There had been significant growth in development activity occurring in South Yorkshire and north-east Derbyshire during the third quarter of the year, according to the latest Knight Frank report.
By the end of September, more than 3.1 million square foot of speculative space was under construction, three times the amount in Q3 2021, the LOGIC research showed.
There was also 2.2 million square feet of occupier take-up in 12 months leading to the end of Q3, while there was a ten per cent prime annual rental growth during the same period.
The main developments that have contributed to these gains include Panattoni’s 629,417-sqaure-foot Panattoni Park in Rotherham; Barnsley 340’s 340,400-square-foot of space; and PLP’s 605,500-square-foot of units at Bessemer Park in Sheffield. All of these developments are expected to be completed in 2023.
Rebecca Schofield, partner and head of Yorkshire Industrial at Knight Frank, said: “Demand for prime units in South Yorkshire and north-east Derbyshire continues to support rental growth, particularly for larger units where we are seeing a higher rate of growth on quoting rents for new buildings coming forward.”
The report noted there is a considerable shortage of space in the region, with availability having dropped by 12 per cent over the year. Subsequently, the vacancy rate has declined from 2.5 per cent in 2021 to 2.1 per cent.
When it comes to occupier activity, 915,900 square feet of space was taken up during the third quarter alone. This was predominantly the result of freight services company Maersk signing a 15-year lease on Mammoth 602 in Doncaster. The new building offers 601,761 square feet of space.
According to the report, nearly half of the occupier take-up this year has been for new, speculative buildings, while 32 per cent were for build-to-suit sites.
Meanwhile, Knight Frank revealed there has been 808,200 square feet of occupier take-up in West Yorkshire in the year leading to the end of Q3, and £766 million in investment.
By the end of September, there was 607,500 square feet of space under construction speculatively. Three of the six schemes that were responsible for the construction projects began during the third quarter.
These included UBS’s 108,500-square-foot Unit 5 at Velocity Point in Leeds; 86,808-square-foot of space for Howden 62; and Tungsten’s 230,000-square-foot Super B and 4th Industrial’s two-unit development in Cleckheaton.
Despite this, there is a lack of available space for occupiers, declining by 17 per cent in Q3. By the end of the quarter, there was just 1.3 million square feet of available space, all of which was second-hand units. There were also no available units bigger than 250,000 square feet, which would have been suitable for larger occupiers.
Ian McPhail, Leeds commercial partner at Knight Frank, said: “The issue in the region is the distance lack of options for occupiers.”
He noted the difference between West Yorkshire and neighbouring counties, noting there was just 192,500 square feet of occupier take-up in Q3 compared with South Yorkshire’s 915,900 square feet.
Similarly, Mr McPhail pointed out the disparity between West Yorkshire’s 607,500 square feet of speculative space under construction compared with South Yorkshire’s 3.1 million, stating: “If there is available space, the demand is there.”
Find out more about commercial construction in Yorkshire here.
