Industrial property in Sheffield and surrounding areas have the highest rental growth forecast in the UK, say commercial property experts Knight Frank.
Research for the company’s Future Gazing report, shows the lack of space and development opportunities is driving strong rental growth for industrial assets across urban areas with the Steel City’s rental growth rate of 7.8 per cent topping all other UK cities and towns for 2021.
St Albans, Basildon and Colchester closely followed Sheffield with Manchester the only other Northern city featuring in the top 5 list of highest rental growth forecast by market outside of London.
Rebecca Schofield, head of the Yorkshire Industrial team at Knight Frank, explained: “The robust levels of growth in the e-commerce market have driven a surge in demand for urban logistic space. With consumers demanding ever-faster delivery times, and the high costs associated with the last mile of the supply chain, retailers and logistics operators are pushing to improve their distribution models, reduce inefficiencies, and hold stock closer to consumers.
“However demand is being held back by limited supply. Strong competition, the lack of space and development opportunities is driving rental growth for industrial assets across urban areas.”
“We have started to see a response to the lack of supply with sites at the 4-unit scheme at Ergo Park in Sheffield offering 25,250 – 80,250 sq ft units; GLP are on site with Mammoth 602 at West Moor Park, Doncaster and Verdion are speculatively building at iPort Doncaster.”
The city has also been unveiled by Advanced Engineering as the UK’s top high-value manufacturing hotspot.
Rebecca added: “Bringing manufacturing back to the UK and into urban areas has the benefit of building resilience into supply chains but also enhances their sustainability credentials, and enables faster turnaround times for consumers.
“There is strong government support for retaining and bringing new manufacturing industries to UK cities. However, historically industrial land has been undervalued, and eroded, with other use classes given priority. This has meant a shrinking manufacturing base across UK cities. Employment in the manufacturing sector has fallen across all cities. However, some cities, like Sheffield, are nurturing growing advanced engineering and manufacturing centres.
“New technologies are reuniting the design and production functions and offering cleaner, flexible, scalable solutions. Many of the drivers that led to offshoring are no longer applicable.
“Advances in technologies such as 3D printing and additive manufacturing have changed the ways that goods are made, and has resulted in bringing manufacturers closer to their customers.”
South Yorkshire is home to The Advanced Manufacturing Park where occupiers include Rolls-Royce, McLaren Automotive, UK AEA and AMRC. The site is able to accommodate occupiers requirements on a build to suit basis.
Knight Frank’s Future Gazing report reveals a record 51.6 million sq ft. space was taken in 2020 (in units over 50,000 sq ft.) and a further 46.9 million sq ft has been taken so far in 2021 (Q1-Q3), demonstrating the robust occupier market for UK logistics space.
E-commerce has been a strong driver of tenant demand, with retailers and distribution firms accounting for 76% of take-up in the first half of 2021. However, the manufacturing sector has increased its share of take-up, accounting for 19% in the first half of this year.
Rebecca added: “The region continued to perform well in Q3 with a further 923,200 sq ft of take up bringing the total up to date for 2021 to just under 5.2m sq ft. A large proportion of the 1.41m sq ft supply is now under offer or in advanced negotiations.”
