Monday 26th Sep 2016 - Logistics Manager

Who ate all the sheds?

22235All the best warehouses are being gobbled up, so what options are left in the West Midlands, asks Liza Helps.

Supply in the West Midlands is beginning to dry up as reflected across the UK as a whole. According to CBRE, availability in logistics warehousing has decreased steadily throughout 2010 with it standing at 44.4 million sq ft at the end of the year, a 16 per cent fall from 2009 when supply stood at 52.3 million sq ft.

Luckily, the West Midlands region has one of the highest levels of supply with 18 per cent market share. However not all of it is particularly useful space. Simon Lloyd of DTZ says: “Although there is a large supply of existing stock most is grade B.” Indeed, King Sturge’s latest Industrial & Distribution Floor Space Today report notes that only 37.7 per cent of the total stock in the region was in buildings over 100,000 sq ft and that was to June 2010. Since then there have been a number of deals and shortages are becoming rather more apparent.

Looking at the availability of modern grade A large sheds there is an immediate dearth. Mike Price of Knight Frank says: “If you are looking for buildings over 150,000 sq ft you will struggle.”

Indeed, Jon Ryan-Gill of CBRE says: “There has been a definite increase in enquiries overall, particularly from the manufacturing sector. In turn this means the distributors are facing new competition for the few sites that are available. For occupiers that are under any time constraints their options are severely limited, with only three or four new buildings actually ready to move into.”

Of the buildings that are still available, there is Standard Life’s 300,000 sq ft The Duke on Wellington Road in Burton on Trent, built in conjunction with Anson Properties, boasting a 12m eaves height, 24 dock and four level access doors, a 50m deep yard and 15,000 sq ft of two-storey offices. It is being marketed by CBRE and Knight Frank, who are quoting £5.25 per sq ft.

The largest speculative warehouse in the region is Gazeley’s 700,000 sq ft Flair unit at G.Park Rugeley. The huge cross-dock warehouse is set on a 40-acre site and boasts a clear internal height of 14.3m to underside of haunch and a floor loading of 50kN/sq m. It has 80 loading docks, eight level access doors and 260 HGV spaces. Letting agents are CBRE, Cushman & Wakefield and Burbage Realty.

Then there is the jewel in Gazeley’s crown, the £50m G.Park Blue Planet at Chatterley Valley in Staffordshire.    It is the first development in the world to achieve the new BREEAM (Building Research Establishment Environmental Assessment Method) “Outstanding” rating (design stage). This is the highest sustainable accolade available in property development.

Impressive
And if that is not impressive then perhaps the fact that the building could create cost savings in the region of £300,000 a year is.

The 387,762 sq ft warehouse has 15m eaves and 38 dock and two level access doors with a floor loading of 50kN/sq m. It is being marketed by joint agents CBRE, Bulleys and Lambert Smith Hampton at a quoting rent of £4.95 per sq ft.

Developer Goodman has The Citadel available again. The building was meant to have been let to Cyclamax but the company was forced to withdraw as it could not get the funding to go forward with the operation it had planned. The Citadel at Junction 10 of the M6 motorway totals 321,000 sq ft. It has 12m eaves, two 50m yards as well as 28 dock and four level access doors and a 50kN/sq m floor loading. Letting agents are Knight Frank and Jones Lang LaSalle who are believed to be quoting £5.25 per sq ft and offering to sell for £80 per sq ft.

Goodman also has a 213,240 sq ft warehouse with available offices in Burton known as First Point, which is being marketed by Savills and BNP Paribas Real Estate. The property has a 12m eaves height, 18 dock leveller and two level access doors, a 50m yard depth, and external landscaping with 274 car spaces and all mains services.

There is 235,000 sq ft which was to be occupied by Biffa at ProLogis Midpoint, however this is rumoured to be under offer already through BNP Paribas Real Estate.

In Coventry there is Frogmore’s Rivet on the former Marconi site. The 222,958 sq ft warehouse, close to Junction 3 of the M6 motorway is being marketed by King Sturge, Harris Lamb and CBRE at a quoting rent of £5.75 per sq ft on a new lease. The building has 10m eaves, 22 dock and six level access doors, a 45m deep yard and a 50kN/sq m floor loading. It has several environmental enhancements including a carbon neutral wall and roof cladding, solar hot water heating, a recycled grey water system, and energy efficient light in the offices. But most useful, says letting agent Carl Durrant of King Sturge, is a large power supply. Rivet has the capability to deliver 3MVA of power which is more than enough for most manufacturing needs.

In certain locations within the region the availability of big sheds over 200,000 sq ft is non-existent and even those over 100,000 sq ft are in short supply. Nick Waddington of CBRE says: “If you are looking for modern stock round the Birmingham area, there is not a lot available.”

Those that are include SEGRO’s 115,607 sq ft Unit 4 at Meteor Park, which is next to Junction 6 of the M6 and three miles from Birmingham city centre. The warehouse boasts 12m eaves height, eight dock and two level access doors, a 50kN/sq m (FM2) floor loading as well as a 50m deep yard. It also has three phase electricity, a gated and fenced service yard and 190 car parking spaces. Lease terms are negotiable and the rent is in the region of £5.50 per sq ft. Letting agents are DTZ, Knight Frank and Cushman & Wakefield.

There is PRUPIM’s The Hub totalling 120,150 sq ft which has a 12m clear eaves height, 50kN/sq m floor loading capacity, ten dock and two level entry access doors, a 50m deep concrete service yard as well as 27 HGV and 99 car parking spaces close to Junction 6 of the M6 motorway. Joint agents are Knight Frank and CBRE.

At Fradley Park there is The Eagle, a warehouse totalling 104,014 sq ft. It has a 12m eaves height, eight dock and four level access doors and a secure service yard with a depth of 50.5m. It is being marketed by CBRE, Kingston and GVA.

There is a bit of good news, says Mark Fitzpatrick of GVA: “For those looking for the more regional-sized requirements between 30,000 – 80,000 sq ft there are a number of options with some quite keen deals available, especially for those that are able to be more footloose.”

David Binks of Cushman & Wakefield says there has been a lot of activity with take up doubling in the region from 2009 through 2010 with the result that: “In certain locations [and in certain size ranges] there is a shortage of space where no one has built for at least two years and are unlikely to for another 18 months.”

Options
Looking at options for those still requiring large warehouses, Richard Smith of Opus Land says the only real option is build-to-suit. “The whole market is changing. Requirements are far more precise than they used to be, especially in the design. People are looking for D&B solutions, the trick is, have you got enough sites ready? It is important to get the infrastructure in so that all you have to do is put a building on it.”

Luckily Smith has a site ready to go. He recently re-launched a 33-acre site at Opus 9 as Opus Blueprint which can take a single unit of 475,000 sq ft. The developer has infrastructure in place and has secured detailed planning.

Not to be outdone, Gazeley has secured detailed planning permission for a single distribution warehouse for the former Johnson Matthews site in Stoke-on-Trent known as Meir Park.

The 20-acre site, that will form G.Park Stoke, will be able to accommodate up to 462,000 sq ft of warehouse space. Nigel Dolan of Gazeley, said: “We will focus our efforts on offering locally-based occupiers a first class option for relocation in the area, while also endeavouring to attract new companies and inward investment.”

G.Park Stoke will incorporate a number of environmental measures including rain water harvesting and recycling, energy efficient lighting, solar panels, low water use appliances and FSC-approved timber, all provided as standard by Gazeley. Letting agents are CBRE.

Colliers and CBRE are joint letting agents on the second phase of IM Properties’ Birch Coppice Business Park scheme in Dordon, North Warwickshire. The first phase of the 400-acre development has been completed, with the second having received outline planning permission.

The two agents will work alongside Eagleton & Co, which has represented IM on the scheme since its inception.

Phase one of the development comprises 120-acres of land, and tenants on the scheme include Ceva Logistics, Euro Car Parts, Severn Trent Services, TNT Logistics and UPS.

The second phase of the development, which has received outline planning permission from North Warwickshire Borough Council, will provide further 124 acres. A total of two million sq ft of warehousing accommodation will be created on the site.

In August 2010, online grocer Ocado announced that it would be moving to the site. The company, which delivers food for high street retailer Waitrose, is planning to build a £200m distribution hub on 35-acres of land at the business park.

Richard Lawrence of Colliers says: “A big attraction for occupiers is that phase two has direct on-site access to the Birmingham Intermodal Freight Terminal (BIFT), operated by Roadways Container Logistics, which is a major selling point for the type of companies we are trying to attract.”

ProLogis is working on a variety of sites including its ProLogis Park Sideway scheme where it could accommodate a single unit of 650,000 sq ft.

Developer Goodman has secured outline consent for a 370,000 sq ft warehouse at its Birmingham Business Park office development after Solihull Council agreed to widen the choice of usage on part of the site.

The park, which currently comprises 1.6 million sq ft of prime office space and provides a home for a range of companies including Orange, Beiersdorf and Fujitsu, has 35 acres of land with planning permission to deliver a further 800,000 sq ft of workspace. Within that area is a site known as Plot 5000, which has a new outline planning permission for up to 370,000 sq ft of industrial/ warehouse development. Strutt & Parker and GVA are joint agents.

Suitable
St Modwen has a number of sites in the region suitable for D&B. These include land at Longbridge in Coventry as well as its 400-acre Trentham Lakes development site where there is a plot of 65 acres available, taking units of up to 300,000 sq ft. Letting agents are Knight Frank and Louis Taylor.

St Modwen also has 85 acres at Meaford in Staffordshire just off Junction 14 of the M6 motorway. It has planning permission for up to 1.2 million sq ft of space. The site could take a single unit of up to 800,000 sq ft. Letting agents are Knight Frank and Louis Taylor.

Neil Slade of Harris Lamb warns: “The design & build route can open up potential pitfalls with variables on planning, hours of use, remediation, funding, inflexible lease length and full rents.”

For some, the only other option is to secure good second-hand space and luckily many landlords are keen to refurbish these buildings to bring them up to scratch.

GVA and King Sturge are marketing the 253,000 sq ft former Co-op warehouse known as Gateway 50 in Ross-on-Wye adjacent to the M50 motorway. The building is fully racked and sprinklered, has its own vehicle maintenance on site as well as 10m eaves. It is available on a flexible lease either as a sub-let or assignment. The passing rent is £4.31 per sq ft.

There is another former Co-op building at Valley Central in Rugby totalling 334,000 sq ft. It has 12m eaves, 30 docks and a quoting rent of £5.25 per sq ft. Letting agents GVA and Savills say the lease length can be flexible.

Then there is the former M&S unit at Radial Point totalling 184,000 sq ft. It benefits from heating, lighting and sprinklers. It is on the market through Colliers.

Although the stock is drying up the balance of power will remain with tenants in the short term as landlords are under pressure to secure transactions especially for second-hand stock. However where there are noticeable shortages rent-free incentives will harden.

At present, according to Knight Frank’s latest research key distribution locations such as Midpoint/Hams Hall, Rugby, Lutterworth and Daventry have seen rent levels effectively hold up and incentive levels of 18 to 24 months for a ten-year term are certain.