Partner Article

Surge in take-up of industrial space in the North East

The North East saw healthy take-up of 1.28m sq ft of logistics and industrial space in the first half of this year report Knight Frank, a figure which is double take-up in the last half of 2013 and is 72% above the five year bi-annual average.

Simon Haggie, partner, industrial agency at Knight Frank says the activity at the start of this year “reflected the strong pent-up demand that was evident at the end of 2013”.

“The first half figures were boosted by Hitachi Rail Europe commencing construction of its new 460,000 sq ft rail plant at Merchant Park, Newton Aycliffe, with completion expected in late 2015.”

Mr Haggie adds; “The largest deal so far this year for existing space was the sale of the 188,000 sq ft Reckitt Benckiser pharmaceutical plant in Peterlee, Co Durham to Luton-based Bristol Laboratories. This was completed on confidential terms.”

In the sector occupier confidence has certainly improved in the North East, although companies remain both cautious and cost conscious in their property strategies.

Export market demand for products manufactured in the North East is strong, maintaining its position as the UK’s only net exporting regions. Nissan continues to expand and invest, with a record half a million cars built in its Sunderland plant in 2013, driving property demand across the supply chain in the Tyne and Wear.

“As a result the availability of new and modern stock is becoming increasingly scarce,” says Mr. Haggie. “The anticipated pipeline of new schemes is proving slow to come forward, with only two small starter-unit schemes of currently on site in the region.

“Developer confidence in speculative build remains fragile, while the anticipated appetite for bespoke pre-lets is yet to materialise.”

In terms of land supply, Highbridge Properties has secured an 82 acre site in North Tyneside close to the A1. This is one of very few major strategic sites in the region to be actively marketed and promoted for development without the constraints many of the other sites suffer from. Highbridge is promoting the site in conjunction with North Tyneside Council which is the majority land owner.

The regional outlook suggests that while occupier confidence is expected to continue to improve, owner occupier activity is expected to soften given expectations of forthcoming interest rate rises.

Increasing demand is expected from trade park occupiers largely fuelled by increased house building and home improvement activity.

“There is little indication that developers are willing to bring forward speculative development in the region, meaning new development is only likely to come forward via design and build agreements,” adds Mr. Haggie

“The supply of available modern buildings will continue to shrink in the absence of new development, and this is expected to put upward pressure on rental levels in the region.”

This was posted in Bdaily's Members' News section by Knight Frank .