As the North-East economy continues to strengthen, the region’s industrial and distribution companies are edging ever closer to a property crisis, one chartered surveyor has warned.
The demand for so-called big sheds across the region is so high, says Keith Stewart, a director at Naylors Chartered Surveyors, that there will be a “significant shortage by the end of the year”. Driven mainly by the manufacturing sector the search for large vacant warehouses has now become a priority for companies, all of which are chasing fewer and fewer properties.
“With a diminishing supply of good quality larger facilities there is a strong case for bringing forward new speculative development in order to satisfy demand,” added Stewart. “Unfortunately there are no plans for new speculative industrial developments of more than 100,000sq ft anywhere in the region.”
Naylors, which has offices on Tyneside and Teesside, receives continued interest in the larger properties it is handling. Elsewhere in the region there remains only a handful of big sheds available on the market to let or to buy. “It is highly likely that all of these sheds — totalling around 500,000sq ft — will go under offer this year,” he said.
If they do, and with no speculative large-scheme development in the pipeline, the only option left for potential occupiers is the design and build route which a number of companies have already taken, among them the third party logistics provider Vantec, the tea importer Clipper, BAE Systems and Rolls-Royce.
One project, for which Naylors is acting as agent, is for speculative developer Gladman which has detailed planning consent to bring forward a 180,000sq ft high bay warehouse at Lumley Park, which it hopes to complete within 30 weeks.
Steve Howett lectures on domestic economics at Northumberland University. He has studied the region’s recovery and fears the vacuum created when all the available big sheds have been leased, and new projects completed, could cause serious problems with inward investment.
“The demand for large, open floor warehouses is stronger than ever,” he explains, “and if an international company cannot find what it needs here it is not going to hang around until they are built — it is going to go elsewhere.”
Naylors is also hoping to acquire more than 300,000sq ft of big sheds on behalf of its regional clients and is also marketing a number of large industrial facilities including the 100,000sq ft former Dewhirst meat processing plant at Blyth Riverside, the 98,000sq ft Churchill Works in Blaydon, near Gateshead, and a 100,000sq ft facility at Tynepoint Industrial Estate in South Shields.
“The North-East is a well-established manufacturing and logistics hot spot with many companies attracted to the region by the availability of a large skilled workforce, well-priced land and excellent transport links,” stresses Stewart. “It is important we continue to offer a good supply of large industrial facilities to accommodate new enquiries and opportunities for inward investment.”
