FEWER properties coming onto the market and a steady take-up of space should help paint a more positive picture for Yorkshire’s industrial and logistics property market, claims a report.

Toby Vernon, senior director of industrial agency at property firm CBRE, said: “2006 and 2007 saw a major increase in the supply of new build, speculatively-built, large-scale logistics schemes.

“This coincided with a significant contraction in occupier demand as the recession bit and the Yorkshire region, like most across the UK, was faced with an over-supply of industrial stock.

“Throughout 2008 and 2009, the market was sluggish, but demand has returned to form with a substantial amount of building take-up over the last two years.

“With no speculative development taking place during this time, supply levels began to diminish and we are now in a much stronger position with the market imbalance correcting itself.”

CBRE’s research shows that the take-up of logistics buildings over 100,000sq ft fell back last year in line with UK-wide statistics to just under 800,000sq ft. That compares with take-up of more than 4m sq ft in 2010.

While the 2011 take-up was below average, the lack of speculative development resulted in a total supply for the region now standing at about 4.04m sq ft.

This still represents a significant amount of space, but when taking into account the five-year average annual take-up of 3.03m sq ft, this means that current availability of existing buildings represents only 16 months of supply.

Said Mr Vernon: “Of the five-year take-up figures, 75% of stock was new build or good quality modern. This tenant drive for quality bodes well for the remaining available stock in the Yorkshire market and will eventually dictate a requirement for pre-let led development in core areas.”

He said demand had been driven by factors including opportunistic retailers seeking to take advantage of market conditions and the continued drive for economies of scale by consolidating supply chains into a smaller number of strategically located, larger footprint buildings.

The growth in online retailing had a big impact on the logistics sector and continued to be one of the major drivers for warehouse demand. Examples included Amazon’s acquisition of 415,000sq ft at Vulcan in Doncaster and ASOS taking 530,000sq ft at Crossflow in Barnsley.

The current economic climate had also created an opportunity for growth of budget retailing which, in turn, has also resulted in new demand for logistics space.

“Looking ahead, we expect that the steady levels of take-up will continue and that we will see an increase in demand from other UK regions where building supply is far more limited,” said Mr Vernon.

“We expect the online retailers and major high street chains will continue to be the main drivers for logistics demand.

“As supply levels reduce further, rental levels will harden and the prospects for pre-let led development will begin to improve.”