Industrial agent Steven Jones at LM1 is responsible for marketing Industrial & Warehouse property across Yorkshire and the wider “North England” region, discusses. Industrial investment yields are continuing to be as strong as ever, influenced by a lengthy periods of low interest rates , low supply and high occupier demand which has subsequently driven rental growth.
During the last year, industrial transactions accounted for 26% of all investment deals in the UK (by £ value), and 30% (by volume). However, most deals in Yorkshire were in the sub-£10m range albeit still some significant investment transactions. With continued strong demand from owner occupiers, we have seen many of the larger estates be broken up into smaller investments, creating pent up demand for larger industrial estates under single ownership. Recently, fund managers and investors have factored in future rental growth in excess of £7.00 per sq ft and have been alert to the potential growth of this market, which has reflected similar rental growth patterns experienced elsewhere. However, we could see rental growth start to slow up as running costs increase and we are still monitoring the on the ground impact of the recent interest rate hikes on commercial investment appetite, not forgetting inflation and soaring energy costs. Notwithstanding this, demand for industrial, logistics, warehouse and trade counter space remains high in Yorkshire with ample development activity of late on the M1 on an S postcode. This, together with the Yorkshire’s connectivity via the M1 and M62, reinforces the region’s industrial offer to manufacturing, logistics, distribution, and e-commerce businesses, and hereby, industrial property investors.
Nationally, Q2 2022 shows that logistics take-up (100,000 sq ft +) has reached circa 15m sq ft, meaning that the first half of the year stands at over 28m sq ft, the highest level of take-up ever achieved in a half year. Occupier demand has come from a wide range of sectors with third party logistics (3PL's) 25% and manufacturers (21%) leading the charge. More interestingly, 54% of take-up this year has been for Build to Suit pre-let units, which is the highest proportion of the market we've witnessed.
LM1 is currently marketing a variety of industrial properties throughout the region. Please get in contact with the team.