Yorkshire I&L take-up returns to pre-pandemic 2m sq ft average

The latest industrial and logistics comments for the county indicate that West Yorkshire and the Humber regions carried the weight for the region’s take up, while the South Yorkshire market is currently experiencing oversupply.

Highlights from Frank Knight’s recent report show:

• A recorded three-year high of 2.1m sq ft (in units of more than 50,000 sq ft), represents a 25% increase from 2023 levels
• Prime rents in Leeds grew by 5.1% in 2024, to £9.20/sq ft (units 50,000 sq ft+)
• Prime rents across West Yorkshire and the Humber have grown by 36% over the past three years, driven by the dearth of new, prime units available
• Distribution firms accounted for 34% of 2024’s take-up, however, large transactions by manufacturers increased their share of the market to 44% – up from 25% in 2023 (859,000 sq ft in 2024, compared to 407,000 sq ft the previous year)
• Occupiers also mainly wanted units between 50,000-100,000 sq ft, with 10 of the 18 units last year being in this size-range
• The latest average rental growth forecasts for Leeds predict 4.1% growth for 2025 and 3.6%  growth across the region of Yorkshire and the Humber

Iain McPhail, partner in Knight Frank’s Yorkshire industrial & logistics team, commented: “Although Q4 was a quieter quarter, with just two transactions totalling 200,000 sq ft, an additional 932,000 sq ft of space was under offer at year-end, boding well for a strong start to 2025.”

Significant deals

McPhail commented: “2024 has seen industrial and logistics take up in the region return to the pre-pandemic average of around 2 million sq ft (units 50,000 sq ft+). We have seen several large units transact to manufacturers (notably on a freehold basis), including the former Hallmark Cards facility in Bradford (315,000 sq ft), sold to Airedale, and the former Ilke Homes factory (275,000 sq ft) in Knaresborough, acquired by Shepley Spring.

“Whilst the distribution (3PL) market continues to transition from the super-charged COVID conditions as well as focus on back-filling ‘grey-space’, there have been a handful of property transactions in this sector during the year. Notably, Oakland International and Campeys of Selby taking two of the three speculative new-build units at Konect 62 in Selby,
amounting to around 220,000 sq ft of space.

“Prime, new build space has performed well this year with four out of the six speculative mid-box units at Leeds Valley Park either let or under offer, 4th Industrials’ two-unit Interchange 26 development in Cleckheaton is now fully let, and UBS’s Velocity Point scheme in Leeds centre has only one unit remaining.”

“Meanwhile, the completion of two new best-in-class speculative warehouse units at Baytree Leeds (76,000 sq ft and 145,000 sq ft) just before year end nudged the availability of existing stock up by 3.0% to 4.2m sq ft (units 50,000 sq ft+) and the vacancy rate up by 10bps to 6.2%. The supply of second-hand space declined 3.3% during Q4.”

Graham Foxton, Knight Frank partner Leeds capital markets, commented: “West Yorkshire and the Humber has experienced strong levels of investment activity in 2024, with year-on-year figures showing roughly double the investment volume seen in 2023 at the time of writing.

“This shows that buyers and sellers are aligning in their pricing expectations, and we expect demand for the industrial sector to continue throughout the region in 2025.”

Low supply vs over-supply

Strong take-up levels have left a low supply in the market. According to Knight Frank, there is currently only eight
new units available, all of which are under 200,000 sq ft.

Mr McPhail continued: “Further to this, just 13 months’ worth of existing supply is now available based on the region’s five-year average annual take up.

“Development activity has come to a halt for now, with the only two commencements during 2024 now complete and no
speculative development underway at year-end.

“Take-up is expected to be robust during the opening months of 2025, supported by the considerable volume of space under offer.

“Combined with a slowdown of second-hand stock, the region’s vacancy rate is likely to edge down in the first half of the year.”

Savills notes that the South Yorkshire market is currently experiencing an over-supply compared the rest of the region, with 12 units on the market.

While it notes that some of the space has gone under offer early in 2025, the company points out that a large portion of the stock is not high-quality, an aspect that is becoming more and more important to occupiers.

In this instance, refurbishment may be the best route to maximising occupancy and rent potential.

Yorkshire and the North East

Taking a wider view, Savills latest Big Shed Briefing notes that take-up of industrial & logistics space in Yorkshire and the North East is down 31% to 3.07m sq ft across 20 transactions over the last 12 months – however, it points out that despite this drop, it is in line with the long-term average of 19 per year.

Savills notes that occupiers have paused on larger transactions over 400,000 sq ft, primarily due to political and economic uncertainties.

Deal turnover in smaller size bands has remained robust and across Yorkshire and the North East in 2024, there were 16 deals within the 100,000–200,000 sq ft size band and four within the 200,000–300,000 sq ft size band.

Tom Asher, director in the industrial & logistics occupier advisory team at Savills, comments: “Despite current headwinds, we are seeing encouraging signs in the market.

“Vacancy rates are reducing, deal churn remains robust, and there are clear indications of increased activity.

“These factors collectively highlight a resilient industrial and logistics sector poised for growth, and we anticipate that strategic investments in modernising and redeveloping existing spaces will further enhance market dynamics.”