The last 6 months month’s in the North East Industrial Property market has had its winners and losers according Jonathan Simpson , Director at Connect Property North East.
The lockdown announcement in March came as a shock to many, with the working world as we knew it completely changing within in 24 hours. Within the space of a week, for the first time in my working life email and phone traffic came to a complete standstill for several weeks, with the exception the odd call to bemused clients and our contemporaries within the market. We temporarily closed the office and began working in isolation at home. I can remember discussing with colleagues and clients “is this it until September, were transactions under offer, going to proceed and which sectors would be looking for space during the next six months” What proceeded us was very worrying times for families and business in general.
It is fair to say, that despite the brief interruption of lockdown, things were soon up and running again. The handbrake was slightly eased, risk assessments and PPE in place, we started to undertake viewings. What transpired after this became one of the busiest July and Augusts that we have had as company. The majority of deals that were agreed pre-lock down proceeded full steam ahead to completion, with what was more surprising no price adjustment or re-negotiation. What followed were unprecedent levels of enquiries from the likes of, the online DIY sectors, Parcel Delivery, E-Commerce, new start up businesses , and Third Party Warehouse providers seeking both new and additional space. We have also directly witnessed shop keepers/ new start up SME’s taking small units to sell products on line, much to the further detriment of the high street. The change consumer shopping dynamics, a reluctance to return to the high street, stay at home working all bodes well for the logistics market going forward.
Similarly certain sectors of the manufacturing industry have been busy acquiring space, for the likes of civil engineering related projects , PPE, and home improvement related manufacturers, where as other sectors have been slow to get going, and in some cases have had to cease production temporarily. One thing we haven’t seen is a raft of new instructions and empty buildings flow to the market, during these unprecedented times, but this maybe something we see in the new year when we discover the real outcome of “the new perceived norm”.
The North East, more so now than ever is starting to suffer from a shortage of good quality industrial and warehousing stock, with a number of new government assisted development schemes in Teesside and County Durham benefitting from good take up over the last 6 months, as well as creating new pioneering rents in the market place.
We are working with a number of developers on small unit speculative developments across the region, to meet the ever increasing demand for starter units up to 5,000 sq ft, but will the recent unprecedented take-up, shine the light the developers in the North East to spec build once again without outside assistance?