LETTING activity in UK the industrial market increased by 800,00 sq ft to 6.9m sq ft in the first quarter of 2011, according to research by property agency DTZ.
But the firm’s latest Property Times UK Industrial report, which covers the market for properties exceeding 50,000sq ft, said overall take-up was down from the 7.3m sq ft seen in the first quarter of 2010.
Retailers and manufacturers dominated take-up of industrial space during the quarter, accounting for more than 90% of all activity.
The report also found that the total availability of industrial space fell to about 182m sq ft at the end of the quarter, while grade A stock continued to fall – reflecting the continuing absence of newly-built supply. Secondary grade space saw the largest reduction during the quarter, falling by about 6m sq ft, largely due to the lack of availability of grade A buildings.
The trend tor consolidated national distribution hubs witnessed in 2010 continued into 2011, especially in the North West and Yorkshire. Activity was also driven by favourable exchange rates, which helped boost the export-orientated manufacturing sector, with many businesses taking the opportunity to expand their operations.
Mike Baugh, director of industrial and logistics at DTZ in West Yorkshire, said: “The report is further evidence of the market trend first noted during 2010, the reducing availability of good quality buildings in many parts of the UK.
“Indeed, the shortage is now evident in most parts of the country. Occupiers are now entering into build-to-suit projects which will be tailor made for their operations, but will not be available on attractive terms in the same way as those on existing building stock.
“Again, the principal demand is coming from food retailers, discount retailers and internet-based operators, although encouragingly, there are also some manufacturing companies in the mix.”
Interest in Yorkshire continues to grow as levels of good quality stock in the North West decrease. Retailers and third party logistics operators in particular have chosen the region for national distribution hubs due to location, lower rents and availability of stock.
Said Mr Baugh: “Take-up continued in the first quarter of 2011, however not at the pace of 2010. DTZ’s standout transaction in the Yorkshire region this quarter was the acquisition of 147,000 sq ft for baby products manufacturer Lindam at Thorp Arch Trading Estate.
“This activity is encouraging and significantly aids in chipping away at the good quality space available in the region.
“There are still a number of unsatisfied requirements however, some of which are having to consider a design and build route as in some size ranges existing buildings are limited.”