Is the retail sector’s loss the industrial market’s gain?

HTA Real Estate’s director, Nick Atkinson comments on how the ever changing retail sector has presented many opportunities for the North East industrial market.

In recent months we have all witnessed the growing list of high street retail casualties hitting the headlines, apparently signalling that the days of the traditional retail model are numbered.

Whilst our ongoing transition to online retail habits is undoubtedly a major factor in the changing retail landscape, the emergence of Netflix and Spotify perfectly illustrate another important cultural change. In many cases we are gradually moving from being ‘owners’ to ‘subscribers’ and unfortunately this trend will only add to the retail sector’s list of woes.

However, like many in the commercial agency market, at HTA Real Estate we have seen first-hand that where the retail sector has lost, the industrial sector has gained.

Requirements for a full range of facilities to serve the online retail sector have emerged in recent years and these requirements are continually developing, as occupiers adapt to advances in new technology and market trends.

Delivery models are evolving as parcel delivery becomes an increasingly specialist function. Many operators are now adopting highly bespoke building models, which can only be fulfilled via design and build contracts, therefore prompting new development activity.

Whilst the challenges of Last Mile delivery have been widely discussed, for the North East, our comparatively lower levels of road congestion means that it is less of an issue than in larger conurbations. Amazon Prime for example manages to service their customer base across Tyne and Wear from it’s base at Team Valley, a location which has benefitted greatly from significant investment to the A1 (M) Western Bypass. To the south of Team Valley and off Junction 62 of the A1 (M) is Cathedral Park where HTA Real Estate has recently concluded the letting of 50,345 sq ft to the parcel delivery specialist, GeoPost.

For the food delivery sector, in particular operators such as Deliveroo, location is certainly a more critical factor in order to successfully serve their target markets, but relatively speaking the requirements are far smaller.

At HTA Real Estate we have recently concluded the letting of a 53,000 sq.ft industrial unit in North Tyneside to the rapidly expanding online fashion retailer END Clothing and we subsequently sold the investment to Threadneedle.

Amazon currently has a live planning application for a 1.6 million sq ft multi storey fulfilment centre in Darlington and even larger requirements have been reported in the press recently. The North East has a number of excellent locations which are ready to accommodate large scale logistics requirements within close to proximity to the A1, A19 and Ports. As a region we are able to offer bespoke solutions with the benefit of a skilled labour pool and low cost base.

Amazon has been very active in recent years, right across the UK and it would be fantastic to see them commit to large scale new development in the North East. But in a market that is evolving on such a regular basis, it is sometimes best not to look too far into the future and predict what may happen next!