Big things are happening. A monster 635,000 sq ft letting to TK Maxx, another of 525,000 sq ft to Poundland and the UK’s largest off-the-shelf shed at Sherburn in Elmet add up to three mighty votes of confidence in the Yorkshire industrial market.
Rents are rising, demand is good, supply is low. Savills says just 5.2% of Yorkshire’s 45.8m sq ft of warehousing is vacant, which is unusually low. And it is a buzzing time to be a warehouse developer, says David Wells, the man behind the 110-acre Logic Leeds scheme.
Muse Developments’ 80,000 sq ft speculative shed at Logic Leeds is now ready for occupation, while next door John Lewis has a 50,500 sq ft facility that is already sold to AXA’s UK Long Lease Property Fund for £6.2m. These are
the first installments of a 1.6m sq ft scheme.
Wells, regional director at Muse, says he hopes to nudge rents well above their historic limit of £5 per sq ft. “There has to be a recognition among occupiers – and among agents – that rents have to go up to meet rising building costs. We are quoting £5.60-£5.75 per sq ft and have three or four people looking at the 80,000 sq ft unit,” he says.
Logicor’s new unit, Sherburn 555, is the king of Yorkshire’s big sheds. Formed by combining two smaller units to make one giant supershed of 555,000 sq ft, it is touted as the only shed of its size in the UK that is empty and waiting for tenants.
Logicor, like Logic Leeds, is hoping to nudge up rents. Logicor asset manager Anthony McCluskie says there is no quoting rent at Sherburn 555, but £5.15 per sq ft on a five-year lease is said to be close to expectations. Some regard that as rather steep, others as realistic, given the shed’s unique status in the UK market.
Will rents take off, lifted by the updraft from super-sized sheds and six-figure lettings? Ian Greenwood, managing director at Yorkshire agent Carter Towler, advised developer Marshall CDP on the 525,000 sq ft letting to Poundworld at XL industrial park, Normanton.
Greenwood says: “We always struggled to get West Yorkshire big shed rents to more than £5 per sq ft, Now we are looking at £5.75-£5.95, while incentives have come right down, perhaps three to six months on a 10-year lease. And lease lengths have extended. I don’t think occupiers will get five-year leases today. It’s more like 10 or 15 years.”
Developers are watching with interest. According to CBRE, the speculative development pipeline is around 620,000 sq ft – by no means massive when compared with the 9m sq ft of speculative floorspace Yorkshire was
left to digest at the end of the boom in 2007-08.
Greenwood says: “We have seen Kier, DB Symmetry, Mountpark and other national developers move into Yorkshire as rents go up. They will tread cautiously and the pipeline doesn’t daunt me.”
Refurbishment is also planned, a large chunk of it from Schroder Real Estate Investment Trust, which is pressing on with the refurbishment of the 463,400 sq ft Millshaw Industrial Park near junction 1 of the M621.
The focus will now turn to sites like Leeds’ Temple Green, close to junction 45 of the M1, which has permission for 2.64m sq ft of new floorspace. With infrastructure work now close to completion, deals should follow – testing depth of demand and rental expectations.
Mike Dove, partner at Dove Haigh Phillips, advises at Temple Green and on the TK Maxx deal. He says: “The pressure is on to deliver. Rents above £5.50 per sq ft are now achievable. There is no shortage of developers wanting to build speculatively on Yorkshire’s serviced sites, but there is a lack of
oven-ready sites for them to build on.”
It is a good time to be a developer of Yorkshire sheds. But this is Yorkshire – there’s no excuse to get excitable.
South Yorkshire
A 320,000 sq ft speculative development at Verdion’s Doncaster iPort, and Harworth Estate’s 75,000 sq ft scheme at the 130-acre Gateway 36 site in Rockingham, Barnsley, could light the fuse on the South Yorkshire shed scene.
“Supply has dropped suddenly in the past six months, and you can feel a developer response is coming,” says Knight Frank associate director Rebecca Schofield.
Rents could be about to move in response, up from £4.75 per sq ft for big sheds to perhaps £5.50 per sq ft, if iPort hits its stride.
Meanwhile, market observers believe Barnsley will be worth watching, with the Gateway 36 scheme regarded by many as the town’s flagship development. Relocators to the town include Universal Components, which moved from Sheffield to take 165,000 sq ft at Ashroyd Business Park in Barnsley.
