Savills: big shed market remains resilient
According to the advisor, take-up of industrial and logistics space in Yorkshire hit 1.6m sq ft across 10 transactions in the 100,000 sq ft+ market over the first half of 2024.
In terms of square footage, Savills noted that there has been a decline of 12% year-on-year; however, on deal volume, the region is performing 25% ahead of last year.
By unit count, there have been eight transactions within the 100,000 sq ft to 200,000 sq ft size band and two within the 200,000 sq ft to 300,000 sq ft size band.
Savills advised on three of these big box deals including K161 @ Konect62 in Knottingley, a food production unit in Leeming Bar, and Unit 5 Velocity Point in Leeds.
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Supply of quality product is often a hot topic, increasingly so given the urgency of market leaders to move away from older, less energy-efficient stock. Of the 8.42m sq ft on the market, 52% is classified as grade A, 24% as grade B, and 24% as grade C.
Savills said that there is now a single unit under construction in the wider region totalling 145,476 sq ft. as developers pause consented developments.
This, said the firm, will keep the vacancy rate lower as supply is absorbed. Savills highlights that whilst supply has increased, a large proportion of these are unsuitable for many occupiers’ requirements, particularly surrounding ESG credentials.
Savills is tipping that, with continuing issues surrounding build-to-suit developments and their viability, many recent requirements will filter towards existing larger stock. This will keep the vacancy rate under 12%, a pivotal point needed for rental growth.
Tom Asher, director, industrial and logistics, Savills Leeds, said: “The supply level in Yorkshire is increasingly dynamic, with some micro-locations experiencing oversupply while others face undersupply.
“Currently, the West Yorkshire market appears to be undersupplied compared to the South Yorkshire market. Developers should consider micro-market dynamics to realise rental growth potential.”
UK take-up of industrial & logistics space (units of 100,000 sq ft+) reached 16.82m sq ft in the first half of 2024, a 44% increase when compared with H1 2023 and 13% above the long-term average. This can be attributed to improved market sentiment in light of a more positive economic outlook, said Savills.
