Yorkshire has seen 2.3 million sq ft of Grade A large distribution and logistics space taken-up over the first nine months of the year to Q3 2015 against a national backdrop of 13.5 million sq ft over the same period. According to JLL’s research, activity in Yorkshire’s industrial property market has been mainly driven by retailers keen to secure a foothold in the region’s key distribution areas.
The most significant ‘Big Box’ deals for space over 100,000 sq ft in Quarter 3, both of which were build to suit, were Poundworld’s agreement to take 523,800 sq ft of space at XL Link 62, Normanton and Amazon’s deal on 246,755 sq ft at Valiant, First Point in Doncaster. Other key deals this year include the TK Maxx regional distribution facility at Wakefield Europort and Great Bear at Markham Vale.
Rich Harris, director, Industrial & Logistics in JLL’s Leeds office, said: “The market for Big Box distribution units in Yorkshire has been driven by retailers keen to get to a base in a key distribution hub and marketplace. This mirrors the wider UK market where retailers accounted for a 48% share of Grade A take-up in Q3, followed by logistics companies with 28% and manufacturing companies accounting for 19%.
“Yorkshire is disproportionately successful in attracting very large occupiers for distribution units in comparison with the North West. All the deals for space over 100,000 sq ft so far this year in Yorkshire has been taken by retailers and retail manufacturers. While the North West market sees a higher churn in the number of deals in this sector we are seeing occupiers take much larger units this side of the Pennines.”
According to JLL, the availability of new industrial space has been on a downward trend for the last six years. This reflects the take-up of speculatively developed space over this period and the fact that very little new space has been delivered to the market since 2009. At the end of September, there were 25 industrial units speculatively under construction in the UK with four of these in Yorkshire including Mountpark Wakefield.
Rich Harris added: “We need to see speculative industrial development step-up in the region. While pre-lets and build to suit have provided a safer stopgap through the economic downturn for many landlords, the market is now lagging behind other areas in the delivery of speculative warehousing space. My concern is that this situation will impact on the region’s future to ability to attract industrial and distribution occupiers and generate new employment.”
In the investment market, regional prime yields stood at 5.00%. Prime yields remained unchanged at the end of Q3 compared with the end of Q2. Regional single let yields have moved 50bps over the same period.
