Investment into Yorkshire industrial and logistics assets reached a record breaking £615 million in 2019, up 8.6 per cent year on year according to global real estate advisor Colliers International.
An increasing willingness by investors to take development risk, in a low supply environment, acted as a boost to the region and a rise in speculative development will follow this year. This is set to include Panattoni speculative building the 512,000 sq ft distribution warehouse Wakefield 515 at Crosspoint 33.
The largest transaction in the area was Muse Developments’ forward funding deal for around £60 million with Aberdeen Standard Investments for a 361,000 sq ft distribution warehouse pre-let to Amazon at Logic Leeds. Equities Property Fund’s acquisition of the £30.67 million SuperG in Glasshoughton, which provides 258,000 sq ft of warehouse space, achieved a net initial yield of 4.6 per cent.
Ben Hall, investment director and head of Colliers International in Leeds, commented: “Yorkshire had a fantastic year last year, as large institutional investors continued to commit to both existing stock, and in the development of new assets in the region. This follows the national trend with industrial and logistics assets being a favourite amongst investors over the last three years, with strong returns and a growing occupational market driven by ecommerce.”
Colliers notes that despite the strong year for investment, the occupational market failed to match the strong demand witnessed in 2018. Take up reached 2 million sq ft, down 57 per cent year-on-year as political uncertainty dampened activity, however it is expected there will be a bounce back in 2020 as fundamentals including low national unemployment rate and increasing online spending are set to drive demand in the region.
Notable deals in the occupational market include Amazon signing a pre-let of 731,000 sq ft at iPort in Doncaster and Puma agreeing a 15 year lease on SuperG. London Metric forward funded a 232,000 sq ft design and build warehouse at Goole 36 for Croda that agreed a pre-let for a 20 year lease.
Robert Whatmuff, director in the industrial and logistics team at Colliers International in Leeds, added: “Although 2019 saw a dip in take up, this was off a particularly high base in 2018 when the market saw circa 4.6 million sq ft of occupational deals for distribution warehouses larger than 100,000 sq ft. There was considerable activity from the retail sector as it continues to adapt to the rise of online shopping, something we definitely expect to see continue into this year. As business confidence bounces back we expect to see this reflected in the rents achieved and headline rents for logistics warehouse space to reach in excess of £6 per sq ft this year, up from the current £5.75 per sq ft headline.”