South Yorkshire is witnessing strong occupier demand for large industrial units due to cost, location and availability of labour according to commercial property experts.
A report published by Knight Frank’s Yorkshire office outlines that the market for industrial property across South Yorkshire has vast potential and could become a default location for businesses seeking central distribution space, indicating a number of further transactions are in the pipeline for H1 2018.
According to Knight Frank, availability of land and cost of labour is playing a significant part in decision making for occupiers sourcing new units with the region offering healthier labour markets compared to some of the traditional logistics hubs.
Rebecca Schofield, partner at Knight Frank, said: “We have published our first LOGIC report for 2018 and it is clear that there is a confluence of factors which make South Yorkshire one of the UK’s hotspots for large industrial requirements and we anticipate a greater shift of emphasis to the region as a key national location for this type of accommodation.
“There has been an imbalance between demand and available supply for some time, particularly in respect of modern accommodation, but we have recently seen a developer response to this.
“This includes DB Symmetry, currently on site with 150,000 sq ft at Symmetry Park Doncaster and Verdion who have recently reached PC on 190,000 sq ft and are considering a further 120,000 and 60,000 sq ft unit. Other developers are also considering speculative development at Capitol Park, Barnsley, Peel Logistics Park in Sheffield and Doncaster Distribution Park.
“Although we are yet to see the full effect of Brexit, that impact will be equal across the UK, but the lower cost of development in South Yorkshire compared to other premier industrial areas can only play to the region’s strengths.
“The small to medium sized sector continues to perform well although suffers from a severe lack of stock. As a result of the of stock shortage, headline rents for second-hand accommodation are improving, particularly for estates where the landlords have invested to improve the accommodation, such as Parkwood Industrial Estate and Tinsley industrial Estate, Sheffield.
“Viability continues to be an issue for small to medium sized units although we think a number will come forward with the support of grant or local authority funding, for example; Capitol Park in Barnsley.
“Headline rents across all size ranges have improved and we expect this to continue over the next 12 months. New headline rents are being quoted in respect of forthcoming speculative development, closing the gap between neighbouring regions.
“The Advanced Manufacturing Park, Rotherham, continues to thrive and headline rents here are currently at £7.50 per sq ft. A further phase of speculative development is under way due for practical completion in September 2018.
“Retailers continue to dominate demand with the continued increase in online retail creating opportunities for the logistics market. However this is causing challenges for the high street and cities will need to adapt and offer more by way of a destination and leisure experience to attract visitors rather than relying purely on retail offerings.
“Equally, occupiers are faced with having to adapt to cater for the on-line market and more importantly handling the returns, in which technology is playing a crucial part.”
