New industrial development is needed if the North East is to satisfy growing levels of occupier demand

In his latest blog, Naylor’s Industrial Agency Director, Keith Stewart explains why speculative development is needed in order to replenish North East industrial stock.

The industrial and logistics market in the North East has enjoyed a strong 5-year period as a direct result of improving levels of occupier demand, but If our region is to be successful in attracting and retaining expanding companies, it is vital that we have a healthy supply of good quality industrial property.

At Naylors, we have seen first-hand the falling levels of Grade A availability, following high levels of occupier take up and low levels of speculative development, a combination which has led to rental growth across the market since 2013.

The Brexit referendum did initially have a negative impact on immediate occupier commitments, both before and after the result, as the market waited to understand the fallout, however we have subsequently seen levels of market interest improve.

There are a number of occupier’s actively seeking design and build opportunities from 30,000 sq. ft. upwards and most industrial occupiers are still committed to finding the right building solution, whether that is existing premises or design and build options.

The increased number of occupiers exploring design and build opportunities is a direct result of the dearth of available stock. The trend has increased over the last few months, partly as a result of new Nissan contract awards but we have also seen warehouse, third-party logistics and parcel delivery companies more active in the market. With the lack of available modern space, secondary opportunities are being given greater consideration, but there is certainly more thought being given to new build options.

With a number of development sites ready for development in strategic locations throughout the North East, we are likely to see a number of occupiers sign up to new build options to satisfy their requirements.

Naylors currently has a number of development sites which are suitable for such opportunities including Integra 61 in Durham, Velocity 194 in Washington and Kingsway North on Team Valley. At all three sites, proposals are being discussed, which shows the lack of good quality buildings remaining in the North East.

Currently there is less than 500,000 sq. ft of Grade A industrial floorspace available in units of 50,000 sq. ft. plus in the North East. We are aware that terms are being discussed on a proportion of this stock, so it is highly likely that this figure will reduce even further as the year progresses, so we hope to see speculative development come forward of a meaningful size, as demand outweighs supply.

To contact Keith please email keithstewart@naylors.co.uk or telephone: 0191 2327030

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