YORKSHIRE is well-placed to cash in on the lack of top quality industrial space across the UK, it was claimed yesterday.
Richard Harris, the head of Jones Lang LaSalle’s industrial and logistics team, told a gathering of business leaders that Yorkshire has a third of all the large warehouse space available in Britain.
As a result, the county could attract companies looking for space to grow their business, at a time when warehouses are in short supply in other parts of the UK.
However, the breakfast meeting at Jones Lang LaSalle’s office in Leeds heard that the UK economy faces a long, hard slog towards recovery.
Andrew Burrell, Jones Lang LaSalle’s head of forecasting, predicted that the upturn in job creation will be slow, although the labour market is expected to enjoy steady expansion over the longer term.
Mr Harris warned the audience that, in the short term, the economic climate made a return to speculative development on any significant scale highly improbable.
Occupier demand, while subdued, has continued to lead to the absorption of prime vacant space, he said.
Mr Harris added: “Despite a weak start to the year, and a slowdown in activity over the summer months, occupiers continue to be faced with lease expiries, consolidation, merger and expansion issues, which in turn, have led to a fall in available supply.
“At the end of September, our research shows that availability of new Grade A space across the UK is down 70 per cent on its pre-recession peak.
“Yorkshire has a relatively high level of new speculative supply, with 2.8 million sq ft of large warehouse units available across the region which accounts for one third of all UK stock.
“Set against a backdrop of an acute shortage of new Grade A space in some other parts of the country, industrial occupiers clearly have the option to look to Yorkshire to satisfy their requirements for existing good quality floor space. While enquiry levels remain unpredictable, we believe there will be increased take-up of these big box facilities due to limited stock in areas such as the North West and Midlands.”
Manufacturing has been a major driver behind demand for space in 2012, with the automotive sector performing particularly strongly, according to Jones Lang LaSalle.
However, logistics companies took the largest share of floorspace during the first half of the year.
Mr Harris said: “Regionally, while demand has been steady rather than spectacular, we have seen good levels of take-up in the big box market of both new and existing stock.
“A lack of new development will, however, hold the market back.”
In his speech. Mr Burrell said that major economic risks lay in the developed world, because the eurozone crisis was not going away.
According to his presentation, there was a 30 per cent risk of a disorderly deterioration of the eurozone, with further bailouts, selective exits and political disruption.
He said there was a 60 per cent chance of the eurozone “muddling along” with a mild recession, a very slow recovery and a widening growth gap.
There will also be “headwinds from consumer deleveraging” as Britons focus on paying off their debts. He added: “Fiscal austerity will continue until the middle of the decade at least.”
Jon Sleeman, Jones Lang LaSalle’s director of UK logistics and industrial research, told the audience: “Nationally, occupier demand has been subdued for the past two years. We expect a gradual recovery next year.”
According to Mr Sleeman, occupier demand will be driven by retailers, manufacturers and logistics companies.
Change in the sector would be partly driven by the growing demand for internet retail logistics, Mr Sleeman claimed. He also predicted that warehouses based in ports and sites close to railway connections would grow in popularity.