The North West
North West Industrial and Logistics Market Weathers the Storm Reports Julien Kenny- Levick Director Roger Hannah
The cost of living crisis, record high inflation, rising interest rates and the war in Ukraine have given the North West’s Industrial and Logistics sector a rough ride in recent months. However, there are strong signs that due to the sector’s depth and resilience that it has avoided any sharp downturn in either rents or capital values. This resilience has been fuelled by continued occupier demand and a maintaining of investor appetite in the Industrial and Logistics asset class. There remains an imbalance between supply and demand with only 12 months supply remaining
reported of good quality/new build mid/big box distribution
accommodation in the region. Occupiers have in some circumstances sought to take advantage of these uncertain times by securing additional incentives/rent free periods but these still remain relatively low compared to historic data.
The North West’s Developer fraternity is united in their opinion that securing a workable planning consent on development sites remains a challenge and is hampering the unlocking of suitable land. This will further contribute to the lack of supply coming to the market in the next few years.
A recent trend that has worked itself up the occupier agenda is a property’s ESG credentials. This is nothing new for new buildings but this trend has now spread to existing industrial units. Tenants will now look at EPC ratings and a property’s running costs in their decision making resulting in Landlord’s taking this issue seriously and now looking at
The second hand sector continues to attract tenant and owner occupier interest resulting in continued rental growth. Empire 40 in Trafford Park comprising 40,000 sq ft of refurbished accommodation was let in March 2023 at a rent equating to £10.50 psf. Roger Hannah have also recently (May 2023) acquired the former Hilti facility on Bredbury Industrial Estate, Stockport on behalf of clients demonstrating that older quality buildings maintain an appeal from owner occupiers.
Going forward there are challenges remaining in terms of worryingly high build costs which can make some schemes unviable and continued uncertainty of more interest rate rises which may affect the market in the coming months. However, the investment market appears to be on the way to recovery from a worrying downturn at the end of 2022. Indeed, Aviva has recently purchased the Amazon unit at Logistics North in Bolton at a NIY of 5% illustrating that confidence is returning to the investor market.
retrospectively improving a building’s green credentials. Indeed, the likes of Peleton Real Estate have listened to occupiers and upgraded some of their existing stock to include LED lighting and enhanced insulation in order to upgrade EPC ratings. They have refurbished units at Oakhill Trading Estate in Worsley to EPC ratings of “B”.
Some key schemes to watch which will provide us with an updated health check of the market will be Ergo Real Estate’s Oldham 367 Speculative built unit, Mirastar’s Air 66/88 in Speke and Liberty/Exeter’s 200,000 sq ft Viking Park in Widnes-all of which are built or about to be built. Another key scheme in the development pipeline is Chancerygate/Northwood’s Bridgewater Point in Trafford Park. This is a speculative development of Grade A urban logistics units comprising a total of 120,000 sq ft (units from 5-13,000 sq ft). Practical completion of the scheme is the start of 2024 and rumour has it that record high rents will be achieved.
TO LET
Julien Kenny Levick T: 0161 817 3399
E:
jkl@roger-hannah.co.uk Neale Sayle
Unit C - Westwood Industrial Estate, Arkwright Street, Oldham, Lancashire, OL9 9LZ M: 07760 160 3321 E:
neale.sayle@
wtgunson.co.uk
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