| the north east
STOCK SHORTAGE HOLDING BACK NORTH EAST INDUSTRIAL TAKE-UP F
ollowing up on strong take up in 2015 was always a difficult ask for the North East industrial sector, but a lack of stock of modern units across the size ranges is having the deepest impact.
Firstly, looking at Chris Donabie
take up of buildings in excess of 50,000 sq.ft, C&W’s research found there was 2.2m sq.ft transacted in 2015. As we close on the half point of 2016, actual and anticipated take-up
at the mid-point may not reach 500,000 sq.ft leaving much ground to be made in in half two. Of the circa 2m sq.ft of available large units in the market only four would be classed as modern, and one is currently under offer. One of the North East’s strengths is in exporting and as such the upcoming EU Referendum has created some uncertainty as to fall out should we pull out of Europe. Assuming the market regains confidence post-referendum, this should improve demand, but again take up
will be hit by a lack of good quality stock. This does mean potential rental growth for existing stock.
Whilst demand from the engineering sector has been hit by the falling oil price, demand from manufacturers and warehouse/distribution users remains strong. With the lack of available options, some are considering bespoke solutions and we anticipate that there will be a rise in design and build activity later this year. The North East industrial market is a churn one at present with particular activity in the range of 5,000 – 20,000 sq.ft. Rental growth has been very apparent on modern schemes such as those on Team Valley Trading Estate, as well as L&G’s Follingsby Park in Gateshead, where rents have risen by more than 10% on the previous 12 months and incentives have hardened. Longer term this market could be held back by lack of readily available options. Improved rental levels should in turn improve viability of new development, but other than the very prime regional locations, speculative development is not a viable without grant assistance. One of the few estates where viability is more assured
by Chris Donabie MRICS Associate Director, National Industrial & Logistics Team Cushman Wakefield - Newcastle
is Team Valley Trading Estate. UK Land Estates recently built an 11,500 sq.ft speculative unit on its Queens Court scheme with a quoting rent of £8.25 per sq.ft. They are also commencing with three speculative units of up to 25,000 sq.ft on their Dukesway Central scheme. Cushman & Wakefield are selling a 4 acre commercial site on Team Valley for the HCA and the majority of interest received so far is from developers considering speculative builds. Landlords are increasingly wise to the existing stock shortage and on schemes such as Follingsby Park and Tyne Tunnel Trading Estate, they have been investing heavily in refurbishment, which has proved effective in securing occupiers and driving further rental growth. So in summary, assuming business as usual after the EU Referendum, now is a good time to be a landlord sitting with vacant modern stock or stock with refurbishment potential. For a bold developer with well-located land, the second half of 2016 could be the time to take the plunge into speculative development. From an occupier’s perspective however, rents look set to nudge forward for the time being.
INDUSTRIAL UNIT ANSWERS THE POWER SHORTAGE
modern refurbished production/warehouse unit on Sunderland Enterprise Park, may offer the solution to occupiers seeking an industrial unit with high electricity supply, which is a rare commodity in the current market. The unit lies to the east of the A19, and less than a 10 minute
A
drive time to the Nissan car plant. It provides an existing 500 KVA of power with a potential for a further 450 KVA via an onsite generator. The unit extends to 2,548 sq.m (27,421 sq.ft), with a clear eaves height of 5.7m, extensive modern offices, yard area and parking for 54 cars. This detached unit may appeal to both manufacturers and warehousing/distribution users. Chris Donabie of letting agents, Cushman & Wakefield,
TO LET Unit F Colima Avenue, Sunderland Enterprise
Park, Sunderland, SR5 3XB
• Refurbished and High Specification • Production/Warehouse Unit • Two-storey offices
• 500kVA of electricity supply and further 450kVA available via on-site generator.
• 54 car parking spaces • Clear eaves height 5.7m • 1 mile from the A19
• Less than 10 minute drive time to Nissan Car Plant
• Rent on application 38
commented: “This unit ticks the box for a number of occupier requirements, but particularly those seeking a high electricity supply. We find a number of engineering or manufacturing users struggle to find units with requisite power for their needs and there can be a significant time lag and cost in upgrading the power supply to a unit. “This unit comes with a ready high supply and therefore costs and time could be cut significantly. Our client has invested heavily in refurbishment of the unit and it provides very modern high specification accommodation, of which there is very little in the current market. The unit was only recently launched to the market and already we are seeing strong interest”. For more information visit
www.cushmanwakefield.com
This unit ticks the box for a number of occupier requirements, but
particularly those seeking a high electricity supply.
COMMERCIAL PROPERTY MONTHLY 2016
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