Friday, April 10, 2015

News: More spec development needed in South Yorkshire

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Developers are being encouraged to consider South Yorkshire as their next project base as occupier confidence improves and stock dwindles across all size range property in the logistics and industrial sector.

The Sheffield office of Knight Frank has reported an increase in demand for units up to 100,000 sqft from a variety of occupiers. There was also strong occupier interest from advanced manufacturers, typically looking for higher quality accommodation including success at the Advanced Manufacturing Park (AMP) in Rotherham, following the speculative development of two units at R-Evolution (pictured), while Factory 2050 at Sheffield Business Park is now underway and attracting further interest from occupiers wanting to locate close by.

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Take-up in the second half of 2014 reached 398,000 sq ft, down on previous periods. Take-up for the whole of 2014 was influenced by limited availability of existing stock and as a result of the shortage of supply. Where lettings were seen it was evident that landlords were able to secure longer lease terms and shorter incentive packages as occupiers were faced with limited choice of existing premises.

Rebecca Schofield, head of the Yorkshire Industrial Team and partner at the Sheffield office of Knight Frank, said: "Whilst much of the good quality standing stock has been absorbed, we are yet to see a more rigorous response from developers. There are however a number of sites ready for immediate development such as Smithywood and G Park Doncaster.

"Occupiers will increasingly need to consider design and build opportunities, which generally take up to 12 months to be delivered."

Speculative development in the Sheffield city region has been brought forward by developers such as Harworth Estates, working in partnership with local councils and securing financial support from the Sheffield City Region Joint European Support for Sustainable Investment in City Areas (JESSICA) Fund. Rotherham-based developer, Waddington, also continues to build speculative industrial units.

A £3.5m call has recently gone out to secure European funding to bring forward land and premises for employment sites, specifically targeting inward investment from foreign firms wanting ready built premises.

Rebecca added: "We see prime headline rents to continue on an upward trajectory across most submarkets. Incentives are expected to move in further over the next 12 months.

"In Sheffield, Barnsley, Doncaster and Rotherham prime headline rents are expected to be in excess of £5 psf depending on square footage taken for 2015."

Knight Frank website

Images: Harworth Estates

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