Industrial landlord Segro said it is facing more challenging economic conditions outside of London and the South East and weaker demand for space.
Segro, which owns Heywood Distribution Park in Rochdale and Premier Park within Trafford Park, said in an interim management statement, covering 1 January to 28 April 2011, that occupier markets remain a challenge with "the level of takebacks continuing to be relatively high across the portfolio".
Segro said £6.3m of new annualised rental income was generated from the take up of space in the first quarter of 2011 with £8.1m of annualised rental income lost from space returned.
This included £2.5m as a result of early surrenders in part to facilitate future developments.
Net debt remains broadly in line with the position at 31 December 2010, which was £2.2bn.
David Sleath, who takes over as chief executive at Thursday's annual general meeting, replacing Ian Coull, said: "Occupier market conditions continue to be challenging as issues such as sovereign debt worries, the austerity measures in the UK and rising energy prices impact sentiment with many customers remaining focused on cost control and the consolidation of their space requirements.
"Against this backdrop we are pleased to have seen good levels of enquiries, healthy demand for existing and new space and an encouraging pick up in our retention rate in the first quarter. Trading remains in line with our expectations and with Segro's high quality portfolio and focus on operational delivery, the group remains very well positioned to benefit as markets recover."