Partner Article

Demand chasing ever-dwindling stock

The recent letting of the 103,950 sq ft former Marks & Spencer distribution warehouse at UK Land Estates’ Tyne Tunnel Estate, North Shields, continues the theme established late last year for some very large lettings says Simon Haggie and Mark Proudlock, partners, industrial agency, Knight Frank.

The letting to a so far unnamed occupier comes hot on the heels of two significant year lettings of a 138,027 sq ft building at Doxford Park, Sunderland, being marketed by Knight Frank to Nissan supplier Calsonic Kansei and the Coveris Rigid acquisition of the 266,885 sq ft Drum One building, Chester le Street, giving the sector a huge end of year lift.

Against this background it is difficult to predict what this year holds in store. In property terms the supply of modern vacant stock is probably as low as it has been for a number of years and whilst activity levels are certainly reduced, there remains demand chasing an ever-dwindling stock of premises.

Although there are one or two new schemes on site currently, the amount of space and size of units will not add greatly to the supply or satisfy demand for larger units in excess of 20,000 sq ft. Indeed there is an almost non-existent stock of modern buildings over 50,000 sq ft.

The major proposal for land release in the region is by the combined authorities of Sunderland and South Tyneside for an area of circa 320 acres lying immediately to the north of the Nissan Plant in Washington.

As the land is designated as green belt it will need to satisfy the rigours of the planning system and is therefore unlikely to come forward for another two to three years. In due course it will provide a much needed supply in an area where the last meaningful plot at Turbine Park, off the A1231, is the subject of a proposal by Vantec to construct a further warehouse of almost 370,000 sq ft to handle parts for the adjacent Nissan factory.

The other major land release to come forward recently is Highbridge Properties’ Indigo Park site which lies off Sandy Lane in North Tyneside just to the north of Gosforth Park. This 82 acre strategic employment site has funding approved for a new signalised entrance from Sandy Lane which will open up the east half of the estate, in addition to which the existing access is to be widened and upgraded to service the expected 1.3 million sq ft of new manufacturing/distribution space the site can accommodate.

On Team Valley, UK Land Estates has an on-going programme of regenerating the estate by demolishing old obsolete factory units to assemble development sites for new schemes, the most notable of which is Kingsway North, the site of the former Huwood premises at the northern gateway to the estate. Both the sites at Kingsway North and Dukesway Central offer over 10 acres of development opportunity in addition to which there is a plot of five acres on Eighth Avenue and one of almost four acres at 5th Avenue Business Park.

In general capital values have risen for modern stock largely as a result of scarcity but neither rental nor capital values are yet at levels which make speculative development viable without grant assistance.

ENDS

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