Continued hearty appetite for speculative industrial development

South Yorkshire vacancy rates are a healthier level than previous quarters due to the completion of new, larger sized units at iPort Doncaster and Mammoth 602, Doncaster

A further 3.58 million sq ft of speculative industrial development is under construction in Yorkshire and The Humber, with occupational demand set to continue into 2023.

Knight Frank’s latest LOGIC industrial sector report for the region reveals a lack of supply and continued occupier demand has driven an appetite for speculative development.

Commenting on South Yorkshire and North Derbyshire, Rebecca Schofield, partner and head of the Yorkshire Industrial team at Knight Frank in Sheffield, said: “The lack of immediately available supply supports an appetite for speculative development.

“The first half of 2022 recorded 1.26m sq ft of take up of units 50,000 sq ft and above.

“In the 12 months to the end of Q2 2022, take up totalled 3.13million sq ft with quarter two representing approximately 635,000 sq ft of this, or 20%.

“Distribution occupiers remain the most active, accounting for 57% of take up in Yorkshire over the past year.

“At the end of Q2 2022 there was a total of 1.83 million sq ft of space immediately available.

“However, 73% of this was under offer with occupiers already in advanced discussions for available space.

“The vacancy rate for the region stands at 3.2%, a healthier level than the previous few quarters due to the completion of new, larger sized units at iPort Doncaster and Mammoth 602, Doncaster.

“Despite the caution that has entered the investment market, occupier demand and enquiries remain robust and we expect levels of interest to continue in respect of the further speculative development planned, including Panattoni Park in Rotherham, Barnsley 340, Bessemer Park Sheffield, Horizon 29 at Chesterfield and Unity Doncaster.”

Talking about West Yorkshire and The Humber, Iain McPhail, partner in the Yorkshire Industrial team at Knight Frank in Leeds, said: “The market dynamics mirror that of South Yorkshire, however the need for new speculative stock is more desperate than ever, especially with Super B (230,000 sq ft) in Bradford now reportedly under offer.

“This is the only new unit available of over 100,000 sq ft in the region at this time.

“Despite the lack of immediately available supply, the industrial occupational market in West Yorkshire and the Humber continues to perform well, with a good level of active requirements and interest in existing and build to suit properties.

“The second quarter of 2022 recorded 217,300 sq ft of take up of units 50,000 sq ft plus, bringing the H1 2022 total to 615,600 sq ft.

“While this is notably below the level recorded in the same period last year, the reduction in take-up reflects the critical shortage of stock available, particularly for new speculative units, with 90% of H1 take up comprising second-hand units.

“In the 12 months to end Q2 2022, take up totalled 2.3 million sq ft, with distribution firms dominating the market, accounting for 89% of the annual total.”

Commenting on the shortage of large, high quality industrial stock, he added: “The total volume of available space (units over 50,000 sq ft) stood at 1.48 million sq ft at end-June, resulting in a vacancy rate of just 2.2%.

“All of this space comprises second-hand stock, while there are no Grade A, larger units over 250,000 sq ft available.”

“The volume of space under construction speculatively remains below market requirements, with just under 360,000 sq ft (units over 50,000 sq ft) due to be delivered this year, with nearly two-thirds already under offer prior to practical completion.”

But he said a speculative development boost is on the horizon, which will bring needed space into the region.

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