Distribution and manufacturing companies continue to dominate Yorkshire’s industrial activity in Q1 of 2023, says commercial property agent Knight Frank.
The past year saw distribution firms reign in West Yorkshire, accounting for 80% of the annual total and up significantly from 13% over the comparable period last year.
While in South Yorkshire, the last 12 months saw a significant uplift in space taken up by manufacturing companies, accounting for 38% of the total. Demand has also continued from distribution occupiers, comprising a further 42% in the year, with retailers less active, at 12%.
This trend continues into 2023 as shown by figures revealed in Knight Frank’s latest LOGIC report covering Yorkshire.
A robust opening quarter saw 496,100 sq ft of industrial and logistics occupier take up in West Yorkshire & the Humber, across four deals (units over 50,000 sq ft) which is 25% higher than Q1 last year, and significantly ahead of the previous three months.
Two notable pre-let deals, logistics service provider Advanced Supply Chain pre-let at Tungsten’s Super B, Interchange 26 in Cleckheaton and IFCO’s pre-let of Equation’s 153,323 sq ft Unit 2 at Prism Park, Glasshoughton, boosted the quarterly total, setting new prime headline rents for the region.
Looking at West Yorkshire and the Humber, Iain McPhail, partner in the Leeds industrial and logistics team, said: “We have seen a welcome increase in take up so far in 2023, with new headline rents being achieved in the process. With the continued dearth of grade A, new speculative development, we are seeing further upward pressure on quoting / ‘guide’ rents.
“There is some 1.5 million sq ft of new space on site and to be delivered over the course of 2023 in the region, although the vast majority of the larger buildings are situated in traditionally ‘secondary’ locations. In the meantime, we expect the new, prime mid-box developments, located in more traditionally sought-after locations, such as in Leeds (Leeds Valley Park and Velocity Point) as well as Prism Park in Wakefield to push rents on further.”
Looking ahead Iain says take up is expected to improve as the year progresses and as new stock reaches practical completion.
“Despite the wider macroeconomic conditions, the first three months alone have already recorded almost 500,000 sq ft of take up, therefore a higher level of transactions is expected for 2023.
“New, high-quality development totalling approximately 1.5 million sq ft is currently under construction and second-hand stock totals circa 1.7m sq ft (units over 50,000 sq ft). Notably, there is only one brand new building available to occupy, and around 37% of the immediately available stock is now under offer.
“Rental growth across all size units has taken place with prime rents in Leeds for units over 50,000 sq ft rising by 10% in the quarter, and by 22% YOY, reaching a new headline of £8.25 psf, however this is forecast to rise again during the next quarter.”
The first quarter of 2023 recorded 247,600 sq ft of take up in South Yorkshire and North East Derbyshire (units over 50,000 sq ft).
Rebecca Schofield, head of the Yorkshire industrial team, looked at South Yorkshire and North Derbyshire.
Occupier deals in quarter one in South Yorkshire included a 164,366 sq ft unit at Nimbus Doncaster, let to Bowker Transport and 83,237 sq ft unit at Phase 2 of PLP’s Bessemer Park, Sheffield, which has exchanged with practical completion expected in late 2023.
Rebecca said: “Development activity has boosted supply. At the end of Q1 2023, approx. 2.2 million sq ft of floorspace was immediately available across the region (units over 50,000 sq ft). This brings the vacancy rate to 3.7%, up from a low of 1.3% recorded a year ago, with the improvement largely owing to a number of development completions. A further 3.5 million sq ft is under construction, up 68% year on year.
“Demand for new units has led to prime rents in the region (units over 50,000 sq ft) growing by 14% annually, to stand at £7.95 psf, with average rents expected to rise but at a more modest rate.”
Summing up Rebecca said: “The region has a strong pipeline of speculative development on site, due for completion during 2023/early 2024. There has also been a number of second-hand buildings that have recently been vacated that have come back to the market, resulting in a healthy supply of buildings to cater for continued occupier demand.
“There are a number of active occupier requirements in the market considering space and also a number of buildings under offer therefore we expect good levels of take up over the coming quarters.”