Saturday 10th Dec 2016 - Logistics Manager

Shed-loads of deals

22789The West Midlands big shed market has seen plenty of activity as retailers, manufacturers and third party logistics providers move in. It’s great for jobs, says Liza Helps, but it’s having an impact on the amount of good quality space available.

A plethora of deals in recent weeks has seen a boost in job prospects in the West Midlands albeit with a sharp reduction in the amount of warehouse space and land available for development.

Online retailer Amazon announced plans to open a new distribution centre in south Staffordshire creating up to 900 full and part-time jobs. The building in question is Gazeley’s speculatively developed 700,000 sq ft Flair facility at G.Park Rugeley.

Amazon is thought to have taken the mega shed on a 15-year lease at a rent believed to be at a substantial discount to the £4.75 per sq ft quoting price.

The cross-docked development, which is the largest modern warehouse in the region, sits on a 40-acre site and is located on the A513 in south Staffordshire. It has 14.3m clear internal height and a 50kN/sq m floor loading with 80 dock levellers and eight level access doors. There are 523 car parking spaces and 260 HGV parking spaces. Letting agents on the development were CBRE, Cushman & Wakefield and Burbage Realty.

The American retail giant said the centre would be up and running by September.

Within days Kuehne + Nagel finally completed a sub-lease on the 237,000 sq ft Biffa unit at ProLogis Midpoint in Staffordshire. The 3PL signed a ten-year lease with five-year break. Gerald Eve advised K+N while BNP Paribas Real Estate acted for Biffa.

Then Peugeot announced that it would be taking a 300,000 sq ft pre-let at Advantage West Midlands’ and developer Goodman’s 60-acre Lyons Park at Browns Lane in Coventry.
The company will move its parts distribution to the new warehouse from its base in Tile Hill rather than revamping the current facility because the new one will be half as high again allowing “greater productivity gains”.

Construction of the new warehouse is expected to start in January next year with completion by October 2012. Gerald Eve acted for Peugeot. Letting agents are CBRE and Savills.
“Take-up for the first half of the year in the [Midlands] region is at 3.5 million sq ft in buildings over 100,000 sq ft,” says Richard Meering of CBRE. “There is a dwindling supply of sheds and in some areas there is no choice in certain size ranges.”

In fact it is worse than that, warns Neil Starkie of Savills: “There is roughly 2.65 million sq ft of grade A space currently available, however, about ten per cent is under offer leaving 2.4 million sq ft up for grabs, but the average take up [in the West Midlands] is 2.65 million sq ft a year, so technically there is less than a year’s supply.”

Of the modern grade A 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.

Then there is Gazeley’s G.Park Blue Planet at Chatterley Valley in Staffordshire. 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 at Junction 10 of the M6 motorway totalling 321,000 sq ft. It has 12m eaves, two 50m yards, 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 levellers and two level access doors, a 50m yard depth as well as external landscaping with 274 car spaces and all mains services.

In Coventry there is Frogmore’s Rivet. The 222,958 sq ft warehouse is being marketed by Jones Lang LaSalle, 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.

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 Birmingham, 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. However, there are strong rumours that this building may soon be let.

Still in Birmingham 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.22790

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.

One of the largest modern buildings available in the West Midlands is Alto415 in Newcastle-under-Lyme. The 415,000 sq ft warehouse boasts 15.6m eaves, 36 dock and two level access doors, 56 HGV and 205 car parking spaces on a 20.4-acre secure site. Letting agents are Moriarty & Co, CBRE and Jones Lang LaSalle.

Second-hand sheds offer more scope but any that are of good quality are quickly being snapped up. Recently furniture distributor Home & Retail took a 179,221 sq ft warehouse at Coltham Development’s Emperor Point scheme near Tamworth on a five-year lease at £3.75 per sq ft, a rent below the £4.50 per sq ft asking price. The building had previously been occupied by Britvic. Jones Lang LaSalle advised.

Robert Rae of North Rae Sanders is marketing one the largest second-hand buildings in the country, the 594,000 sq ft former Focus warehouse in Tamworth on behalf of London & Stamford. The building has a £6m fit out and is fully racked with 50,000 pallet spaces.

The unit has 10.4m eaves as well as 64 dock and ten scissor lifts. It has a 60m yard and parking for over 100 trailers and is currently being refurbished to bring it up to standard. Joint agents are North Rae Sanders and Dowley Turner which are quoting £5.25 per sq ft looking for a ten-year lease.

Another large second-hand unit is the 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.

With the supply of space becoming shorter Simon Lloyd of DTZ says: “Occupiers will have less choice therefore there will probably be slightly increased demand for good buildings, so pricing will go harder in the short to medium term. Incentives will get harder as well although we are still a little way off before headline rents start to grow.”

Ranjit Gill Of BNP Paribas Real Estate agrees: “Tenants are paying almost the full asking rent and incentives for prime accommodation, or at least within five per cent. The days of seeing 10-15 per cent discounts are dwindling as more and more landlords are holding out. It is the same with incentives where you used to get an 18 month to two-year rent free on a five-year lease; you won’t see that now, more like 9 – 12 months.”

So what are the options with such a rapidly induced shortage of space? Cameron Mitchell of Jones Lang LaSalle says: “There will be more D&B opportunities although that may be difficult as there are not that many sites available that are ready to deliver D&B options particularly for the larger buildings.”

Around Coventry there are only two sites capable of accommodating large sheds. Goodman’s Lyons Park could take up to 580,000 sq ft in total. Letting agents are Savills and CBRE. And ProLogis’ 65-acre ProLogis Park Ryton which can take up to 1.2 million sq ft and accommodate a single unit of 1 million sq ft. Letting agents are Jones Lang LaSalle, North Rae Sanders and Gerald Eve.

Elsewhere there is Opus Land’s 33-acre site at Opus 9 known 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. Letting agent is CBRE.

Colliers International and CBRE are joint letting agents on the 124-acre second phase of IM Properties Birch Coppice Business park scheme in Dordon, North Warwickshire, which has planning for up to 2 million sq ft of space. The two agents will work alongside Eagleton & Co, which has represented IM on the scheme since its inception.

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.

Consent
Goodman has secured outline consent for a warehouse at its Birmingham Business Park office development after Solihull Council agreed to widen the choice of usage on part of the site. The 35-acre Plot 5000 can accommodate up to 370,000 sq ft of industrial/warehouse development. Strutt & Parker and GVA are joint agents.

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. It 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.

There are a variety of new sites coming through, including Hadleigh Park near Stoke, totalling 50 acres, which could take 800,000 sq ft. Joint agents are Jones Lang LaSalle and Mounsey & Co.

Another 50-acre site at Washwood Heath is being promoted by Axa with Savills as sole agent. It could take up to 1 million sq ft. While Bericote has secured a 52-acre site known as Four Ashes in a joint venture with owner chemical company SI. This site could also deliver up to 1 million sq ft. Letting agents are Jones Lang LaSalle and Dowley Turner Real Estate.

Carl Durrant of Jones Lang LaSalle says that build-to-suit is the way forward for occupiers but warns that they will have to come to terms with a new set of constraints. “Certainly the days of enjoying attractive rental terms and flexible leases from landlords will halt. If a company decides to have purpose built premises they will need to live with signing up to a 15-year lease or more with little hope of a break clause. They will also have to settle for a market rent.

“No developer or landlord will enter into a build-to-suit solution unless there is a profit and this drives the length of lease and rental terms. Empty rates on large buildings are also so substantial that a landlord can’t afford to have a vacant building on its books,” says Durrant.