Yorkshire is seeing the first wave of speculative development of industrial and warehouse space since the credit crunch. The majority of this speculative construction is around Leeds and Wakefield, although the timescales imposed by ERDF funding means that some other locations such as Thorne, Rotherham, Hull and Newport are also benefitting from speculative stock says property agents JLL.
Wakefield Europort, an established distribution hub adjacent to the M1, is set to deliver the first 100,000+ sq ft ‘big box’ scheme since 2008. Work started on site in March on units of 133,000 sq ft and 142,000 sq ft with the developers, Mountpark/Stoford and Keir/Yorvale respectively anticipating completion of the facilities in Q4 2015. In total, JLL estimates there is over 600,000 sq ft of speculative industrial space under construction in the region.
Rich Harris, director in JLL’s Industrial and Logistics team, said “Despite expectations of a continued pick-up in speculative development in 2015, we expect that the overall level of supply of industrial/warehouse space will continue to fall in 2015. New speculative space is largely being taken as quickly as it is being built thus adding little to existing stock levels of quality space which is extremely low in Yorkshire.”
According to JLL, the supply of quality stock is critically short in Yorkshire which in turn is driving rental growth in some of the most popular areas. Prime industrial rents saw a modest increase of 50 pence per sq ft in Wakefield/Normanton area over 2014 (for units over 10,000 sq ft) however were unchanged in other major regional markets.
Rich Harris added; “We have seen rental growth for the first time since the peak of the last property cycle. This is largely due to the diminishing supply levels of quality industrial space which is also leading landlords to harden lease terms and incentive packages.
“Occupier demand remains unpredictable but is generally more robust than 12 months ago. The combination of limited quality stock, economic uncertainty and the forthcoming general election could however constrain demand over the short-term.”
At the end of December 2014, there was some 28.9 million sq ft of industrial floorspace available across the Yorkshire and Humberside market, 11% down on the end of December 2013. Availability in Yorkshire and Humberside accounted for 12.5% of the GB total. The available supply in units below 100,000 sq ft totalled 19.8 million sq ft, 12% lower than at the end of December 2013. Around 7% of the available floorspace in this size band comprised new or refurbished floorspace, matching the GB average.