Member Article

£37m Doncaster warehouse sale buoys Yorkshire ‘Big Box’ market

Investor demand for UK ‘Big Box’ logistics property (distribution units of 100,000 sq ft and over) continued to remain strong over the first half of 2013 (H1 2013) with £1,599m transacted, a 23% increase compared with the first six months of 2012 (£1,296m).

In Yorkshire, the £37m sale of a 750,000 sq ft distribution warehouse near Doncaster buoyed H1 activity, although there has continued to be a lack of prime product resulting in a strengthening of prime yields, according to Jones Lang LaSalle’s latest UK Big Box Industrial and Logistics Market report.

Andrew Summersgill, director in Jones Lang LaSalle’s National Investment team in Leeds, said: “Investor interest remains strongly focused on prime and good secondary stock in well-established locations as evidenced by JLL’s sale of distribution facility, let to The Range, at Nimbus Park near in Doncaster, which has good links to the motorway network and the east coast ports.

“Compared with this demand there continues to be a lack of prime product and because of this there will continue to be interest in better quality secondary assets.

“As a result both prime yields and yields for good quality secondary stock across Yorkshire have sharpened.”

At mid-2013 Jones Lang LaSalle says prime distribution yields stood at around 5.50% in London, 6.00% for the South East and 6.50-6.75% for regional markets.

These yields assume a 15-year lease with open market rent reviews and there is evidence of lower yields for longer leases with inflation linked rental uplifts.

Looking at UK occupier demand Grade A logistics take-up totalled 9.7 million sq ft in the first half of the year, compared with 7.9 million sq ft in H2 2012 and 3.6 million sq ft in H1 2012.

Retailers accounted for 47% (4.6 million sq ft) of all Grade A take-up in H1 2013, compared with 39% in H2 2012.

Jones Lang LaSalle said the figures showed that retailers are continuing to play a major part in the UK Big Box market as multi-channel retailing sets more challenges for supply chain management.

This was posted in Bdaily's Members' News section by Mark Lane .