No time like the present

IT’S OFF to a flying start with occupiers seemingly finding that sitting still and waiting for geopolitical and economic instability to pass, is not doing anyone any favours at all. There is no time like the present.

Certainly, take-up figures in the first three months of the year bear this theory out: Yorkshire and the Northeast accounts for 21% of the UK total take-up, with Knight Frank’s latest LOGIC report putting take-up in units over 50,000 ft2 at circa 1.9 million ft2 for the region which includes North East Derbyshire.

And there seems as yet to be not let up in the number of transactions going forward- Colliers director Simon Hill says: “There are a further three warehouses under offer totalling some 700,000 ft2 set to complete in Q2.”

Mountpark development director Brett Huxley notes: “At the moment occupiers are needing to make decisions and the requirements schedule doesn’t seem to be any softer now than it was six years ago.”

This is a sentiment endorsed by Savills director industrial and logistics Tom Asher, who says: “Looking at it from the coal face: viewing levels have been up, requirement levels are up and this is translating into deals done.”

CBRE’ executive director Mike Baugh agrees: “Enquiry levels are probably a bit better than this time last year.” He notes that there has been a flurry of deals in Yorkshire in recent months amounting to 1.3 million ft2 of take-up in roughly five transactions.

Agents say this is how 2025 started, a flurry of business in the first quarter then a huge slow down. “What’s different this time,” says Asher, “is we’re getting viewings and terms out to potential occupiers.”

Which is probably just as well, particularly in South Yorkshire where vacancy rates for units over 50,000 ft2 are at 12.6% totalling 7.8 million ft2 according to the latest Knight Frank LOGIC report.

“It is a little less dramatic for units over 100,000 ft2 where vacancy rates sit at a more modest 7.6% in 19 units, of which only nine have been built in the past five years,” says property analyst CoStar Director of Market Analytics, Manchester Giles Tebbitts.

“Looking just at South Yorkshire vacancy rates across the board are actually double that of either West or North Yorkshire.”

It is something that Knight Frank partner Rebecca Scholfield is more than aware: “Available space [in South Yorkshire] is now skewed towards second-hand accommodation, rather than new stock with secondhand stock [over 50,000 ft2] accounting for 58% of availability.”

The only good news is that Grade A second hand stock seems to be letting well, especially to 3PLs, with a certain level of competitive fervour. MAERSK took only seven days to secure CBRE Investment Management’s 411,470 ft2 Gateway 4 unit at West Moor Park near Doncaster. The fully fitted secondhand Grade A building was re-leased so quickly that brochures did not even make it to print.

The property next to Junction 4 of the M18 motorway, has 383,396 ft2 of warehouse space with 15m eaves as well as 34 dock and four level access doors served by two yards of 55m and 35m with parking for 75 HGVs. It has 360 degree circulation and 5,329 ft2 of two storey hub offices. It also benefits from 14,645 ft2 of three storey office space. CBRE and CPP were joint letting agents.

This particular deal reflects a trend being replicated across the UK – companies snapping up Grade A fitted space. GXO has secured Elmhirstpark, a 155,149 ft2 property in Barnsley which was fitted out and last year Dusk.com snapped up EQT Exeter’s 279,322 ft2 First Point warehouse in Doncaster leaving virtually no void between it moving in and former tenant online bathroom retailer Victoria Plum moving out, while it only took a week for Cainiao UK Supply Chain, a wholly owned subsidiary of Chinese tech and ecommerce conglomerate Alibaba, specialising in last mile delivery in the UK to take a 10-year lease at Prologis’ recently refurbished DC4 warehouse at Apex Park in Daventry, East Midlands.

Savills logistics research associate Lewis Rapley explains: “Fitting out space requires a lot of CapEx, and the process can delay a contract starting – having an already fitted out space means you can be operational from day one with a lot less money required.”

3PLs in particular are keen to secure such space not just due to operational concerns but also the flexibility in lease terms that can be negotiated on the secondhand space. GV&Co director Andrew Gent says: “Even institutional landlords are prepared to look at these flexible leases to enable 3+1+1 contracts – better to have a tenant paying rent and rates than not.”

There are number of enquiries from 3PLs across the region as clients seek single building solutions via 3PLs to test the waters or hold off decision making in less than optimum economic times so to speak, before committing to larger more strategic facilities further down the line.

Another advantage of second hand stock is that rent wise it is at a discount to modern Grade A space. Tebbitts says: “On second hand space we’re getting a good £1- 1.50 cheaper than the top quoting rent.”

Colliers lead director in the industrial and logistics northern team Robert Whatmuff says: “Many occupiers are finding the initial Capex piece challenging so anything that can alleviate that expenditure is a bonus while secondhand units offer advantages especially if fitted out – capex assistance on new builds is also welcome.”

All in all, while supply availability is high in South Yorkshire, occupiers are finding that landlords and developers are willing to negotiate. “While headline rents are not moving, landlord are willing to look at rent free and capital contributions in order to secure a deal.”

To that end supply in South Yorkshire is slowly being chipped away. On the secondhand front, there is the aforementioned Gateway 4 deal to Maersk as well as the 155,149 ft2 deal to GXO, with Sheffield 336 – EQT’s second hand unit on Europa Way, totalling 336,105 ft2 thought to be under offer.

New buildings taken up include parcel delivery firm EVRI taking Arrow Capital Partners’ BREEAM Excellent and EPC A rated 266,044 ft2 warehouse at Arrow Point Barnsley. The unit, known as Arrow 265, has 250,686 ft2 of warehouse space with 15m eaves, 26 dock and two level access doors, served by an 55m yard with parking for 61 HGVs. There is 13.314 ft2 of two storey Grade A office space and a separate 2,044 ft2 hub office. Arrow was advised by CBRE and CMS while Evri was advised by LSH and Schofield Sweeney.

Gent says: “Buildings are starting to get picked off and supply therefore is starting to dwindle. However, there are still opportunities particularly for occupiers looking for space between 300,000 – 450,000 ft2.”

Properties include Panattoni’s Doncaster 420 building, the largest of those available in Yorkshire. It totals 418,276 ft2 consisting of a 397,759 ft2 warehouse with 15m eaves, 34 dock and three level access doors served by a yard with up to 85m depth. It has 16,069 ft2 of three storey office space as well as a 4,137 ft2 hub and separate gatehouse. Joint letting agents re CPP, Colliers and Savills.

Other available buildings include Trammel Crow Company’s BREEAM Excellent and EPC A rated 367,935 ft2 Core Sheffield building with joint agents CBRE and CPP, and Cain’s 406,183 ft2 facility Eclipse at Unity in Doncaster, marketed by Knight Frank and CBRE.

Every building of size can be found in South Yorkshire says Avison Young principal Rob Oliver: “However, there’s virtually nothing in West Yorkshire – we have this perennial lack of anything in West Yorkshire.”

He says a lot of this can be laid at the door geography with its moors and valleys, and general lack of developable land. When big box schemes are brought on they acquire almost unicorn status and command equally rarefied rent levels. “They [developer] are pushing £9.50/9.75 targeting that sort of headline level on big boxes.”

Indeed, Inpost is thought to have secured a ten-year lease on developer Baytree and investor Axa REIM’s BREEAM Outstanding Baytree Leeds scheme in West Yorkshire at a record headline rent of £9.75 per ft2 for Unit 2 a 145,935 ft2 property.

“Certainly, in West Yorkshire for both big box and midbox there is an upward pressure on rent levels going forward – purely to do with scarcity. Supply is very tight.”

According to JLL associate director Eoghan Morgan this represents a year-on-year rent growth in prime big box rents of 11%

JLL director Harry Fullerton adds: “We fully expect to see rents to surpass £10 per ft2 for the next speculatively built unit [in West Yorkshire].

Demand for space in West Yorkshire has also recorded the highest requirements regionally in both the 100 – 200,00 ft2 and 500,00 ft2 + size brackets according to the latest Savills research. At the same time supply is woefully limited as already noted.

“Crucially, this undersupply is not supported by any meaningful speculative pipeline reinforcing rental tension in the market,” says Rapley.

“There are no units over 100,000 ft2 currently under construction in West Yorkshire. The primary challenge lies in land availability. Planning constraints and increased competition from owner-occupiers continue to restrict access to prime development plots.”

“For investors and developers, this creates an environment well positioned to deliver long-term value and capture premium returns. With the right strategy, those entering the market now can benefit from a window of opportunity that is unlikely to remain open for long.”

There are a handful of sites coming forward and these include Mountpark’s 1.64 million ft2 Mountpark Ferrybridge scheme near Knottingley on the former Ferrybridge Power Station site. Having acquired the site in October last year Mountpark, says development director Brett Huxley, is on site with enabling and plateau works and is set to go vertical in August on with the pre-let to bakery Warburtons and a 40,000 ft2 speculative units.

Reserved matters planning is in for two different schemes on Zone B – a single unit scheme of 640,000 ft or a three unit scheme of warehouses ranging between 70,000 ft2 and 220,000 ft2.

Huxley says: “We are optimistic about speculatively developing the site. The Yorkshire supply and demand dynamics coupled with the location of the site close to the M62 motorway play in our favour.”

The Northeast

Distribution and logistics deals in the Northeast saw some 297,490 ft2 taken up in warehouse units of 50,000 ft2 and above in the first quarter of 2026 – double the 139,583 ft2 of the previous quarter and a welcome change in sentiment after a rather subdued 2025.

It is difficult to tell in this hyper-localised market with its demand focus mainly coming from manufacturing where exactly occupier sentiment truly is at any one time.

According to Knight Frank’s latest Northeast LOGIC report, published in April this year, manufacturers over the last four quarters accounted for 60% floorspace taken up in the region

Indeed, HTA Real estate director Nick Atkinson, says: “While retailer occupiers have predominantly led the UK take-up [in 2025], looking at the floor area taken in the Northeast, manufacturing accounted for five out of the nine deals in this sector and the remaining four deals for storage and distribution. This reflects the buoyant North East manufacturing market and is a trend we expect to continue.”

Reflecting current economic conditions Naylor Gavin Black managing partner Keith Stewart notes: “Demand continues, particularly for units above 50,000 ft2, and take-up has remained resilient broadly in line with longer-term averages. However, activity sits slightly below the peak levels seen the year before, although it remains ahead of 2023.

“This reinforces the point that although the pace of the market has eased, underlying demand has not fallen away. Instead, it has reset to more sustainable levels.”

He says that the market is ‘no longer being driven solely by big-box logistics’ pointing out that manufacturing, engineering and supply chain occupiers are now accounting for a significant proportion of activity, ‘reflecting a broader shift towards resilience, production capability and operational control.’

He adds though that at the same time, there is ‘growing interest from more land-hungry requirements, including data centres, if the power capacity is there, or can be, and defence-related occupiers’.

The largest transaction in Q1 according to Knight Frank, was the letting of the 126,000 ft2 Stephenson House property in Hartlepool to home interiors retailer Leader Online. The

Knight Frank LOGIC report notes: “The transaction highlights ongoing occupier demand for well-located secondary accommodation particularly where such space can meet operational requirements at competitive rental levels.”

Second hand space accounts for the vast majority of availability at 3.2 million ft2 in units above 50,000 ft2, while new build and refurbished Grade A space accounts for just 1.2 million ft2 – which may go a long way to explaining the seeming popularity of second hand space: there is more of it. That being said there is a huge discount rent wise between the two. Property analyst CoStar’s Director of Market Analytics Grant Lonsdale says: “There are [good buildings] to be had at sub £5 per ft2.”

This is against rent levels for prime industrial buildings in Newcastle and indeed now Middlesborough and Stockton-on-Tees, which stand at £8 per ft2.

Appetite for prime industrial and logistics space is being noted across the board. HTA director Richard Scott says that Arlington Real Estates and Homes England’s 1 million ft2 West Hartford Park development, in Cramlington Northumberland, is ‘already garnering strong interest even before planning has been approved’.

Located close to Port of Blyth, West Hartford Park sits within the Energy Central Partnership cluster, which promotes South East Northumberland as a centre for offshore wind, renewable energy, clean technology and advanced manufacturing.

The outline application submitted at the end of last year proposes units ranging from 40,000 ft2 to 532,000 ft2, available on freehold or leasehold terms. Arlington said the development could create more than 2,000 jobs and generate in excess of £150m of investment into the regional economy. Newly appointed joint agents are CBRE and HTA Real Estate.

“However,” says Stewart, “while occupier engagement is happening earlier, key decision making is taking longer where costs are being scrutinised in greater detail, business cases are being stress-tested, and timescales are being pushed out before commitments are made.”

Probably just as well because the supply of new Grade A space is thin on the ground. Stewart says: “There is stock in the market but the majority of it is second-hand. The pipeline of new high-quality space remains limited, particularly for occupiers seeking clear height, power capacity, large yards and strong ESG credentials. As a result, choice is constrained and competition remains for the best Grade A opportunities.”

Lonsdale says: “The Northeast has got 17 available sheds which are bigger than 100,000 ft2, but only four of them, could be classed as modern Grade A space.”

These include three speculative warehouses Connect 298, and Connect 152, a 298,622 warehouse and a 151,678 ft2 warehouse at Citrus Durham’s 205-acre Integra 61 mixed use scheme in Durham and then Greenbox’s 215,360 ft2 warehouse in Darlington; the fourth Grade A warehouse is Unit 1 Drum Park I Chester-Le-Street totalling 266,750 ft2 which is currently being used as a manufacturing facility.

While there seems to be a number of units over 100,000 ft2 available, there are more in the planning pipeline including the previously mentioned West Hartford Park. Citrus Group has secured planning for Phase 2 of Integra 61 which will deliver up to a further 3.2 million ft2 of employment space and there are proposals for a 750,000 ft2 development at Newcastle Airport to be known as AirLink on a 71 acre site south of the runway. Newcastle has appointed Buccleuch Property in partnership with Argon Properties as preferred developer to deliver the project and Naylors Gavin Black has been appointed as letting agent.

However, while there are proposals and even planning permissions granted, developers are slow to go vertical. Indeed, Knight Frank notes that there is an absence of speculative development activity in the region with no units over 50,000 ft2 currently under construction.

There is evidence to suggest that should new space come forward especially in units under 100,000 ft2, it would be taken up.

Lonsdale notes: “While there is 6 million ft2 of space available across the region in sub-100,000 ft2 units, of that just 2.7 million ft2 has been built in the last five years. And of that, there is just 700,000 ft2 currently available.’

In the last five years some 2 million ft2 of space has been taken up and according to the Potter Space’s fourth BIG Things in SMALL Boxes report in partnership with Savills supressed demand i.e. the amount of space that had it been available, businesses would have taken up has been supressed by 30% in the Northeast alone.

According to the report small to mid-box accounts for 95% of I&L units. However, occupiers are still struggling to find space as the undersupply is failing to meet resilient demand.

At a national level, from 2014 to 2024, demand has been suppressed by 35% – equating to 60 million ft2, over the last decade. It is estimated that meeting this demand could have facilitated 48,000 jobs and £3.3 billion of Gross Value Added (GVA) to the economy.

Right now, it is hard for developers and investors to hit that speculative development button – for the Northeast there seems to be plenty of space available of a good enough quality, occupiers are taking their time to secure deals, and construction costs continue to rise. The cost of money is still an issue and with the latest geopolitical shenanigans in the Middle East no one is quite sure where inflation or indeed interest rates will land…

The good news is that sites are being brought to oven ready levels so when the time is ripe it will be all systems go.