Mark Adair

Yorkshire & North East real estate market continue to reach highs in UK wide report

A strong pipeline of deals is anticipated with the second largest amount of space under offer compared to other UK regions.

Senior director of CBRE Mike Baugh said that: “the supply forecast is positive with circa 9m sq ft of space coming  to the Yorkshire market over the next few years.”

Global real estate advisor CBRE has published its UK Logistics Market Summary for Q1 2022.  Despite experiencing a quieter quarter in terms of logistics take-up in Yorkshire and the North East, with only 1 build-to-suit deal of 0.4m sq ft completing.

A strong pipeline of deals is anticipated with the second largest amount of space under offer compared to other UK regions. The region concluded the quarter at 5.8m sq ft with 3 build-to-suit units over 1m sq ft. 

Despite Yorkshire & North East having the lowest vacancy rate in the UK at just 0.94 per cent, the region has increased QoQ (Quarter-on-quarter) from 0.55 per cent with availability increasing by 52 per cent QoQ reaching 2.3m sq ft. Take-up is predominantly made up of speculative under construction spaces.

Mike continued: “In addition to the imbalance between supply and demand, the sector faces additional challenges including labour availability and the continued rise in construction costs.”

“Interestingly, only 5 per cent of take-up came from the online sector for Q1 2022, while other sectors provided a significant amount, including 3PL, showing the diversity in the types of occupiers currently seeking a significant quantity of warehouse space throughout the UK.”

Nearly all UK regions have experienced rental growth throughout Q1 with Yorkshire and North East climbing to £7.75 per square foot, a 24 per cent YoY (Year-over-year) rise. Prime yields within the region hardened 10bps to 3.65 per cent. 

Across the UK, highlights included the development pipeline, which was up 36 per cent QoQ to 28.3m sq ft and there were record high levels of speculative under construction space, 14.97m sq ft at the end of Q1, though 5.9m sq ft of this space had already been taken by the end of the quarter.

A total of 41 deals have completed nationally this quarter, a 64 per cent increase compared to Q1 2021 stats, which saw 25 deals complete.  The quarter ended with a record level of space under offer, 22.46m sq ft, a 132.7 per cent rise from the end of Q4 2021, suggesting a busy year ahead for the sector.

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