Yorkshire warehouse sector heading for supply slump
A lack of consented development land, coupled with rising construction costs and increased borrowing costs for developers, is likely to result in fewer big box developments coming through the development pipeline, according to the latest data from Lambert Smith Hampton (LSH).
The company has found that the Yorkshire industrial property market is on course for a supply slump in 2023, with only 3.5 million sq ft of new space to be delivered across the region in the next 12–24 months. With developers facing rapidly rising construction costs and a further 5.5 million sq ft of industrial space likely to be put on hold, there is likely to be upward pressure on rents across the region.
Q4 of 2022 is unlikely to offer any respite, with only a further 1 million sq ft of space to be delivered and just a couple of second-hand existing units available in the market.
Scott Morrison, a director in LSH’s industrial & logistics team, said: “Unless a large wave of second-hand stock comes to the market, there is likely to be a marked drop off in supply. Annual requirements for large-scale (100,000 sq ft plus) industrial space throughout the region typically stands at around 5 million sq ft, so the current supply pipeline is falling well short of typical market demand.”
Like most sectors, the industrial and logistics sector is likely to face challenges and some headwinds in the next 24 months with the economic background and rising costs. However, occupiers are warned to act now if they have lease events or need to upgrade or expand their facilities, or face increased competition and potentially higher rental values in the coming years.
We have recently been appointed on Firethorn’s S42 scheme at Sherburn in Elmet which will deliver four units comprising 660,000 sq ft of new space. This comes on the back of being appointed on Arrow Point in Barnsley, which is nearing completion in December 2022, providing a combined 451,000 sq ft to the market across two modern units. Both schemes providing much needed stock to the market with high ESG credentials.
Doncaster sofa group sees demand bounce back
DFS the Doncaster-based sofa group have seen revenues bounce back since their September statement over buyers remaining cautious, due in part to fears over disposable incomes and uncertain economic conditions.
Since early September the company report a more positive trend, with Group order volumes growing relative to FY22 and also relative to the pre pandemic FY19 financial year.
The company report that overall performance is in line with their “mid-case scenario (c.£36m PBT) for the full year”
Tim Stacey, Chief Executive, commented :“We are pleased to report that since mid September we have seen positive year-on-year order volume growth. While we continue to be watchful of the macro economic environment, we continue to take market share and our market leading position, inherent scale and proven strategy give us confidence in our future prospects.”
Revenues soar at East Yorkshire Kitchen Group
East Yorkshire-based trade kitchen group Howden Joinery Group has seen profits rise in the second half of 2022 according toits latest trading update.
As one of the country’s largest specialist trade kitchen suppliers, trading has seen revenues soar by 24.5% than the same period in 2021 translating into a 6.6% year-on-year revenue growth in the UK depots.
Commenting on Howdens’ performance Andrew Livingston, Chief Executive said: “Howdens achieved a record performance in our important peak trading period. We continued to gain market share supporting our customers with a strong product line-up, high stock availability and outstanding service. Trade customers have remained busy into the Autumn with a good pipeline of work, as consumers continue to invest in and improve their homes. Our kitchen and joinery markets are large and attractive, and we are prioritising investment for future growth through our successful strategic initiatives.”
Royal appointment kicks off double celebration for Sewell Group
A family-grown business which dates back to 1876 and now employs 500 people celebrated in style after receiving two major awards on the same day.
Sewell Group enjoyed a royal breakfast with the monarch’s representative in East Yorkshire as the Lord Lieutenant presented the Queen’s Award for Enterprise for Promoting Opportunity.
A delegation from the company then travelled by executive coach to London to make their sixth appearance in The UK’s 100 Best Companies to Work For Awards, this year being listed at 45.
HM The Lord Lieutenant, Jim Dick OBE, said: “This is one of those moments when we give an award to a company which absolutely deserves it. I know from working with Sewell Group in other ways that promoting opportunity is in your DNA.
“You help people develop and it’s fantastic. This is an award from the monarch and there’s no higher award than that.”
Dr Paul Sewell OBE, Chair of the business which he joined in 1978, said: “These are the sort of milestones which make you realise how far you have come.
“We had never won a Queen’s Award before and although we’ve been very successful in the Sunday Times Top 100 over the last 14 years, we are now in the large company tier. We’ve grown the business in terms of adding new disciplines and geographically and this tells us we are going in the right direction.
“We had a lovely morning and a great night but then you wake up and it’s the next morning and you have to reset and go again. We don’t rest on our laurels.”
Sewell Group rolled out the red carpet at its headquarters in Geneva Way, Hull, to welcome the Lord Lieutenant, Vice Lord Lieutenant Christopher Oughtred, the High Sheriff of the East Riding of Yorkshire Jacky Bowes and the Leader of Hull City Council Cllr Mike Ross. The guests of honour also included over 50 Sewell Group employees drawn from across every business in the group.
The Lord Lieutenant revealed he had won two Queen’s Awards as a member of the senior management team at Smith & Nephew in Hull. The Vice Lord Lieutenant also won a Queen’s Award with the William Jackson Bakery in Hull.
The Lord Lieutenant said: “The awards had a big effect on our business. In terms of credibility of the company, it certainly helped sales and it’s great for staff morale as well. It comes from the monarch. It’s very prestigious and should be seen so.”
Mr Dick presented the group with a Queen’s Award trophy and an official citation signed by Her Majesty and Boris Johnson, the Prime Minister at the time the honour was announced in 2021.
Mr Dick said: “It’s a very significant moment and I would like to congratulate all of you because I know the way that Sewell Group works. Everyone is important in getting this award. It’s the team that all make Sewell Group the company that it is.”
Paul added: “It sets the bar and we are now judged by that bar, as a Queen’s Award holder.
“We are united behind the principle that talent is spread equally within our community but opportunity isn’t and we have a great team here because they come from very different backgrounds.
“Just because you have had a disadvantaged start in life it doesn’t mean you can’t get to the top and if you are given the opportunity your duty is to pass that opportunity on to others. It’s not a do-good thing, it’s a business strategy and when you see the people you know it’s the right strategy.”
Paul and the Lord Lieutenant were joined in stage by Emily Jones, Retail Manager at Sewell on the go, and by Dieter Franks, Construction Site Supervisor, as other colleagues followed the proceedings on a live stream.
Dieter said: “One of the main things that attracted me to come into the company was the award. When I came for the interview I was looking into the award and what Sewell Group does in the community and how they work.”
Emily added: “I’m really touched that I’ve been invited here as it’s such a special occasion. I know everyone back at our site is watching the live stream and celebrating. We have flags flying and it’s really nice for customers to be able to see that and for them to ask us about it. I work for a place that’s been given an award by the Queen!”
Helmsley brings The Alchemist to York
Helmsley Group has announced that leading bar and restaurant The Alchemist is set to open at its The Coach House building in York.
The property investment and development specialist has agreed a letting to The Alchemist. Subject to planning and licensing approvals, it will be The Alchemist’s first venue in the city.
Helmsley has also revealed that it is accelerating plans to redevelop the upper floors of the three-storey building, located on the corner of Nessgate and Ousegate, for residential use following planning approval.
The move comes as Helmsley finalises its vision for the regeneration of neighbouring Coney Street through its Coney Street Riverside masterplan and follows it securing other prominent leisure operators in the area, including Rosa’s Thai Café.
The Alchemist, which has more than 20 bar and restaurant venues in prime city centre locations across the UK, is set to take the ground and basement levels of The Coach House which offer almost 5,000 sq ft of open-plan floor space.
Tom Riddolls, development surveyor at The Helmsley Group, said: “The Alchemist is a fantastic brand to welcome to York and it is testament to the strength of The Coach House’s offer that it has chosen the location ahead of other venues in the city.
“When we acquired The Coach House, we said it offered a rare and exceptional leisure opportunity for a forward thinking and prominent leisure operator to open a significant bar and / or restaurant in the heart of York’s thriving retail core. The Alchemist fits both these criteria entirely and we are delighted to have them on board.
“This is another positive addition to Coney Street and neighbouring areas and complements our exciting vision to revitalise this part of the city centre, including opening up the riverfront for the enjoyment of all.”
Pudney Shuttleworth and Reesdenton are joint agents at The Coach House. Harlow Property Consultants and Westmark Estates acted on behalf of The Alchemist.
360 Foundation championing grassroots sports granted charitable status
360 Chartered Accountants is delighted to announce its new charity has received official registered status.
The 360 Foundation has been formed with the specific remit to promote participation in grassroots sport for under privileged children in the HU1 to HU9 postcode areas, with plans to extend this geographically in time to other areas where 360 has a physical presence.
Andy Steele, Director of Hull and East Yorkshire-based 360, said: “Grassroots sports clubs play a vital role in bringing our communities together and we want to make sure that every child has the opportunity to take part. A recent report found that the Covid-19 pandemic and now the cost-of-living crisis has brought real financial difficulties for many. 2,600 grassroots clubs have shut down across the UK, with thousands more still at risk. More than half of parents said affordability got in the way of playing and the number of families who couldn’t afford kit almost doubled. We don’t want families to be unable to pay subs or buy sports kit for their son or daughter because they need that money to buy food and other essentials.”
360 Chartered Accountants has a strong history of supporting grassroots and professional sporting organisations in the city and has a series of fundraising events planned over the coming year.
Managing Director Adrian Hunter, who has been appointed Chair of the charity, said: “We have been working hard over the last year to get everything in place and are thrilled to finally have official registered charity status for the 360 Foundation. We are looking forward to working with local sports clubs and agencies as well as with Hull City Council to reach as many young people as possible.
“Playing sport benefits both their physical and mental wellbeing. They also learn the importance of being part of a team which gives them a sense of belonging as they make new friends, helping increase their self-esteem and confidence. There are so many plus points, we don’t want anyone to drop out for financial reasons. Similarly, if there are young people who want to play a sport but haven’t been able to afford it up to now, we are here to help them too.”
More than 80% of UK SMEs want to switch to electric vehicles
Most UK small businesses want to switch to electric vehicles but are held back by rising vehicle costs and electricity bills, new data from NatWest shows.
Despite the research revealing that 81% of SMEs want to transition to green transport, the current economic conditions are delaying plans rather than causing them to be abandoned entirely. Of those looking to take their first steps into greener transport, only 40% plan to start within the next 2 years, highlighting the need for greater support to allow businesses to fulfil their climate ambitions sooner.
SMEs are reporting that the price of electricity is a barrier for more than a quarter (28%), whilst vehicle costs are deterring a further third (32%). However, the business case for adopting electric vehicles appears to be the main motivator for SMEs looking to electrify their fleet (44%), however emissions reductions (40%) and sustainability concerns (36%) are also found to be key drivers in the move to greener transport.
Recognising the barriers preventing SMEs from taking action to improve their sustainability, NatWest Group, through Lombard, has launched Green Asset Finance which gives businesses a way to finance assets that help to make their businesses more sustainable, such as electric vehicles. Since July 2021, Lombard has provided £1.3billion in climate and sustainable funding, to businesses transitioning to electric vehicles, hybrid vehicles, and other renewable assets, including those in the Agricultural sector.
Commenting on the findings, Ian Isaac, Managing Director at Lombard, NatWest Group, said: “It’s clear to see there is appetite among UK small businesses to transition to electric vehicles in order to both lower fuel costs, and make a significant contribution towards the nation’s climate targets.
“However, the current economic climate and immediate cashflow concerns means that many SMEs feel they need to put plans on hold. We’d encourage any business looking to take that first step in their own sustainability journey to research the support measures available.
“The first step on this journey is the hardest and it’s a big decision for businesses. But our research shows the intention to transition is there, and the sooner businesses take that first step, the sooner they will be able to see the benefits. At NatWest and Lombard, we can help them make sense of their business case even against the backdrop of increasing energy costs.”
The bank is also working in partnership with energy tech company Octopus Energy to offer businesses EV charge points at discounted rates, and last year partnered with EV8 Technologies to launch the EV8 Switch app, which uses real world data to help drivers understand if switching to an EV makes economic sense for them.
If it does, the bank can then offer funding to SMEs to allow them to spread the cost of transition to EV, through options such as contract hire. This allows businesses to have certainty around vehicle operating costs over a fixed period, as well as the option to regularly refresh their vehicles and adapt their fleet to meet changing business needs and guard against the risk of technology obsolescence.
NatWest has recently begun offering Green Loans and Green Asset Finance to SMEs from £25,000, ensuring that more businesses can access funding to help transition to more sustainable practices such as electric vehicles, in turn reducing costs in the long term, all whilst supporting UK net zero targets.
NatWest has also created a new Carbon Planner, a free to use digital platform designed to help UK businesses manage their fuel and operational costs and reduce their carbon footprint to help them go and grow greener. This includes providing a cost of transport overview that businesses can then use to build a business case for investing in their transition to net zero. Since launch around two-thirds of businesses that have used the NatWest Carbon Planner have produced a carbon reduction action plan for their business.
The bank has recently also launched one of the UK’s biggest EV car parks at its Scotland headquarters at Gogarburn in Edinburgh, investing in 264 chargers for colleagues and visitors to charge their electric vehicle. The launch forms part of the bank’s aim to halve its own operations emissions by 2025.
Over a third of mid sized businesses in Yorkshire plan to restructure says new report
Inflationary pressures, rising interest rates and high energy costs, coupled with ongoing supply chain issues are causing Yorkshire businesses to reassess their investment plans and restructure operations, according to Grant Thornton’s Business Outlook Tracker.
The company surveyed mid market business leaders in October 2022 and found that, the number of companies feeling optimistic about their revenue growth fell over 20% from October with pessimism its highest since lockdown.
Many businesses are having to secure additional finance to work through the escalating costs facing the market, with 30% already having secured further funding and 38% planning to do so.
It also found that in the face of mounting pressures, 20% of respondents have already restructured their operations, with a further 40% having plans to do so.
The survey also recorded lower levels of optimism from respondents on their business’ funding position – dropping significantly (-42 percentage points) compared to August 2022, to just 42%.
The strain on funding has also led to a considerable drop in investment expectations across all areas monitored by the Tracker. The most significant drops compared to the last round in August 2022 were seen in technology (-39pp), plant, machinery and new buildings (-31pp) and employee rewards and benefits (-21pp). There was also a -17pp drop in the number of businesses planning to increase investment in both skills development and growth in international markets.
But investment looks to be being directed to areas that will have the most impact on reducing costs. Over two thirds (68%) of respondents have already invested, or are planning to invest, in productivity, efficiency and automation.
In the face of increasing costs and ongoing changes to government fiscal policy, the number of businesses optimistic about the outlook of the UK economy has also plummeted -32pp, compared to August 2022.
Andy Wood, Yorkshire Managing Partner at Grant Thornton UK LLP, said: “Businesses across the country are facing incredible cost pressures from all sides. The combination of input cost price increases, high energy costs and rising interest rates, are seeing businesses faced with increases from 5% to as much as 100% in some cases, when combined with the added strain of ongoing supply chain shortages in some areas. The severity of the environment is clear, with the majority of those surveyed either planning to restructure their operations, or already having done so.
“There isn’t one solution to fix these issues but there are always sensible steps that businesses can take to start to rebuild confidence. For example, reducing the businesses debt level to counter interest rate rises, reducing energy usage and looking for efficiencies in the face of energy cost rises, and considering alterative, cheaper suppliers.
“Many businesses are also reviewing their budgets for the next 6-12 months. It’s vital that these forward plans account for assumptions that may need to be made over this period, such as the impact of the end of energy bill relief, and rising interest costs. Businesses need to be proactive and take action where they can, rather than burying their heads in the sand – its these businesses who will work their way through this challenging environment, and emerge a more resilient, efficient organisation.”
Golden Quarter off to slow start with sluggish retail sales growth
The retail sector’s crucial Golden Quarter period, which encompasses Christmas and Black Friday, has started poorly with disappointing sales growth in October, new figures by accountancy and business advisory firm BDO LLP reveal.
According to BDO’s High Street Sales Tracker, total like-for-like (LFL) sales (combined in-store and online) grew by +3.5% in October, compared to a base of +19.9% in the equivalent month last year. However, with a strong first week of sales masking poor performance across the rest of the month, these results are a disappointing start to this vital time of year.
Total non-store LFLs recorded the first positive results (+0.5%) since July, following negative results in August and September. With growth of just +5.9%, total in-store LFLs recorded the lowest results since stores reopened when the UK emerged from lockdown in 2021.
October started strongly with total LFLs recording an increase of +11.48%, compared to +22.03% for the same week last year. These positive results were likely making up for the slowdown in sales resulting from the bank holiday funeral of Queen Elizabeth II the preceding week. However, following weeks showed much lower levels of growth, with weeks two and three recording total LFL growth of +5.63% and +4.16% respectively. In the fourth week LFL growth fell to +0.27% and in the final week of the month, total LFL sales went negative, falling to -1.84%.
Sector Results
The fashion sector was the strongest performing category throughout October, with total LFLs climbing by +6.7% from a base of +36.8%. This marks 20 consecutive months of positive total LFL sales figures for the fashion sector, but is the third straight month of slower growth. The homewares sector recorded total LFL sales growth of +3.5% in October, the first positive set of results since April 2022, following five consecutive months of negative results. However, these figures are compared to a low base of +0.7% in October 2021. October was also a disappointing month for the lifestyle sector, with total LFLs falling by -0.1%, from a base of +10.0% in the previous year. This is the first negative result for the category since February 2021, suggesting that the fall in consumer discretionary spend has spread to include the lifestyle sector, having already seen homewares record declines in recent months. Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “This is a disappointing start to the most important part of the retail calendar. After a summer of sluggish retail sales growth, retailers would have been hoping for performance to pick up once we reached the Golden Quarter. However, like-for-like sales are continuing to trend downwards, as consumer confidence remains at near record lows. “October may have started strongly but sales quickly tailed off, with negative results in the final week of the month. If we remove the first week of the month from these results which was making up for the held back spend of the extra bank holiday, retail sales grew by only +1.8%. Given the current level of inflation, this means that actual sales volumes have decreased significantly. “We are likely to see different actions being taken by retailers in the run up to Black Friday depending on their performance to date, stock levels and also challenges that they may be facing on working capital Across the sector it’s clear that retailers will have to think carefully on pricing to persuade shoppers to part with their cash, without further impacting their already low profit margins. As ever, some will look to make operational savings or reduce costs through the supply chain, but when faced with such strong economic headwinds, there is only so much the sector can do to preserve their business.”Interest rate rise will leave small businesses between a rock and a hard place
Following today’s decision by the Bank of England to increase the base rate from 2.25% to 3%, Federation of Small Businesses (FSB) National Chair Martin McTague said:
“Whatever the macroeconomic justifications for this latest rise, the eighth in a row, its effects will be felt immediately on the ground by small businesses carrying many kinds of debts, as well as by hard-pressed consumers.
“Consumer confidence in October was only slightly above its all-time low in September, which spells worrying news for countless small firms relying on consumer spending in the so-called ‘golden quarter’ running up to the festive season.
“Our research found that firms in the hospitality sector had a confidence reading almost twice as negative as the overall score for all sectors in Q3, raising fears of a wave of closures if prospects do not improve this winter.
“Prior to today’s base rate hike, small firms were already telling us that the availability of new credit worsened in the third quarter, and that finance was already getting more costly, adding to the financial pressures they face.
“Inflation is still sky-high, especially for business inputs, where it is running at around twice the rate of that felt by consumers.
“Today’s rise may be seen by markets as necessary and inevitable, but for small businesses struggling under a debt burden and seeing decreases in custom that will be cold comfort.
“The Chancellor must not forget small businesses and self-employed people in the upcoming Budget.
“While there are undoubtedly tough decisions ahead, a further drop in small business numbers, after 2020 and 2021 saw a combined loss of nearly half a million, will hamstring the UK’s economic recovery before it has a chance to get going.
“Action on late payment at least would be a godsend for small firms, opening up flows of working capital to keep them able to trade. The long-running scandal of large corporates’ poor payment practices must end, and the sooner the better.”
