Danny Cramman is Director at Avison Young and joint agent on Integra 61 with Colliers International

North East’s Sub 5,000 sq ft industrial sector shows strength as companies defy Brexit and Pandemic challenges

The increased red tape for businesses trading between Great Britain and the EU arising from Brexit has been reported to be particularly challenging for smaller companies. The issues such as delays and increased costs can be especially difficult to overcome for those businesses not benefitting from scale and it is therefore encouraging to see that in the North East, we have healthy demand for industrial and logistics space from companies needing premises in the smaller size ranges.

Compared with other regions, the North East has always enjoyed a healthy manufacturing sector and the success of the larger operators filters down to the smaller more niche businesses in all areas of production and distribution which is where we are seeing the requirements come from. The three most active ports, Teesport, Sunderland Port and the Port of Tyne remain a real draw for companies locating in the region and those seeking well-connected premises will inevitably want to be in easy reach.

This healthy market demand is in complete contrast to availability though, which is at an all time low across all sectors and sizes in the North East. If we look at Durham, there has been little significant speculative development in the last 10 years with the majority of available stock in the sub 5,000 sq ft size range is older in nature. This presents a challenge for occupiers wanting to upgrade to more modern accommodation and a barrier for those new companies seeking to get on the property ladder.

The £300m Integra 61 development at J61 of the A1(M) in Durham is addressing this with the speculative development of a new business/industrial hub called Evolution@Integra61. Developer Citrus has secured planning consent to add up to 23 flexible units totalling 52,142 sq ft in sizes from 1,205 sq ft up to 6,480 sq ft at the Integra 61 development, which is home to Amazon’s new 2m sq ft Fulfilment Centre and has consent for over 3 million sq ft of employment space and the potential to create some 4,000 jobs.  The scheme has benefitted from major infrastructure works and sits in the centre of the region making it an excellent location to service all areas of the north east.

Evolution@Integra61 will be ready early next year and units can be occupied individually or combined to meet larger requirements of up to 14,940 sq ft which should help to ease some of the shortages.

In addition to our strong enquiry levels at schemes such as Integra 61, the resilience of North East businesses is further evidenced by Avison Young’s latest UK Cities Recovery Index which monitors the diversity of market activity and the speed and trajectory of the recovery following the ongoing impact experienced by UK cities as a result of the Pandemic. The focus is on Newcastle which, in the year leading up to the pandemic, saw a record level of inward investment as one of the fastest growing economies in the UK. Encouragingly, the steady performance of the Commercial Activity Sector Index for Newcastle recorded 99.3 on 7th June, not far off the national figure. Business sentiment in the North East has seen a sharp recovery since the new year, while cargo ship visits and energy usage are both at pre-Covid levels. Many of the predications for a post Covid-19 economy align with the region’s strengths in life science, AI, big data and tec. This will play a vital role in its recovery and we look forward to seeing prosperity return to all sectors and businesses moving ahead.