New homes builder Persimmon saw shares slide after it announced shareholders dividends are to be cut and warned of cancellations as well as increased uncertainty ahead.

Dean Finch, Group Chief Executive, commented: “Persimmon entered 2022 in a strong position with healthy forward sales and good weekly sales rates which continued throughout the first half of the year. This, together with our increasing levels of build efficiency, means we are well positioned to deliver new home completions for the year within our previously stated target range, while maintaining an industry-leading housing margin, despite the recent deterioration in market conditions leading to increased cancellation rates.

 “Rising interest rates and broader economic uncertainty are clearly impacting mortgage lending and customer behaviour and this is reflected in our recent weekly sales rates and forward sales position. Persimmon enters this more challenging period as a five-star builder, with average selling prices below the market average, high quality land holdings, and a robust balance sheet. The recent strengthening of our land holdings with disciplined investment will maintain our industry-leading embedded margins.

 “Our highly experienced senior operational management team are drawing on their decades of detailed knowledge across many housing cycles to continue to rigorously assess every aspect of our business to ensure we are building quality homes for customers in the most cost-efficient manner. This relentless focus on customers, cost-efficiency, cash management and disciplined investment will help us navigate this more challenging market while also strengthening our ability to capitalise on future opportunities. We recognise how important sustainable returns are for our shareholders and today we are setting out a new capital allocation policy that balances this with the need to invest in our future success.

 “We were proud to lead the industry with our pledge to protect leaseholders from the costs of cladding removal in any multi-storey development built by Persimmon. We have made good progress and continue to proactively engage with management companies to agree work plans. This proactive programme, together with more certainty over the broadened scope of work required by the Government, means we are increasing our provision to meet our pledge to protect leaseholders.”

Yorkshire & North East led the way in UK logistics take-up for Q3 2022, contributing 27.1% of total take-up, despite a 38% decline in the region for this quarter, according to the latest research from global real estate advisor, CBRE.

Availability rose to 1.8m sq ft at the end of Q3 in Yorkshire & North East, up 16% QoQ, with 56% of this available space comprised of speculative units under construction. Due to the lack of ready-to-occupy space, the region’s vacancy rate fell further to 1.04%, down slightly from 1.07% in Q2. Big box prime rents remained stable for the fourth consecutive quarter at £7.75 psf. Prime yields moved out a further 60bps to 4.50%.

Nationally take-up of logistics space totalled 7.67m sq ft for Q3 2022. The aggregate for the first nine months of 2022 stands at 30.25m sq ft, which equates to 95.8% of 2021 and 92.1% of the record-breaking year of 2020 for the same period, signalling the sector’s resilience. 

This represents a decrease of 30% compared with Q3 2021, which saw take-up reach 10.9m sq ft. A total of 29 deals have completed this quarter, a decrease of 19.4% compared with Q3 2021, which saw 36 deals complete. Speculative schemes accounted for almost half of total take-up at 46.9%, followed by build-to-suit at 34.7% and secondhand accounting for the remaining 18.4%. 

Third-party logistics dominated at a sector level, accounting for 56.3% of total take-up for the quarter. This was followed by retail at 21.3%. The remaining 22.4% was split across supermarkets, manufacturing, motor and other, demonstrating that demand for logistics space is wide-ranging and that competition for units remains strong. 

Take-up was widespread across the regions for the quarter. Yorkshire & North East led the way at 27.1%. This was followed by West Midlands at 20.7%, East Midlands at 19%, South East at 16.3%, North West at 9.3% and the South West at 7.5%.

Nationally, vacant available space increased from 5.73m sq ft at Q2 2022 to 6.51m at Q3 2022. This was due to a number of speculative buildings reaching practical completion during the quarter. However, with only 21 built speculative units available, there remains a significant under supply. The increase in completed units resulted in the UK vacancy rate increasing fractionally from 1.18% to 1.32%.

Mike Baugh, executive director, CBRE Leeds, said: “The regional market is still in a good place, with a comparative low supply of space and continued steady occupier demand.  There are a number of significant deals under offer in Yorkshire, which will hopefully lead to another strong performance for the year end.”

Jonathan Compton, senior director, UK Logistics at CBRE, said: “Despite the ongoing economic uncertainty, the logistics occupational market remains strong with a wide range of occupiers securing space across the country. The decrease in take-up this quarter points to a degree of normalisation in the market following a prolonged period of record-breaking numbers, however the under-offer pipeline signals towards another robust year for the sector.”

Annabel Nash, senior analyst, UK Logistics Research at CBRE, added: “We have seen a significant shift in the type of occupier taking space following a dominant display from online retail. Third-party logistics providers are now leading the pack, accounting for more than a third of total take-up year-to-date. Ongoing supply chain and shipping disruptions are resulting in longer lead times, driving retailers to extend their stock profile in the UK. Therefore, companies that do not have the sufficient infrastructure are turning to third-party logistics providers for fulfillment on their behalf.”