Knight Frank: manufacturing on the up in robust shed market
According to the firm, Q2 of 2024 saw 722,000 sq ft let across West Yorkshire & the Humber in the 50,000 sq ft+ market, bringing the half-year figure to 1.2m sq ft.
This means the regional industry is well placed to top 2023’s full-year figure of 1.6m sq ft, said Knight Frank’s latest Logic industrial property report.
Iain McPhail, partner in Knight Frank’s Yorkshire industrial & logistics team, said: “This puts the market in a good position against last year’s total of 1.6m sq ft, reflecting a 20% improvement, and the highest H1 volume in three years.
“One of the main drivers impacting the positive figures is the notable increase in demand from the manufacturing sector. Out of five leasehold and three freehold transactions to complete this year, all three freehold purchases have involved manufacturers.”
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The largest of these transactions, said McPhail, was air conditioning manufacturer, Airedale, which acquired the 314,714 sq ft former Hallmark Cards facility at Dawson Lane in Bradford. In addition, the 275,413 sq ft former Ilke Homes factory in Flaxby, Knaresborough was bought by bottled water manufacturer Shepley Spring Water.
McPhail continued: “The West Yorkshire and Humber market has seen a mini revival during H1 2024, which has also been driven by the increased availability of speculatively developed warehouse space in the region, with developments like Leeds Valley Park, Konect 62 and Velocity Point benefiting from pent-up occupier demand for small and mid-box units.
“With the marked rise in manufacturing enquiries, we have seen increased demand from occupiers needing buildings with large electrical capacity. This further emphasises the need for developers to factor-in sufficient power supply to their speculative schemes to accommodate not only the B8 distribution sector, but also B2 manufacturing end users.”
During the past year, more than 1m sq ft has been taken by manufacturers in the region, a substantial increase on the 200,000 sq ft recorded across the previous four quarters. With 56%, manufacturers now comprise over half of the space taken, with distribution companies making up 30%.
This marks a shift from the previous year, when distribution firms accounted for 72% and manufacturers only 16% of space transacted.
The largest letting in Q2 involved food and beverage logistics company, Oakland International, committing to K161 at Konect 62 in Selby, a new-build of 161,578 sq ft developed by Cole Waterhouse.
Prime rents in Leeds for units of 50,000 sq ft+ remained stable in Q2 at £8.75 per sq ft, however, with quoting rents for prime mid-box units now at £9.50 per sq ft to £9.75 per sq ft, Knight Frank expects to see a substantial increase in headline rents within the next two quarters.
McPhail concluded: “Despite a small handful of second-hand modern warehouse space returning to the market recently, for example Unit TL2, Towngate Link in Leeds, we have seen total supply reduced by around 13% this quarter due to take-up levels and the notable absence of proposed speculative development on the horizon.
“The exception is Baytree Developments, currently under way with their impressive speculative warehouse scheme located in South Leeds, which consists of two best-in-class warehouse units extending to 76,000 sq ft and 145,000 sq ft respectively.”
Contractor Glencar is delivering the Baytree development, being selected in late 2023.
