Chartered surveyors Sanderson Weatherall say transactions for manufacturing firms are leading a resurgence in the industrial commercial property market in the North East.
However, due to six year period where virtually no new stock was built a shortage in available space threatens to halt the momentum which is building.
Richard Scott, a Partner at Sanderson Weatherall, said: “Around 90% of the enquiries we receive for industrial space is coming from manufacturing businesses, and there is real demand for space of 50,000 sq ft and above across the region.
“We have recently completed a number of deals around the region including a sale of a 100,000 sq ft unit for PD Ports in South Tyneside and a 60,000 sq ft letting for a private client in County Durham. Both occupiers were engineering businesses.
“However, the availability of larger units is now very limited and, due to the improving conditions in the market, we expect to see demand continue to rise and supply fall.
“As a result we expect to see rents and capital values starting to rise over the next 12 to 24 months and incentives have already started coming down. Despite this, however, we are still some way off a return to the level of development we saw pre 2008. There are a couple of new schemes planned which will help the supply problem but more is needed.”
Richard added: “Overall, positivity in the market is good, but the consequence of the lack of development over the past six years is that good quality stock is short and the confidence to once more build speculatively will only come when the recovery is seen to be sustainable.”