Friday 30th Sep 2016 - Logistics Manager

Hunt the shed

Competition for sites along the critical east-west corridor is getting fiercer as retail giants such as Tesco, Sainsbury and M&S jockey for position. Lucy Tesseras examines the options.

There are plenty of D&B options around but it’s going to get quite cut throat and aggressive.

Jeremy HughesEnquiries are up, but the options along the M4 are disappearing fast. Paul Hobbs of GVA says: “The M4 west follows the pattern of the UK generally with swiftly depleting stock of any quality.”

In fact, Crossflow 550, the biggest existing building still available, is now rumoured to be under offer to drinks company Constellation.

The 549,626 sq ft warehouse has 12m clear internal height, eight level and 50 dock level loading doors, 50kN/sq m floor loading, two 50m service yards and parking for 172 HGVs and 403 cars.

The facility is located less than two miles from Junction 18 and 18a of the M5 motorway and eight and a half miles from Junction 22 of the M4. Savills and Knight Frank are marketing the property.

Elsewhere, the 164,000 sq ft 4mation building is expected to go to Yankee Candle.

So with those two properties out of the picture there really isn’t much choice left in Bristol.

James Haestier of Colliers International, says: “There are good deals to be had on existing buildings, but there is a shortage now. Good deals are getting fewer and farther between.”
According to the latest research from Colliers International, rents for big sheds over 200,000 sq ft in the South West have dropped by only 25p per sq ft in Bristol since June 2007 due to a dearth in supply.

Prime rents in Bristol have remained constant at £5.50 per sq ft since June 2009, whereas in the South West as a whole rents are in the region of £4.60 per sq ft compared to a high of £5.30 per sq ft in June 2007. The research also revealed secondary rents for big sheds at £4 per sq ft in Bristol, with land values averaging £275,000 for ten acres.

Healthy
Soon occupiers will have no choice but to look at D&B options, particularly as there is a healthy number of enquires. Fashion brand Superdry is thought to have a requirement for 300,000 – 400,000 sq ft in the Gloucester/Bristol area, Stapleton Tyres has a requirement for 100,000 sq ft and TNT is looking for 70,000 sq ft, but it wants a five-year break.

Plus, following the Co-op’s agreement for a 450,000 sq ft base in Bristol, Hobbs says there are still some big retail regional distribution centre enquiries in the medium-term for the sub-region, including M&S possibly seeking 500,000 sq ft and Asda looking for 400,000 sq ft.

“Recent news,” he adds, “has been a proposal from Sainsbury to base a new RDC in Exeter, circa 400,000 sq ft – that would be a real landmark deal as such strategic distribution has never gravitated that far South West, Bridgwater being the finishing post in the UK pattern, and Bristol being the acknowledged first choice.”

Reading is also experiencing previously unfamiliar levels of activity from the big shed market, according to Sam Vyas of GVA, as Tesco has gone under offer on the former Courage Brewery site.

“Tesco is understood to be paying £40m for the 58-acre site where it plans [to build a] distribution centre [totalling] approximately 900,000 sq ft,” say Vyas. “Food service supplier Brakes is also understood to have agreed terms and be at the planning stage for a 275,000 sq ft facility at Standard Life’s Sutton Business Park.”

In Swindon, Gazeley completed work on the 796,649 sq ft B&Q logistics distribution centre six weeks ahead of schedule. The facility at G.Park Swindon will serve B&Q’s stores across the South of England, and once fully operational will create 550 jobs.

Hobbs says the fact the building was completed in a reported 32 weeks “backs up how fast developers can respond to enquiries”.

The £70 million project is the largest unit on the site, which can accommodate further bespoke buildings up to 435,000 sq ft.

“We really are at starvation point now,” says Jeremy Hughes of BNP Paribas Real Estate. “The only option is D&B, and there are plenty of D&B options around but it’s going to get quite cut throat and aggressive. The role of the developer is going to change so all sites will be conditional on getting pre-lets.”

On the D&B front there is Ecco, formerly Big Ram, at the Dorcan Industrial Estate in Swindon, a 240-acre redevelopment which is about to get detailed planning consent for a new cross-docked distribution facility of up to 450,000 sq ft. It is a joint venture between Graftongate and UBS and is being marketed as an eco-friendly property with the provision for wind power generation, rain water harvesting and photovoltaic solar systems which could help save some 90 tonnes of carbon dioxide emissions a year, the equivalent of £30,000.

The specification includes 35m and 50m cross-dock service yards, and 40 dock levellers, along with a 15m haunch and 50 kN/sq m floor loading. There is room for 240 car parking spaces, 20 motorcycle spaces and 140 HGV spaces. The site is located near Junction 15 of the M4 motorway and Junction 13 of the M5. It is being marketed by CBRE and Colliers International.

There is also the 600-acre Central Park scheme in Bristol where £5 million of infrastructure is shortly to be concluded for footprints up to 1.3 million sq ft. Joint agents are GVA and Knight Frank.

Further east, the 96,000 sq ft DC2 unit at ProLogis Park is rumoured to be under offer. The unit has been on the market for a while and is thought to have gone for a guiding rent of £13per sq ft. Plus Segro has done a deal with DB Schenker for a 106,500 sq ft pre-let on The Portal site at Heathrow Airport.

However, the landmark deal in the area has to be the acquisition by Harrods of G.Park Thatcham though, according to Vyas. “Having now acquired the 256,000 sq ft distribution facility for a figure rumoured to be in the region of £20m, Harrods plans to service its flagship Knightsbridge store as well as growing its airport retailing outlets from the facility.”