THE region’s strong manufacturing base has ensured total take-up of floor space across the North East is better than the national average.
Simon Hill, director of agency at Jones Lang LaSalle’s Newcastle office, said: “Total take-up in the first three quarters of 2012 virtually matched the total take-up figure for 2011.
“Based on this evidence, we predict the total level of take-up in 2012 overall is likely to overshoot last year’s levels by 32%. This is better than the national average which is likely to undershoot 2011’s level by around a fifth.”
The North East industrial market has held up well throughout 2012, with significant transactions being completed in both the manufacturing and distribution sector.
It is, however, the strong manufacturing base in the region which has performed best with a number of companies linked to the Nissan supply chain having expanded into larger facilities over the last 12 months.
This trend is likely to continue into next year as second tier suppliers start to enter the market for space.
At the end of September 2012, total available supply across the North East stood at 17.4 million sq ft of industrial and logistics floorspace, 1.7% up on the end of March 2012 and 1.8% up on the end of September 2011.
As at November 2012 there was no speculative industrial development under construction in the North East.
“We will see a gradual pick-up in occupier demand and take-up activity next year as the gradual economic growth starts to take affect,” said Hill. “With limited speculative development taking place in the North East, the availability of prime new and good quality supply is likely to fall. However the availability of poorer quality supply will increase as occupiers release this space in favour of more modern properties.
“There will be little rental growth in the next 12 months in the North East as we envisage this will remain fairly static as per 2011.
“Investor demand for multi-let stock will continue to focus on prime stock. We expect prime yields to remain unchanged in the short term with secondary yields expected to drift out further.
“The biggest test facing the region is how the market is going to react to the lack of good quality available stock, which has been exacerbated by the fact that there has been no new speculative development for a number of years.”
The latest industrial and logistics research released by Jones Lang LaSalle shows that the total take-up of floor space across the North East in Q3 2012 fell by 47% compared with Q2, but 23% up on the same quarter a year ago.
In the first nine months of 2012 take-up of industrial and logistics floor space totalled some 4.1 million sq ft.