Take-up of industrial units in excess of 50,000 sq ft is at its highest for two years in South Yorkshire, according to property consultancy Knight Frank.
But, the market for units over 250,000 sq ft remains “difficult,” according to Sheffield office partner Rebecca Schofield.
“Demand for small to medium sized units has remained robust, with the supply of such stock reducing significantly during 2012 as a consequence,” said Ms Schofield.
“Additional buildings of 150,000 sq ft to 200,000 sq ft are also currently under offer, which is impacting significantly on the supply of units in the region.
The Range took a 750,000 sq ft lease of the Nimbus in Doncaster last year, but approximately 1.85m sq ft of space remains, with landlords continuing to offer generous terms to potential occupiers.
“While the manufacturing sector remains an important driver of demand in the region, a notable development has been the rise in requirements from parcel distributors.
“These have become particularly active on the back of increased internet sales, with a number of the main operators being in the market for new facilities in South Yorkshire.”
Knight Frank says take-up in the second half of the year stood at 1.65 million sq ft, after the highest increase since 2010.
The consultants are now predicting a fall in the incentives landlords are prepared to offer to secure a tenant.
“Looking ahead, with the exception of the big shed stock, reduced supply is likely to lead to a further hardening of incentives in 2013, with the possibility that growth in headline rents will follow in respect of the small to medium sized sector,” said Rebecca Schofield.
“But, despite the dwindling of supply in the small to medium sized segment of the market, speculative development remains off the agenda given the rental levels required to make schemes viable.”