YORKSHIRE and the Humber recorded the steepest fall in the supply of industrial space of any UK region last year, according to a study by property consultancy Lambert Smith Hampton (LSH).
However, the strong demand for industrial space in Yorkshire is also giving developers the confidence to start speculative developments. The number of speculative schemes suffered a dramatic decline after the economic crash of 2008, which hit investor confidence.
Overall, 2014 was a record-breaking year for the UK industrial and logistics sector, as take-up reached new heights, investment activity also hit record levels and speculative development finally returned to the market, LSH’s report said.
However, in Yorkshire and the Humber supply continued to fall across the region, from 7.4 per cent to 5.2 per cent, with Sheffield seeing its availability rate halving to 4.4 per cent.
Significant deals in the region included Great Baer Distribution taking 412,519 sq ft at LPP in Sheffield, Lawcris Panel Products acquiring the freehold of the 155,282 sq ft Blue Steel 45 building in Leeds and WH Malcolm taking 135,172 at Latitude 135 in Castleford.
Simon Rhodes, LSH’s head of industrial and logistics for Yorkshire and the Northeast, said: “While there remains some limited availability across the region, demand is likely to outstrip good quality supply in 2015 which could see a further hardening of rents as they move beyond pre-2008 levels in some areas.
“However, looking to the medium term, we are now seeing more speculative development underway on schemes in the Aire Valley Enterprise Park and along the M62 corridor providing much-needed stock for what remains an incredibly active market.”
According to Mr Rhodes, there were a number of large-scale lettings of industrial accommodation in Yorkshire in 2013.
He added: “While 2014 was another strong year for Yorkshire, availability levels were reduced.
“There remains limited stock availability but demand remains strong, and this is leading to upward pressure on rents which is giving developers the confidence to speculatively build again in Yorkshire.”
According to the latest edition of LSH’s annual industrial and logistics market report, take-up nationally rose eight per cent to 103.3m sq ft as a result of robust economic expansion and structural change in the logistics sector due to the growth of online shopping.
The strong recovery in demand has put the supply of industrial stock under acute pressure and started to influence occupier activity, the report said.
Despite considerable demand, Grade A take-up was the lowest on record last year.
With economic growth forecast to strengthen and with availability tightening, LSH predicts that prime and secondary rents in many markets will surpass their pre-recession highs in the next year, and up to 4.4m sq ft of new space could be built speculatively during 2015.