New demand for industrial space in Hull
Posted: 16 April 2015
More industrial property is starting to be built as business demand ramps up now the downturn has ended, say commercial agents.
Construction work ground to a halt in the recession with a number of speculatively built units left vacant resulting in a general drop in values as supply outstripped demand.
But as the market recovers most available space has gone – and there is now strong signs of good demand for new industrial accommodation.
For Matthew Tomlinson, a partner at Hull firm Scotts Property, it feels like a significant change from the past few years.
He said: "We're seeing increasing demand for newer buildings although a shortage of supply now exist.’
"The speculative stock constructed during the peak of the market to some degree remained vacant during the initial years of the recession however over the last 18 months or so this over supply has evolved into an under supply with take-up rates for recently built accommodation on the up.’
Unfortunately construction still lags behind demand and it will be some period before any new developments are complete and ready for occupation.
Mr Tomlinson pointed to several projects that Scotts have been involved with recently as evidence of growth.
They include a development on Mount Pleasant, east Hull, and a four-acre on Sutton Fields Industrial Estate.
Ideal Business Park on National Avenue and another site on Priory Park East, both on the city's west side, now also feature new-developments that are now partially complete.
To some degree industrial users now demand higher-spec premises and Mr Tomlinson has seen the quality of accommodation improve in respect of the new developments that have recently been constructed and are yet to be built.
But perhaps the biggest change is not the buildings that are on offer, but the developers behind them.
In the past the majority of the development was typically backed by the banks although in the absence of a willingness by the banks to support speculative developments developers now have to be more resourceful. There are now examples of new projects that are being funded by companies and private parties that are seeking to put their own financial reserves to good use despite having no experience of property development in the past.
Mr Tomlinson said: "a new wave of developers is starting to emerge that have the financial resources to build without the support of third-party funders.’
"During the height of the market a greater number of developers existed largely fuelled by the availability of bank funding. Many individuals with the benefit of good house equity dabbled with property development. Now it's almost a closed market where only those with resources can entertain a development project."
New build values are similar to 2006 levels and Scotts predict further rises of 10 to 20 per cent for new build accommodation in due course, Hull's commercial property market could be set to take off.