DESPITE the recession and the pervading gloomy economic atmosphere over 260,000 sq ft of new industrial warehouse space has been let in the first three months of this year.

That currently leaves on the market brand new space of 1,660,000 sq ft, substantially down on June last year when there was approximately 2.5m sq ft available.

In each of the past two years, over 900,000 sq ft of brand new speculative space has been disposed of, and as the market recovers there may well be a shortage of space in two or three years time.

Chris Donabie, industrial agency surveyor at DTZ in Newcastle: said: “260,000 sq ft for the first quarter of this year suggests that while the feeling is that the market has slowed, in reality there is obviously more happening than might have been thought.

“Not unnaturally, with investment yields having moved out and pressure on rents, new development is increasingly difficult to justify. Added to which we also now have empty property rates that need to be built into the calculation.

“There have been no new starts on site for some time and it can be anticipated that there will be none for the foreseeable future.

“As the market recovers at a faster pace, and it is difficult to say when that will be, it can be envisaged that perhaps in two or three years time, we may be looking at a different sort of problem and that is a shortage of brand new space.”