The North East has seen the supply of large industrial buildings and the space to build more falling in recent years. Property experts from the region look at how long the trend is likely to continue and find some cause for hope.
LEADING industrial property agents in the region have expressed their concerns for some time that the region will face supply shortfalls of larger industrial units because of the lack of both strategic sites and land and as a consequence of the development pipeline slowing down during the economic recession.
It could be that the return to the market of secondhand space arising from either company failures or closures may assist the supply chain in the short term, but is not a long-term solution.
Demand for new space has been fuelled by increased production at Nissan, expansion of the green energy and offshore power sectors, company relocations from older plants to custom-built schemes and inward investment to the region.
GVA has undertaken research into both availability and take-up over the past 12 months which confirms take-up figures of 1.43m sq ft of new or good-quality secondary space over 50,000sq ft. Correspondingly, current supply following recent deals stands at 1.15m sq ft, demonstrating the limited supply chain and the need for new build projects to be advanced at pace. The region may well hit the buffers before the situation can be addressed in terms of offer to inward investment.
The scale of some of the newer projects is highlighted by Clipper taking 434,000sq ft at Wynyard, BAE relocating to a new 340,000sq ft building at Washington, Rolls Royce proposed relocation to the adjoining site and Vantec Europe announcing a new £22.5m warehouse at Turbine Business Park alongside the existing Nissan plant at Washington.
Elsewhere, Akzo Nobel are to relocate to a new £100m state-of-the-art plant at Ashwood Business Park, Ashington, and further south, the proposed Hitachi train plant at Amazon Park, Newton Aycliffe, will further reduce the amount and choice of strategic serviced industrial land across the region.
The region has seen large-scale factory closures which have and will continue to result in previously occupied space being returned to the marketplace. GVA has recently sold the 340,000sq ft former Findus plant at Longbenton and is marketing the former EJ Badekabiner premises in Cramlington and the former Amdega site in Darlington.
The proposed closures of the Rio Tinto (Alcan) plant at Lynemouth and the BAE (former Vickers Armstrong plant) on Scotswood Road will also offer redevelopment opportunities within the industrial sector.
Given the potential imbalance of demand and supply issues, it is somewhat surprising that Newburn Riverside, which saw considerable ERDF public-sector funding towards becoming the next Team Valley, may now be partly promoted for future residential development.
If this is the case then the local planning authorities may have to revisit strategic sites and industrial land allocations in order to accommodate future economic growth and new, much-needed employment-creating development.
:: Danny Cramman, national markets, industrial at GVA in Newcastle