Friday 9th Dec 2016 - Logistics Manager

Planes, trains and automobiles

Logistics operators are forever being told to take lorries off roads and reduce their carbon footprint, so what are the options when it comes to multi-modal warehouses? Lucy Tesseras reports.

Taking lorries off the roads is seen by the government as an important part of the green agenda, but with no pre-warning the Freight Facilities Grant collapsed.

Chris SelwayRail has been highlighted as one of the most important aspects of the multi-modal shed of the future, according to BNP Paribas Real Estate’s first Warehouse of the Future survey. Indeed, more than 60 per cent of occupiers across the UK agreed or strongly agreed that rail would be key to their operation looking forward.

However, despite this support the government has pulled the plug on the Freight Facilities Grant following the outcome of the comprehensive spending review in October 2010.

Chris Selway, director consulting at BNP Paribas Real Estate, which produced the research in partnership with Gazeley and the UK Logistics Fund, says: “The results of the survey from a rail point of view were very encouraging, so it’s disappointing that the politics has gone awry over the past couple of months…Taking lorries off the roads is seen by the government as an important part of the green agenda but with no pre-warning the Freight Facilities Grant collapsed. It’s a shame that the two don’t go hand in hand.”

“It’s a definite step backwards,” continues Selway, “and broadly speaking you won’t find anyone in the rail industry that is happy with the move. I still think we can be optimistic about rail freight growth in the UK though particularly if the High Speed 2 proposal goes through, which should release more capacity for freight.”

Tunde Adegbemile of DTZ agrees that the closure of the FFG won’t have any significant impact on appetite for rail. At present though, he believes rail is seen by the majority as a nice extra but not an essential requirement.

However, he adds: “With rising fuel costs, and as pressure grows on organisations to reduce their carbon footprint, I would expect to see rail freight gaining momentum. Ongoing support from the government in infrastructure, grants and incentives is required though and I think occupiers are never quite sure how much support it is getting at government level, particularly with these mixed messages.

“A bit more support would be a statement of intent. The closure of the FFG, along with the fact that a number of schemes including Radlett, were turned down last year, gives a sense that the view is slightly negative towards rail freight, but at the same time the government wants to reduce traffic on roads and reduce drivers work times.”

Kent International Gateway was also refused planning permission last year, but there is now hope that the decision might have cleared the way for a different development in the area. Colin Wilkins of Savills, a spokesperson for the landowners of the Kent Rail & Freight Terminal (KRAFT), says: “After the inspector’s decision to dismiss the appeal in respect of AXA’s proposals for the KIG scheme, near Maidstone in Kent, there is now a clear platform from which my clients are considering the future promotion for a strategic rail freight interchange at Borough Green.”

The KRAFT proposals are centred on the quarries and sandpits between the A25 and Junction 2A of the M26 motorway on a 250-acre site owned by Cemex UK, Borough Green Sandpits and adjoining landowners.

Wilkins adds: “Any development on the scale necessary will always be a sensitive issue; however, if the national objective to reduce the volume of freight on Britain’s roads is to be achieved then development of railheads to allow this freight to be transported by rail is essential. The land in question has a green belt designation, but is no longer contiguous with the wider designation having been truncated by the M26. It is largely brownfield or made up land following gravel and sand extraction.”

There are a number of existing sites which offer rail access, including Keypoint Swindon which has its own fully operational railhead and runs on the Western Main Line allowing customers to transport goods nationally and to Europe. One building with sidings has already been let to TDG and an additional two sites have been taken by SDC and Oxford University’s Bodleian Libraries.

The K145 plot offers a bespoke distribution warehouse opportunity on a seven-acre site for up to 150,000 sq ft. Agents are Whitmarsh Lockhart and DTZ.

Elsewhere, IM Properties is in the process of developing phase two of its Birch Coppice Business Park. It secured planning permission from North Warwickshire Borough Council last August for a 124-acre extension of warehousing space with direct on-site access to Birmingham Intermodal Freight Terminal. Phase one houses companies including Euro Car Parts, while Ocado has got detailed planning consent for one third of phase two. There is still room to build up to one million sq ft.

Richard Lawrence of Colliers International, which is marketing the development alongside Eagleton & Co and CBRE, says: “We’re not on the verge of a deal but we have seen good interest. It is in a prime location and there are not many sites that can accommodate a building that size in this area.”

There is also the Nuralite Industrial Estate in Higham which comprises 217,000 sq ft and has a former rail link. It is being marketed by Caxtons.

Chris Selway reckons there is a definite propensity for rail with a number of success stories such as Royal Mail and M&S boosting interest. Just last month M&S committed to switching more than 300,000 clothing and home products from road to rail each week. By doing so the retail giant will reportedly move some 25 containers per week cutting 750,000 road miles and saving more than 800 tonnes of carbon dioxide emissions each year.

Selway also believes that interest in rail will be driven by increased traffic through ports – particularly at Felixstowe and the London Gateway. “As a country we are importing more and more electric goods, food and heavy products such as steel which need to be transported, so rail needs to grab more of the import market. There needs to be more collaboration.”

Construction is now underway at DP World’s London Gateway which claims to offer the UK’s “newest deep-sea container port combined with Europe’s largest logistics park”. Hundreds of operatives are currently working at the site, with dredging and new land creation taking place alongside the development of key infrastructure.

The port’s road, rail and sea links are designed to offer a quicker, cheaper and more environmentally-friendly way to transport goods to their destination. While the logistics park on site will also provide some 9.25m sq ft of accommodation, primarily for the distribution sector.

BNP Paribas Real Estate’s Warehouse of the Future survey revealed that some 81 per cent of operators view port access as valuable, while 33 per cent agreed or strongly agreed that air would be important.

When it comes to available airport space, Tom Clews of GVA says Titan at Heathrow is unlike other sites in the area which are either tenanted or don’t have planning permission.

“We can offer either one large building of 233,000 sq ft or we can go down to 150,000 sq ft if required. Alternatively we could do two smaller buildings,” he says.

The ten-acre site has planning in place for a single high bay warehouse and office facility of 233,000 sq ft and forms part of what was the Parkway Trading Estate which is now owned by HSBC and its development partner Volume. The 1970s warehouses have been cleared to provide a development platform with planning permission in place to deliver new buildings to occupiers’ requirements in 2012.

The site has received a fair amount of interest as the development pipeline dries up, with an airport user, a waste energy company and a retailer all said to be looking. “I think with take up continuing as it is and sites being gobbled up there is nothing competing,” says Clews. “People had been sitting back and waiting but retailers are starting to roll out again.”

Agents are GVA and King Sturge.

With Western International Park rumoured to be under offer to Costco and Verdus, the former Entertainment UK warehouse in Greenford, being let to Sainsbury’s, Clews says Titan is really the only available site of this scale capable of accommodating those airline and cargo handlers looking at consolidating operations out of a single site.

The Verdus building forms part of the portfolio Segro acquired when it bought Brixton and is one of the developer’s largest buildings. Ian Coull, Segro’s chief executive said at the time of the letting: “Verdus is one of our largest vacant buildings and this lease represents another positive step forward with the leasing of the Brixton portfolio. This shows Segro is continuing to capitalise on the strong occupier demand for prime industrial space particularly in West London, which continues to be an important market for us.”

Elsewhere, there is The Portal, a 13-acre site at Heathrow which presents an opportunity for a logistics facility of up to 200,000 sq ft and is being marketed by Altus Edwin Hill and Jones Lang LaSalle; and X2 a new two-storey, fully accessed industrial/warehouse facility located between the Heathrow Airport’s Southern Perimeter Road and the A30. Units 1, 2 and 3 have been let to Airworld Services, but there are five units still available to let from 26,293 – 151,698 sq ft.

Segro’s existing Polar Park building at 122,398 sq ft is under offer and believed to be exchanging imminently. It is located in close proximity to Heathrow’s Northern Perimeter Road and has direct access to the A4 Bath Road. The warehouse has ten metre clear height with six level loading doors, five level access doors and 50kN/sq m floor loading.

Agents are Colliers International, De Souza and DTZ.