The logistics and industrial property market in West Yorkshire is gathering momentum, with speculative development making a long-awaited return to the region, according to the latest research from global property consultancy Knight Frank.
Tom Lamb, industrial property specialist at the Leeds office of Knight Frank, commented: “The West Yorkshire region saw strong take-up in the first half of this year. For units above 50,000 sq ft, take-up reached 2.52m sq ft - four times the level for the second half of last year and more than twice the five year bi-annual average.
The majority of this year’s transactions involved Yorkshire-based manufacturing firms,” said Mr Lamb.“This confidence has helped speculative development to make its long-awaited return to the region. Two significant imminent schemes are Logic Leeds by Muse Developments, a major development within the South Leeds Enterprise Zone, and Connect 45 by Wilton Developments.
“The return of speculative development will provide a much needed boost to the quality of supply in the region, and it is hoped that other development sites will start to come forward as confidence in the market gathers momentum,” he added.
Following a prolonged absence, the pre-let/pre-sale market has returned to West Yorkshire this year, with three deals totalling 260,000 sq ft. Of these, the largest was Fyffe’s Bananas’ 115,000 sq ft pre-sale at Trident Park (Junction 31, M62).
The first six months of this year also saw a number of long-registered requirements finally bear fruit, although there remain a number of major shed requirements in the region for units ranging from 200,000 sq ft to 500,000 sq ft.
Mr Lamb said: “Current demand is being driven by manufacturers rather than distribution, while e-commerce-based requirements are proving reluctant to commit at present.
“Close to 500,000 sq ft of this year’s take-up involved new space, with total new build supply reducing by 25 per cent during the period. Nevertheless, the market does possess an oversupply of second-hand product in the 5,000 sq ft to 10,000 sq ft size range, with numerous multi-let estates of comparable age in the region.
“However, the market for good quality product in the smaller size brackets remains strong, with schemes at prime junction locations such as Access 26, Cleckheaton, and Overland Park, Birstall, experiencing strong demand. Both sites are now fully occupied with headline rents rising to a new high in this unit size category.
“The tightening of existing supply has prompted a clear hardening of incentive packages at the prime locations. Lease terms have also lengthened more generally, as the balance of power has swung back in the landlords’ favour,” said Mr Lamb.
Supply constraints, coupled with improving occupier demand, are expected to prompt a long awaited increase in rental levels. As occupiers start to compete for the prime buildings and development opportunities, we foresee headline rents rising to new market highs.
He concluded: “With the availability of cheap, short-term warehousing becoming increasingly scarce, we expect the major third party logistics providers to become more strategic with their acquisitions, perhaps even electing to take design and build solutions for shared user facilities”.