and boost margins at a time when price rises are proving difficult to implement.”

This was posted in Bdaily's Members' News section by Clare Burnett .