Industrial occupier take-up in the UK for the first half of 2018 has soared past 2017 according to the latest figures from CBRE. Take-up for the first half of 2018 (at 17.4M sq. ft. in 51 deals) exceeded the whole of 2017, representing approximately 60% of the record year of 2016. The Yorkshire and North East region recorded its best start, which accounted for a market share of 19%.
The first half of 2018 has seen an incredible resurgence of take-up in the Yorkshire and North East region, resulting in a very positive start to the year and a total take-up for the first half of 3.26M sq ft. The region has not seen similar half year take-up figures since the second half of 2013, and the particularly strong Q2 has pushed to establish the best regional start of a year.
The increase in demand on existing units resulted in more than 1.1M sq ft of second-hand, modern space occupied, signifying strong levels of overall demand on logistics. This record take-up level was boosted by a number of exceptionally large deals.
In Sheffield, one of the largest available units in the UK at the start of the year was acquired by Clipper Logistics after undergoing a complete refurbishment by Logicor. This 615,000 sq ft unit next to the M1 will be operated by Clipper on behalf of online fashion retailer PrettyLittleThings.
Online retail was also responsible for a 1.5m sq ft pre-letting in Darlington, one of the largest ever warehouse deals in the North East. Apart from online retailers either directly operated or via 3PLs, other sectors have also been active in the region during this first half of 2018. Symphony Group signed for a 133,000 sq ft speculative unit in Wakefield Europort and Tor Coatings committed to a similar size D&B warehouse in Follingsby Park, Gateshead.
Mike Baugh, Associate Director, CBRE’s Industrial team in Leeds commented:
“Despite the supply situation remaining restricted with less than 2.6m sq ft of Grade A logistics space available, there is an interesting and promising increase of speculative units currently under construction which will provide 820,000 sq ft of new space within the next year. This is still not enough to cover a year’s demand, which averages 2.8m sq ft, but it could be the beginning of an improvement.
“There is therefore room for the development of new speculative units like those at iPort in Doncaster. Any future speculative development, however, will need to ensure that units are being built within the right size range and in the most optimum locations in the region. We expect larger speculative developments to satisfy requirements of up to 300,000 sq ft in the main logistics hubs of the region, where rents for prime units over 100,000 sq ft have achieved £5.50 in the Tyne and Wear area and £5.75 in Leeds and Wakefield,” continued Mike Baugh.
Nationally, in terms of occupiers’ preferences, the first six months accentuated the trend towards new build space, relegating secondhand space to only 20% of the total national space acquired. The rest of acquired space was principally build-to-suit and another key trend is the growing size of requirements with XXL warehouses (exceeding 500,000 sq ft) accounting for almost half of the total take up, a proportion never seen before. This trend has also encouraged developers to start building speculative XXL schemes against for the first time in almost a decade.
