Supply

Following the completion of multiple speculative developments, the supply of units over 100,000 sq ft now stands at 2.5m sq ft across 14 units. There is 1.7m sq ft available within Yorkshire across eight units, and c.800,000 sq ft available in the North East across six units. A large proportion of this space has strong interest from multiple parties, and 24% is currently under offer. The vacancy rate across the two regions now stands at 2.75%, equating to just 0.27 years' worth of supply.

Now, 45% of the available supply is Grade A, 35% is Grade B, and 20% is Grade C. As previously noted, a vast proportion of this space could be obsolete through not being able to accommodate modern occupier requirements. We are seeing rising concerns surrounding the suitability of a unit, particularly referencing its ESG credentials, power availability and amenities.

In terms of unit count, 86% of the available units are within the 100,000–200,000 sq ft size band, 7% are within the 200,000–300,000 sq ft size band, and 7% are over 500,000 sq ft.

Take-up

Take-up in 2022 has reached 5.78m sq ft across 14 units, already surpassing the long-term annual average by 10%. In isolation, Yorkshire & the Humber saw 67% of this activity, and the North East saw 33% of the activity.

The chronically low levels of supply has pushed occupiers towards the build-to-suit route to acquire space, 79% of space transacted in 2022 was built-to-suit bespoke space, 17% was second-hand space, and 4% was speculatively developed space.

Demand was spread across the size bands, 64% of transactions were within the 100,000–200,000 sq ft size band, 8% were within the 200,000–300,000 sq ft size band and 14% within the 400,000–500,000 sq ft and 500,000 sq ft+ size band. The largest deal this year was Amazon committing to a 2.2m sq ft unit at Melton West Business Park in Hull.

The region has seen demand from a diverse range of occupiers; 42% of take-up was from manufacturers, 38% from online retailers, and the remainder was spread almost equally across a variety of alternative occupiers.

Development pipeline

There are currently 12 units under construction, totalling 2.47m sq ft. There are six units under construction within the 100,000–200,000 sq ft size band, five within the 200,000–300,000 sq ft size band, and a single unit under construction within the 300,000–400,000 sq ft. These units have strong interest; however, if they were to add to the supply figure once PC’d, the vacancy rate in the region would rise to just 5.32%.

_{Read the articles within Big Shed Briefing below.}