Time to think smalldevelopers urged
DEMAND for ‘big sheds’, which has helped keep the commercial property market alive in the North-east, is likely to contract over the next 18 months, a new report said.
The National Industrial and Distribution report from Lambert Smith Hampton said that nationally take up of distribution sheds bigger than 100,000sq ft reached a peak in 2008, with demand almost doubling on the previous year. In 2008, the average unit size was 225,000 sq ft.
But the amount of available space was now static as developers moved away from speculative development in favour of pre-lets.
Locally, one of the largest developments to be let last year was at Wynyard Park, where 302,027 ft went to high tech data centre EDS.
“The outlook for the warehouse market is for around 18 months of contraction marked by falling take-up and declining rental values alongide rising availability,” said the report.
“We expect the economy to return to growth from 2010 onwards with the property market following suit.”
It said the reduction in empty property rate relief was still having an impact on the commercial property market.
Describing it as a ‘poorly timed piece of legislation’, the report said: “Owners of older property will continue to demolish unoccupied buildings rather than face liability for business rates.”
In the North-east, nearly a third of distribution and industrial space was empty, with another 4.8% of the total market under construction.
Closer analysis showed headline rents last year for 10,000-20,000 sq ft premises in Darlington. Middlesbrough and Stockton areas was £4.50/sq/ft.
“The quality of the supply in Darlington has been greatly improved due to a higher proportion of newly built space, thanks to the Easter Group’s recently completed mid-sized units at Faverdale Industrial Estate. Other key developments include Link 66 and Lingfield Point,” the report said.
But in Middlesbrough and Stockton demand continued to fall due to a higher proportion of second hand stock. Opus Park was singled out as one of the most significant recent developments.
