In terms of square footage, it appears that the Yorkshire and North East market has seen a significant decline in transactional activity over the past twelve months. However, closer analysis shows that deal volumes remain in line with long-term averages. Occupiers have paused on larger transactions over 400,000 sq ft, primarily due to political and economic uncertainties. Despite this, deal churn in smaller size bands has remained robust. Savills is tracking several large bespoke requirements, which are expected to exchange in the first half of 2025.

Supply

The addition of 1.45 million sq ft of speculatively developed space, alongside 2.2 million sq ft of second-hand space, has caused the level of vacant warehouse space to rise by 57% to 10.26 million sq ft. Savills is aware that 12% of this space is currently under offer and set to exchange in Q1 2025. Furthermore, regional splits show that 18% of this supply is based in the North East, while 82% is within Yorkshire. This results in a combined vacancy rate of 6.69%, with the North East vacancy rate standing at 2.40% and the Yorkshire vacancy rate at 9.63%.

An analysis of vacant supply by grade reveals that 44% of the available stock is newly built speculatively developed space, 12% is second-hand grade A space, 14% is second-hand grade B space, and 31% is second-hand grade C space.

In terms of unit sizes, there are 23 units available in the 100,000–200,000 sq ft size band, eleven in the 200,000–300,000 sq ft size band, five in the 300,000–400,000 sq ft size band, four in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft. The five units larger than 400,000 sq ft currently make up 22% of the total vacant supply. Once these units are removed from the market, the vacancy rate will decrease significantly.

Savills advises developers to consider micro-market dynamics to maximise rental growth potential. For example, the West Yorkshire market appears undersupplied relative to the South Yorkshire market, with variations in size bands.

Savills’ rental growth projections suggest that in our baseline scenario, the region is expected to see an average rental growth of 3% per annum over the next five years.

Take-up

Take-up in the Yorkshire and North East market has decreased in terms of square footage compared to previous years. End-of-year figures show a total of 3.07 million sq ft across 20 transactions, which is below the long-term annual average of 5.4 million sq ft but roughly in line with the long-term deal count of 19 per annum.

The decline in square footage is mainly attributed to the drop in larger transactions, which the region is accustomed to. According to the long-term average, the region typically sees eleven transactions per annum in the 100,000–200,000 sq ft size band, three in the 200,000–300,000 sq ft size band, two in the 300,000–400,000 sq ft size band, one in the 400,000–500,000 sq ft size band, and two over 500,000 sq ft. In 2024, there were 16 deals within the 100,000–200,000 sq ft size band and four within the 200,000–300,000 sq ft size band.

In terms of grade, 53% of space transacted in 2024 was best-in-class grade A space, 24% was grade B space, and 23% was grade C space. Regarding specification, 59% of activity involved second-hand space, 31% was newly built speculatively developed space, and the remaining 10% was built-to-suit space.

By sector, 26% of activity came from third-party logistics firms, 25% from manufacturers, 13% from food producers, and 16% from wholesalers, with the remaining spread across various other sectors.

Development pipeline

There are currently six units under construction in Yorkshire and the North East, totalling 1.9 million sq ft. This decline in the development pipeline is seen as a positive, as it will allow the vacancy rate to decrease and support rental growth.

In the North East, there are two units under construction: one in the 100,000–200,000 sq ft size band and one in the 200,000–300,000 sq ft size band. The Yorkshire market has four units under construction: one in the 100,000–200,000 sq ft size band, one in the 200,000–300,000 sq ft size band, one in the 400,000–500,000 sq ft size band, and one over 500,000 sq ft.

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