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21st May 2021

Can supply keep up with demand for logistics space in Yorkshire?

The challenges of the last year have clearly highlighted the importance of logistics in not only underpinning the economy but enabling us to live our everyday lives – it is an essential part of the UK’s infrastructure. Yet with take up at a record high and sites slow to come through the planning process, Freddie Oakey, associate development director questions whether supply can keep up with the huge surge in demand for Grade A logistics space in the region.

Demand for logistics space has increased in the region

The reliance on logistics and the need for more space has increased exponentially over the last 12 months but the sector was witnessing an upward tick long before Covid. In 2020, the industry saw the strongest take up ever recorded in the region at 10.35million sq ft, which equated to an eye-watering 111% increase on the long-term average, according to research by Savills.

The situation was exacerbated by Covid restrictions which accelerated the trend in online ordering at breakneck speed, with ONS data recording the delivery of a decade (yes, a decade) of forecast e-commerce growth in just the first month of the national lockdown.

This surge, coupled with Brexit onshoring the modernisation of supply chains has reduced supply of Grade A stock to a bare minimum, with the vacancy rate in Yorkshire currently standing at a record low of 4.4%. As vacancy falls rents typically rise which will put even more pressure on companies looking to source space.

At Tritax Symmetry, we have been active in the region for a number of years, completing a 237,000 sq ft facility for Croda Europe in Goole in September 2020 and, realising the latent demand for space, speculatively developing a 151,000 sq ft distribution warehouse at Symmetry Park, Doncaster in 2019. This building was subsequently let to online luxury dog food supplier, Butternut Box, the rise in lockdown puppy purchases no doubt playing a contributing factor.

So it’s clear that the logistics sector is uniquely placed to contribute to the UK’s recovery, creating huge economic benefits, but Yorkshire could lose out if new sites do not come though quickly enough to keep up with demand.

Why is more not coming through to plug the deficit?

While the demand for stock has clearly risen, developers are still constrained by the traditional stumbling blocks to development namely planning, infrastructure and the construction period required to develop big box schemes.

The planning argument around brownfield first development lives on. However, brownfield sites that are suitable for large scale logistics development with the necessary access to transport infrastructure are few and far between.

The lack of allocated greenfield sites also remains a barrier to bringing sites forward. Although logistics schemes can be delivered very quickly, often within 14 months, the time taken during the planning process often exceeds delivery timescales. The Local Plan process as it stands is not flexible enough to respond to the economic challenges we currently face. What we need is direction at Government level to ensure that the appropriate amount of land is brought forward in key areas such as Yorkshire to meet the demand. This will help to sustain delivery of the substantial jobs and economic benefits.

Why is logistics development so important?

It’s clear that logistics development will play a vital role in the region’s economic recovery. The Government’s plan that the Humber is set to become one of 10 new freeports across the UK is of huge economic benefit to the entire region. Yet we need the logistics hubs to support the influx of trade this will bring and to create skilled employment opportunities for the people of Yorkshire.

As logistics is a key economic enabling sector, if it is in any way stymied or not supported, then the growth potential of other sectors will likewise be restricted.

So what can the industry do as a whole?

The answer lies in collaboration between all stakeholders to expediate the time taken for sites to come through the planning process and meet the demand.

Tritax Symmetry has been working hard with LPAs, landowners and communities in the region to secure development opportunities in Yorkshire and we are looking for more. Our extensive client portfolio, which includes Amazon, Ocado, Co-op and DPD, means we know what occupiers are looking for, namely high-quality, highly-sustainable logistics facilities in the right place close to a skilled labour pool. The economic benefits that these schemes can bring to a region can simply not be underestimated and we must collaborate with all parties to capitalise on this once in a generation opportunity.

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