Thursday 20th Oct 2016 - Logistics Manager

All is not as it seems

Owen Holder of Knight Frank says: “There is a split, while South Yorkshire is subject to quite a large oversupply, the market in West Yorkshire is completely different. There is an undersupply particularly around Leeds which has been a victim of its own success with sites being sold for development for higher land uses such as housing.”

Paul Mack of DTZ agrees: “It depends on where you are looking and what size range,” he says. “There is a lack of space around Leeds but then that’s been the case for years.”

Rob Oliver of GVA Grimley adds: “In the big shed market over 100,000 sq ft [in South Yorkshire] there is a serious oversupply but for smaller space occupiers could be facing a shortage as early as next year.”

In the North, Danny Cramman of GVA Lamb & Edge says there could be a shortage of new build units toward the end of next year.

He says: “At present there remains an availability of high quality industrial units provided by schemes such as Easter Developments’ Cherry Blossom Way in Sunderland and Faverdale in Darlington, Follingsby Park in Gateshead and TV120 at Wynyard. This will be supplemented by schemes currently being constructed such as Caddick’s Gateway West at Newburn Riverside, which will provide 160,000 sq ft of space to the market. However, if take-up persists at its present rate once these schemes leave the market there will be little pipeline stock to fill the gap.”

Recent deals have seen developments such as HelioSlough’s Wynyard 360 warehouse being snapped up by computer firm Electronic Data Systems, which before its takeover by Hewlett Packard, announced that it would invest £30m in the 300,000 sq ft warehouse facility and convert it into a high-tech data centre. M3, King Sturge and Knight Frank are letting agents on the scheme. CBRichard Ellis advised Electronic Data Systems.

In addition to this, the Co-op Group has secured a £12m 270,000 sq ft RDC at Drum Industrial Estate in Birtley developed by Gladman and Rockpoint/Evander Properties, and Cumbrian Seafoods has taken a further 132,000 sq ft at Foxcover Distribution Park in Seaham. Follingsby Park in Gateshead has also seen over 100,000 sq ft of lettings during the course of this year.

In respect of development pipeline there are some significant sites coming forward throughout the region. Radial 64, located on the former 45-acre Dunlop site in Washington is currently being master planned by the developer Highbridge and can cater for large-scale distribution and manufacturing requirements.

In addition to this, Barmston has obtained planning for a mixed-use scheme adjacent to Nissan, which will provide 350,000 sq ft of industrial space.

The £70 million 55-acre Turbine Business Park from Barmston Developments, a joint venture partnership between Wilton Developments and Clugston Developments, is strategically located between Sunderland and Washington on land fronting the A1231 adjacent to the junction with the A19.

The infrastructure work being carried out at the development by Hall Construction is expected to complete in November, bringing drainage and services to the site.

As part of the £2.5m infrastructure works, Barmston Developments is providing 750 m of Turbine Way, the new access road to the site which includes a new traffic-lit junction at the intersection with Nissan Way.

Jason Stowe of Wilton Developments says: “The plots are now ready for development. We expect Turbine Business Park to generate in the region of 4,000 new jobs.”

Further south, there are numerous significant sites available for industrial development with both HelioSlough’s Wynyard Park in Teesside and Merchant Place’s Amazon Park in Newton Aycliffe able to provide large single floor plates.

Merchant Place is actively seeking pre-lets on its 1.4m sq ft scheme through letting agent Cushman & Wakefield. The development could accommodate the largest distribution building ever seen in the North East, a 1m sq ft structure with eaves up to 25m high.

Amazon Park is just off Junction 59 of the A1M, which gives excellent access to several key conurbations as well as south to the M62 corridor and west to the M6 and M74 into Scotland.

These will be supplemented by Skylink, which is a 250-acre site at Durham Tees Valley Airport, which will be accessed via a purpose built link road and made available in 2009. These will be further supplemented by sites in and around Darlington being brought forward including Lingfield Point and Link 66.

Cramman adds: “Although the above demonstrates the region has an excellent supply of key strategic sites, it is unlikely in the current economic climate that there will be significant speculative industrial development. As well as issues in the global financial markets, the abolition of vacant rates relief has put further pressure on the speculative development market. With industrial properties now only having rates relief for a period of six months from practical completion, many developers have been put back into a position where their schemes are not viable without significant grant assistance. This has led to a sharp downturn in demand for industrial development land.”

According to King Sturge’s latest Industrial & Distribution Floorspace Today report the level of speculative development has seen a significant decrease in the North and now stands at 297,912.12 sq ft across just three schemes.

Indeed, Paul Nicholson of Atisreal says: “In terms of land values there is currently a dearth of evidence and certainly what people paid a year ago doesn’t stack up in the current climate. Costs do not encourage development either. For example Part L of Building Regulations adds costs through increased insulation values, and of course Empty Rates Relief has gone. This does not help the developer and as a result a cost gap has emerged between a vendor’s aspirations and what a developer is prepared to pay.”

Taking a closer look at West Yorkshire and Leeds, Holder says: “There is a lack of available product in and around Leeds and Bradford. Traditionally those who wanted to be in Leeds have gone to east to Wakefield Europort or west to Lowfields Business Park and that is still the case.”

Recent deals include Bathroom supplier TC Bathrooms taking a new £11m purpose built warehouse at PPG Land and Clugston Estate’s 28-acre Bretton Business Park, Dewsbury, and Cert Octavian acquiring a 84,000 sq ft second distribution facility at Adwick Park in Manvers, which is situated in the heart of the Dearne Valley, near Rotherham in South Yorkshire. Deals to Marks & Spencer, which has secured a D&B deal with ProLogis for a 1.1m sq ft facility at ProLogis Bradford, and Expect Distribution which has secured a 105,000 sq ft warehouse at PPG Land’s 14-acre Premier Point scheme just of the M606 close by, indicate that where space is available it will be snapped up says Holder. Even second-hand units get snapped up as illustrated by Valad Property Group, which has let a 135,000 sq ft high bay warehouse at the Wakefield 41 Industrial Estate to Leeds-based Northern Foods. The warehouse, used for the distribution of the company’s Fox’s biscuit products, is situated on Brunel Road and was previously occupied by haulage company RCS (UK). It is in this belief that demand is high in the locality that PPG Land is moving forward with developments such as Link 62 in Wakefield.

The developer has secured two detailed planning consents for two separate distribution warehouse design and build options; either a single warehouse of 470,000 sq ft or two self contained units of 250,000 sq ft and 270,000 sq ft.

Vital issue

Mark Rudolph of PPG Land says: “These detailed consents allow us to respond extremely quickly to occupiers where time is a vital issue in securing these types of facility.” PPG Land is advised by Strutt & Parker and Carter & Co.

St Paul’s Developments is also banking on the demand for this particular location. It is speculatively developing – albeit on a smaller scale – two high quality industrial units of 21,260 sq ft and 23,620 sq ft at Smithy Wood Business Park located at Junction 35 of the M1 motorway.

Also in the area is Jaguar Estates’ 19-acre Magna 34 Business Park near Rotherham at Junction 34 of the M1 motorway, which has units from 1,000 sq ft to 151,000 sq ft available.

Letting agent Rebecca Schofield of Knight Frank says the 151,000 sq ft warehouse benefits from 12m eaves, 14 dock level access doors and four per cent office content. Joint agents are GVA Grimley and M3.

For those looking for space in the locality there is good news: Muse Developments (formerly Amec) is promoting its 120-acre Logic Leeds scheme that can accommodate large buildings over 100,000 sq ft. Letting agents are Knight Frank and Carter & Co. Paul Mack of DTZ says there is also J Pullan & Sons’ Howley Park to the south-west of the city at Junction 28 of the M62 motorway which could accommodate up to 65,000 sq ft. Letting agents are DTZ and Lambert Smith Hampton.

Taking a long hard look at the market in South Yorkshire Holder says: “There is probably a deal to be done but that depends upon who owns the property – there are some, who even in this climate, cannot be overly generous so would take the hit rather than drop their pants…”

However, although Rob Oliver of GVA Grimley agrees there are deals to be done, he says landlords will prefer to go long on incentives rather than drop headline rents. “There is certainly talk of these amazing incentives but there has not been a big deal where that has been evidenced as yet.”


Andrew Gent of Gent Visick says deals are still being done. He also says that the supply pipeline has been turned off quite dramatically and that this could be exacerbated by the problem that the Yorkshire LDF is taking considerably longer to put in place than many authorities anticipated. Doncaster has already taken steps to put in an interim policy to bring at least two sites forward prior to the LDF.

One of these is the 100-acre Gazeley and Blue Anchor Leisure scheme next door to West Moor Park where an outline planning application to Doncaster Metropolitan Borough Council has already been lodged.

If successful, planning approval will secure the purchase of the site by Gazeley and will create up to 1,700 new jobs for the local community.

The site, situated at Junction 4 of the M18 motorway, forms the natural extension to the existing West Moor Park development. Upon completion it is estimated that the total value of the scheme will be approximately £125m. Jones Lang LaSalle advised Gazeley while DTZ represented Blue Anchor Leisure.

Immediately available developments in the region include Standard Life’s and Catesby Property Group’s 930,000 sq ft Firstpoint scheme which includes Vulcan totalling 415,000 sq ft and Victor and Valiant, consisting of 246,000 sq ft and 276,000 sq ft respectively. Letting agents are GVA Grimley and M3.

Then there is Evander Properties and Rockpoint’s Sherburn Distribution Park. Mack of DTZ is marketing the five buildings, which are available from 92,000 – 666,000 sq ft.

The key feature says Mack: “Is that none of them have floors so it can be done bespoke to suit the loading capacity. In addition is the huge amount of power available – some 14mva.” Joint letting agents are M3 and CB Richard Ellis.

There are two units available at HelioSlough’s SIRFT development. Unit One, totalling 330,000 sq ft, and Unit Two, 290,000 sq ft, can be combined to create a single building totalling 640,000 sq ft. Joint letting agents are M3, GVA Grimley and King Sturge.