Friday 21st Oct 2016 - Logistics Manager

Olympic challenge

There’s no doubt about it that the options for occupiers looking for modern warehouse space in the M25 East region are limited to say the least, but if they can be flexible then hope is not lost.

According to Lambert Smith Hampton’s latest National Industrial & Distribution report it is not surprising that there is little modern warehouse space available when in 2010 take-up in Greater London increased by 16 per cent to 7.3 million sq ft.

This was the highest level of take up since 2006 and was 11 per cent above the five year average. Recent deals have seen LOCOG, the Olympic organising body, take Unit 1 at Gemini Business Park in Beckton until the end of 2012 at a rent of £6.50 per sq ft. The 111,415 sq ft building owned by Aviva was the largest single building at the 25-acre park which was built by the LDA in a joint venture with developer Goodman, to offer accommodation for businesses that were displaced by the Olympic Park development in East London.

The warehouse, which boasts ten metre eaves as well as two dock and six level access doors, was marketed by Frankis Porter, Glenny and Matthews & Goodman.

Though not a letting, Henderson’s Magnum 25 at Waltham Cross has at last been sold not to salad grower and packager Stubbins, which had ear-marked the building for nearly a year, but Delta Prints & Display for a price in the region of £60 per sq ft. The 177,900 sq ft shed sits on an eight acre site, and has an eaves height of 12m. There are 14 dock and three level access doors. It has a yard depth of 53.5m with parking for 143 cars. It also has two-storey offices totalling 9,760 sq ft. King Sturge, CB Richard Ellis and Knight Frank acted for Hendersons while Strettons advised Delta Prints.

John Allan of Dowley Turner says: “If occupiers want a modern well specified shed the choice is limited – more in the north than the south [of the river]. To be honest occupiers are down to the last few buildings and it is getting to the point where some of those buildings will be a compromise.”

Ben Wylie of Strutt & Parker agrees: “We are starting to see take-up and enquiries are up as well for quality distribution facilities but there is nothing at all, of the others that are available, all have faults either floor loading, eaves height or just generally need more work.”

It’s not just modern units, John Porter of Frankis Porter says: “There is not much space around generally as no one has built anything new and most of the second-hand space has also been swallowed up.”

Indeed Waymade Pharmaceuticals snapped up a disused warehouse on the Burnt Mills Industrial Estate in Basildon from Lord Alan Sugar’s firm Amsprop. The 107,000 sq ft warehouse sits on a plot of 4.6 acres and was sold for around £2m. Waymade is refurbishing the property to bring it up to industry standards.

That’s not to say there is nothing available, there are if you can be flexible. For starters there is 12 Point Bow. The 142,000 sq ft warehouse facility is built on the site of the former Iron Mountain building in East London. It is located on the established ProLogis Park in Bromley-by-Bow, off the A102 Blackwell Tunnel Northern Approach close to The City, Canary Wharf, Stratford, O2 Arena and the 2012 Olympic Site.

It includes approximately 16,500 sq ft of comfort-cooled office accommodation over two floors while the warehouse benefits from 12.5m eaves height, 12 docks and four level access doors, a 50kN/sq m floor loading and 1,000 KVA power transformer.

The property is held on a 15-year lease from 16th September 2002, expiring on 15th September 2017 and is available by way of an assignment or a sub-letting, subject to terms. Short-term/flexible leases may also be considered. Letting agents Jones Lang LaSalle and CBRE are quoting a rent of £8.50 per sq ft.

There is also Evander Properties rebranded DDC160 Dartford Distribution Centre on Sandpit Road, just off the A206 University Way which provides a direct dual carriageway link to Junction 1A of the M25 motorway and the QE2 Bridge Dartford River Crossing.

DP World’s London Gateway scheme will provide a deep water port as well as a portcentric logistics park.

The facility totals 160,552 sq ft with 15,653 sq ft of two-storey fitted offices. The warehouse has 12m clear internal height with high bay lighting as well as loading on two elevations with 15 dock and five level access doors. It also benefits from 40m deep service yards and has parking for 198 cars.

Chip Mitton of Altus Edwin Hill says: “We are involved in letting or selling the only modern high bay warehouse/industrial unit of its size on the south east M25.” Joint letting agents Altus Edwin Hill, CBRE and GVA are quoting £6.95 per sq ft.

Despite there being little modern new space available, Jonjo Lyles of BNP Paribas Real Estate says: “On the second-hand front there are a lot of buildings from 30,000 sq ft upwards on Western Avenue in West Thurrock.

“In fact if you drove down Western Avenue you would see there is a trend for stepped rents ranging from £2 to £5 per sq ft where landlords are trying to tempt occupiers to reconsider moving or indeed to move into the location. There is a huge amount of supply. Landlords will be flexible on leases and have even historically let on three-year deals, etc. The reason for this is empty rates which are hurting landlords badly.”

Large second-hand properties available in West Thurrock include: 30/31 Eastern Avenue which totals 156,803 sq ft and has 12m eaves as well as 11 dock and two level access doors. It is located just a mile from Junction 30/31 of the M25 motorway and is being let through Frankis Porter.

There is also Unit E QED, a 113,030 sq ft warehouse which could be split from 56,515 sq ft. It comprises a large purpose built high bay warehouse with two yards at either end plus parking to the front has 12m eaves, 6 dock levellers and 2 level access doors as well as fully fitted offices and 24hr security. It is available to lease or for sale.

Marketing agents Strutt & Parker, Kemsleys and McMeeking Chartered Surveyors are quoting £5.95 per sq ft or £90 per sq ft freehold.

There is ISIS Reach in Belvedere, a cross-docked 320,825 sq ft building constructed in 2001. The property benefits from 13.3 metre eaves, 14 dock-level and seven ground level doors. There are covered van docks with 40 bays. This is a possible assignment of the current lease from Office World. The rent passing is £2,073,000 a year (£6.46 per sq ft). The property has been on the market for almost two years.

Then there is Goresbrook Park, Choats Manor Way, Dagenham where there are five separate buildings ranging from 72,472 sq ft to 139,606 sq ft on a site of approximately 25 acres. The current tenants, Kuehne + Nagel, have a short term on their existing lease. The site will be developed thereafter and therefore will be more relevant in a few years’ time. The passing rent is £5.50 per sq ft.

Lyles warns: “However, if you are looking down the A13 corridor, that is another story. There are very few properties available and even land prices are very high some might even say overpriced…”

For those occupiers seeking modern space there is only one way to go and that is design and build. Tesco took that route with its 500,000 sq ft RDC on a 35.2-acre plot at Beam Reach 5 in Rainham owned by the LDA which finally conceded that jobs come before pride and allowed distribution warehousing on its land holdings last year. CB Richard Ellis, Kemsley, and North Rae Sanders advised the LDA; Lambert Smith Hampton advised Tesco. The LDA will now look at applications on a project by project basis.

Tesco also opted for the D&B route with its e-commerce distribution centre at Gazeley’s 15.5-acre G.Park Enfield scheme. The facility is made up of two buildings one 30,238.88 sq ft dark store supported by a more traditional 117,170 sq ft single storey facility known as the dot com warehouse from which the dark store will be supplied. Tesco expects to employ some 500 people, on a full and part time basis, of which around 50 will work in the dark store.

Lambert Smith Hampton acts for Tesco while letting agents at G.Park Enfield are CB Richard Ellis, Jones Lang LaSalle and BNP Paribas Real Estate.

Kevin Storey of Cushman & Wakefield, warns occupiers looking for large warehouses may struggle to find sites. “Is there land available? A 40-acre site for 500,000 sq ft in the north east M25? Frankly it will be a struggle to find it, the land is just not there. [Go] south of the river and you have a double whammy with the time delay in getting north and significant cost running a lot of lorries. People have been predicting Kent is going to take off following the deal with Morrison’s but there wasn’t much choice.

Perhaps in the future there may be in the form of DP World’s London Gateway scheme which as well as providing a deep water port will also have a port-centric logistics park of up to 9.5 million sq ft. DP World’s Xavier Woodward says: “We have currently completed 40 per cent of the land reclamation and we are working on Phase One of the project which will see the first three berths of the port, the rail infrastructure and the park infrastructure completed and ready for occupancy by late 2013.”

The logistics park will be able to handle build to suit facilities of up to around 1 million sq ft. In total, London Gateway incorporates over 1,800 acres, this includes the port and park and areas for environmental mitigation.

There is also 70 acres of land coming forward at the Port of Tilbury. Steve Williams of Lambert Smith Hampton says: “A planning application is due to be considered shortly and this would be a northern expansion of the port. The port wants to free up some of its operators on the quayside, attract investors and occupiers to the port.”

Once planning is in place remedial and infrastructure works will commence with plots available from the end of 2012. Totalling 931,000 sq ft of space the proposals include an indicative master plan that includes warehousing from 38,754 sq ft to 155,000 sq ft with eaves heights ranging from 9.6m to 12m. Lambert Smith Hampton is advising.

The other strategic site in the region is ProLogis’ RFI Howbury rail freight interchange scheme in Erith just off Junction 1A of the M25 motorway. The 156-acre distribution park could accommodate up to 2.1 million sq ft of rail-connected space in four units from 145,000 sq ft to 1.1 million sq ft. The £80m project is expected to take hundreds of lorries off the roads and according to ProLogis save 35,000 tonnes of carbon emissions a year and create up to 2,500 new jobs.
Letting agents are Savills and BNP Paribas Real Estate.

Other schemes for D&B include Bericote Properties’ Crossdox 420 where there is planning permission for a 423,900 sq ft warehouse, the only one of its size within the M25. It will boast 17m eaves, 30 dock and eight level access doors, as well as a 50kN/sq m floor loading. Letting agents are Altus Edwin Hill and Colliers International and Dowley Turner Real Estate. Bericote purchased the 38-acre site for £800,000 per acre from Apollo/Astral in 2007.

Further out the next biggest site to accommodate large sheds is Gazeley’s G.Park Sittingbourne. Charles Blake of Gazeley says: “G.Park Sittingbourne has three plots left and can accommodate anything from 100-500,000 sq ft and variations in between. We have undertaken work to the site to an advanced stage where an occupier can have a building built immediately.” Letting agents are CBRE, Savills and GVA.

Not quite as oven-ready is Goodman’s Thurrock Commercial Park where planning is being sought for up to 252,500 sq ft of warehousing space. Letting agents are GVA and Altus Edwin Hill. Goodman also has plans for up to 325,000 sq ft, its 16-acre Aylesford Commercial Park near Maidstone.