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Vacancy rate just 6.38%; 0.77 years’ worth of supply left
Konect 62 in Knottingley, where Cole Waterhouse & Henderson Park, advised by Savills, has recently reached practical completion on c.373,000 sq ft of speculatively developed space.
Inflation and rising base rates have understandably caused a decline in BTS transactions, with occupiers leaning towards existing units. In recent weeks, Savills has seen a resurgence in occupier interest in best-in-class quality units to mitigate any future risks. Headline rents remain robust, evidenced by recently refurbished units transacting at prime levels for longer terms, highlighting the continued strength of the market
Tom Asher, Director, Leeds
Supply
Currently, there is 6.54m sq ft available across 31 units. In isolation, there are 26 units available in Yorkshire, totalling 5.35m sq ft and five units in the North East, totalling 1.19m sq ft. Based on past levels of take-up, the current supply in the wider region would last for approximately 0.77 years.
In terms of specification, 46% of space on the market is Grade A speculatively developed space, 10% of space is Grade A space, 18% is Grade B space, and 26% Grade C space. Landlords are beginning to recognise occupier requirements and are undertaking comprehensive refurbishments. Now, 31% of all stock meets the widely requested standard of EPC B or above, up from 29% six months ago.
By unit count, 65% are within the 100,000–200,000 sq ft size band, 16% are within the 200,000–300,000 sq ft size band, 10% within the 300,000–400,000 sq ft size band, 6% within the 300,000–400,000 sq ft size band, and 3% over 500,000 sq ft.
Savills rental growth prospects show in our baseline scenario, Yorkshire is set to experience 4.4% rental growth per annum over the next five years and the North East 5.8%.
Take-up
Take-up in 2023 reached 4.55m sq ft across 23 transactions, which is 18% below the long-term annual average. When considering the regional breakdown, 78% of activity occurred in Yorkshire & the Humber, with the remaining 22% in the North East.
Analysing take-up by specification shows that 16% of space transacted was speculatively developed space, 42% was BTS space and 42% second-hand space. In terms of grade, 17% of activity involved Grade A speculatively developed space, 44% Grade A, 19% involved Grade B space, and 20% involved Grade C space, reflecting the recent trend of occupiers preferring higher-quality units.
By unit count, 70% of transactions were within the 100,000-200,000 sq ft size band, 13% were within the 200,000–300,000 sq ft size band, 4% in the 300,000–400,000 sq ft size band, 9% the 400,000–500,000 sq ft size band and 4% over 500,000 sq ft. By sector, 33% of activity stemmed from 3PLs, 18% from manufacturers, 13% from grocery retailers and 10% from wholesalers.
Development pipeline
There are currently eight units under construction, totalling 2.24m sq ft. All of these are within Yorkshire – there are three units within the 100,000–200,000 sq ft size band, one within the 200,000–300,000 sq ft size band, two between 300,000–400,000 sq ft, and two within the 400,000–500,000 sq ft band.