Strong demand for new high-quality space drives Yorkshire’s industrial market

More than 4.1m sq ft of industrial property was acquired by occupiers in 2022 in South and West Yorkshire. Distribution occupiers continued to dominate the market with 63 per cent take up in West Yorkshire and 57 per cent in South Yorkshire.

The figures are highlighted in Knight Frank’s latest LOGIC report, which profiles occupier and investment market trends across the region and sector and shows how distribution and retail occupiers for high quality units have supported take up, activity and rental growth last year.

Commenting on South Yorkshire and North East Derbyshire, Rebecca Schofield, partner and head of Yorkshire Industrial at Knight Frank, said: “The final quarter of 2022 recorded 927,300 sq ft of industrial and logistics occupier take up in the South Yorkshire & North East Derbyshire region (units 50,000 sq ft+).

“This brings the year end total to 3.1 million sq ft and, while notably below the record levels seen last year, take up is 8 per cent ahead of the five-year annual average for the region.”

Rebecca added: “Reflecting the robust demand for new, high quality industrial space, 76 per cent of take up in 2022 comprised of new speculative buildings and build-to-suit units. This compares to 53 per cent last year.

“South Yorkshire & North East Derbyshire will see a number of speculative schemes reach completion during 2023. Supply levels remain tight as new and modern second-hand space was been quickly absorbed. Availability stood at 1.4 million sq ft at year end (units over 50,000 sq ft), with a vacancy rate of 2.3 per cent. There are only two units over 250,000 sq ft immediately available for large occupier requirements.”

Rebecca added: “Continued demand from distribution and retail occupiers for high quality units should support take up activity and rental growth this year. We’re also witnessing demand from other sectors, including manufacturing and vertical farming.

Commenting on West Yorkshire and The Humber, Iain McPhail, partner in the Yorkshire Industrial team at Knight Frank in Leeds, said: “The industrial and logistics market in 2022 was characterised by the critical shortage of good quality, large stock, with occupiers continuing to face limited options.

“This resulted in record low take up levels, with under 1 million sq ft of space occupied during the year, compared to 5.7 million in 2021 (units over 50,000 sq ft). The annual total stands 71 per cent below the five-year average. This also contrasts with neighbouring South Yorkshire, in which 76 per cent of take up in 2022 comprises new-build space, compared to just 7 per cent in West Yorkshire.

“The final quarter saw just one deal take place, with event transportation company, Stage Freight, leasing 100,000 sq ft at Towngate PLC’s Copperworks 2 in Leeds. The distribution sector accounted for the majority of take up in 2022 (63 per cent).”

Iain added: “The latter half of 2022 saw developers respond to the shortage of stock in the regions with several developments commencing construction. As of the end of December, 2.5 million sq ft of space was under construction speculatively across 16 units, compared to just 186,000 sq ft recorded one year ago (units over 50,000 sq ft). A further 556,000 sq ft is in the planning pipeline.”

Iain added: “Despite the wider economic conditions, we anticipate a greater level of take up towards the end of 2023, as much needed speculative development enters the market, including the six-unit mid box scheme at Leeds Valley Park in Leeds, and the completion of Super B and Interchange 26 in Bradford.”

By Mark Adair – Correspondent, Bdaily