According to the latest Logic Industrial Property report from the Leeds office of global property consultancy Knight Frank, a robust 722,000 sq ft of take-up was recorded in the West Yorkshire and Humber region during Q2 2024, bringing the half year total take-up figure to 1.2 million sq ft. (Units over 50,000 sq ft).
Iain McPhail, partner in Knight Frank’s Yorkshire Industrial & Logistics team, commented: “This puts the market in a good position against last year’s total of 1.6 million sq ft, reflecting a 20% improvement, and the highest H1volume in three years.
“One of the main drivers impacting the positive figures is the notable increase in demand from the manufacturing sector. Out of five leasehold and three freehold transactions to complete this year (as of end of June 24), all three freehold purchases have involved manufacturers.
“The largest of these transactions was air conditioning manufacturer, Airedale, who acquired the 314,714 sq ft former Hallmark Cards facility at Dawson Lane in Bradford. In addition, the 275,413 sq ft former Ilke Homes factory in Flaxby, Knaresborough, was bought by bottled water manufacturer, Shepley Spring Water earlier this year.
“The West Yorkshire and Humber market has seen a mini revival during H1 2024, which has also been driven by the increased availability of speculatively developed warehouse space in the region, with developments like Leeds Valley Park, Konect 62 and Velocity Point benefiting from pent-up occupier demand for small and mid-box units.
“With the marked rise in manufacturing enquiries, we have seen increased demand from occupiers needing buildings with large electrical capacity. This further emphasises the need for developers to factor-in sufficient power supply to their speculative schemes to accommodate not only the B8 distribution sector, but also B2 manufacturing end users.”
During the past year, over 1 million sq ft of space has been taken by manufacturers in the region. This is substantially higher than the circa 200,000 sq ft recorded in the same four-quarter period last year. Manufacturers now comprise over half of the space taken (56%), with distribution companies making up an additional 30%. This marks a shift from the previous year, when distribution firms occupied 72% and manufacturers only 16%.
The largest letting in Q2 involved food and beverage logistics company, Oakland International who secured K161 at Konect 62 in Selby. The 161,578 sq ft new build unit was, speculatively developed by Cole Waterhouse and reached practical completion in Q4 2023.
Prime rents in Leeds for units over 50,000 sq ft remained stable in Q2 at £8.75 psf, however, with quoting rents for prime mid-box units now at £9.50-£9.75 psf, Knight Frank expects to see a substantial increase in headline rents within the next two quarters.
Iain McPhail added: “Despite a small handful of second-hand modern warehouse space returning to the market recently, for example Unit TL2, Towngate Link in Leeds, we have seen total supply reduced by around 13% this quarter due to take-up levels and the notable absence of proposed speculative development on the horizon.
“The exception is Baytree Developments, who are currently underway with their impressive speculative warehouse scheme located in South Leeds (Baytree Leeds), which consists of two best-in-class warehouse units of extending to 76,000 sq ft and 145,000 sq ft respectively.”
