Retailers drive regional distribution dominance

The North West saw the highest take-up in the country of industrial space in 2007 with 11m sq ft, closely followed by the West Midlands with 10.8m sq ft, according to Lambert Smith Hampton's new National Industrial & Distribution Report.

Retailers continue to drive growth in the industrial and distribution market, the report said, as the sector looks for new warehouse space to cope with the flood of consumer goods from the Far East. Competition within the sector and pressure from consumers to improve sustainability performance is also driving innovation as efforts are made to secure supply-chain efficiencies.

Dr Arezou Said, head of research at LSH, said: "2008 is shaping up to be a very interesting year. New corridors of industrial activity are emerging as supply pressures tighten in the 'Golden Triangle', opening up parts of the country where land prices are cheaper and planning less restrictive.

"Proximity to the motorway remains key but the industry is increasingly on the look out for sites with good access to the rail network and port connectivity. This trend is set to continue as occupiers seek to avoid congestion on the road network, escalating fuel costs and to reduce the carbon footprint of their supply chain. Environmental standards for buildings are also on the up, partially in response to new legislation, but also as demand for 'green sheds' intensifies."

Andrew Aherne, head of industrial agency at LSH's Manchester office, said: "The good levels of take-up and strong demand from occupiers we have seen in our region, coupled with a fairly restrictive supply, have generally maintained rents and values. New schemes coming through will improve the supply situation over the next 12-24 months."

Other findings in LSH's report include:

• The North West, Yorkshire and Humberside have the largest amount of available space and at least one third of that space is new. The North West and South Yorkshire are forecast to be the "next big thing" in the distribution sector as high levels of speculative development in these locations continues.
• Rental outlook in the North West is good, with rents expected to rise over the next year to an average of £5.95/sq ft and over £6.00/sq ft in prime locations, reflecting good demand and availability of high quality new space.