Friday 9th Dec 2016 - Logistics Manager

What a difference a year makes

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The past year has seen a substantial take-up of warehouse space along the M6 corridor. Lucy Tesseras looks at what options are now available.

There was record take-up along the M6 corridor last year driven by a back log of requirements and some opportunistic deals, but the knock on affect from that means the options for good quality space are now fairly limited.

“There has been quite a big change since this time last year in terms of take-up,” says Julien Kenny-Levick of Colliers International, “but now the last of the big sheds is gone, and that’s ProLogis Crewe.”

The 360,000 sq ft facility has been snapped up by Expert Logistics, a subsidiary of online kitchen appliance specialist DRL Holdings.

The warehouse and distribution facility is on the former BOC site, located minutes from Junctions 16 and 17 of the M6 motorway.
Letting agents were North Rae Sanders, CBRE and Lamont.

The deal comes hot on the heels of DHL taking Gazeley’s 361,600 sq ft warehouse at G. Park Liverpool on a ten-year lease at a rent thought to be in the region of £4 per sq ft. Letting agents are CBRE, Jones Lang LaSalle and Colliers International.

Plus, internet retailer The Hut Group is rumoured to be under offer on about 400,000 sq ft in Runcorn.

Galaxy, the 478,105 sq ft cross-docked distribution centre on Knowsley Industrial Park is still technically available, but it has been purchased by Matalan Pension Fund and it is heavily rumoured that Matalan is going to take it.

“Occupiers who sat on their hands over the past year have lost out,” says Kenny-Levick. Unsatisfied requirements will have to either consider lower quality existing space, which is really more of a half way house, or they will have to look at the build-to-suit route.

“We’ve done some digging and 15 design & builds have been committed nationwide compared to almost zero in the past three years.”

Plans
Asda has bought a 44-acre site at Wilson Bowden Developments’ Kingsway Business Park in Rochdale, where it has submitted plans for a 633,150 sq ft distribution centre. Waitrose has set out plans for a regional distribution centre on a 40-acre plot at Matrix Park in Chorley, as part of a £35 million investment in the North of England and Scotland. And Brakes Brothers has bought a 20-acre site at Heywood Distribution Park and submitted plans for a 230,000 sq ft facility.

But, Kenny-Levick warns: “It’s a re-education. Occupiers can’t sign up for a five-year deal. Now it’s ten to 15 years with no breaks and rents are closer to 2008 levels.”

So whether all requirements look at build-to-suit – that’s another story. There is some second-hand availability, but it’s very much tier two on the M6.

“If you’re looking for a large facility on the M6 then there are numerous options but retailers and 3PLs want new modern buildings with 14-15m eaves. Lots of the older buildings were built 15-20 years ago and most of them have an eaves height of less than 10m,” says Kenny-Levick.

Tesco did release three facilities totalling more than one million sq ft in the North West last year after consolidating its supply chain operations into a 528,000 sq ft hub in Widnes. However nine months after putting them on the market the supermarket giant moved back into its 460,000 sq ft unit in Middlewich, which it is now using for internet products. Previously it handled its food operation at the facility.

Letting agent Andrew Aherne of Lambert Smith Hampton says there is good interest in the remaining two buildings.

Activity
Aherne reckons that with this “vast take-up of land by pre-let activity, the supply side and indeed development pipeline for good quality sites is increasingly looking restrictive”.

However, there is one significant scheme on the horizon, which he reckons will ease some of the supply pressure. Cutacre is a 200-acre former mining site with the potential to deliver up to 3.5 million sq ft of distribution and manufacturing accommodation over the short to medium term. Harworth Estates has instructed DTZ and Jones Lang LaSalle to jointly select a development partner for the park.

Tony O’Keefe of DTZ said: “Cutacre has the potential to be the most significant scheme in the region, going a long way to redress the supply imbalance of industrial stock in the north west of England.

“Although the market outlook in the north west region as a whole is improving, expectations remain for a muted recovery, but Cutacre will be at the forefront of all that is positive in the region over the coming years.”

The Stobart Group is also on the development trail after submitting two sets of plans in the region, one in Carlisle and one in Widnes – both of which it is waiting to get the go-ahead for.
The group is looking to build a 400,000 sq ft distribution centre in Carlisle which will be occupied by Eddie Stobart.

Richard Butcher, deputy chief executive of the Stobart Group, who also heads up the Estates Division, says: “We’ll be moving from about seven or eight sites at the Kingstown Industrial Estate at Carlisle and consolidating everything. It will be much more efficient. We could also put in a chilled cross-dock facility.”

As part of the application Stobart would also resurface the runway at the Carlisle Airport.

Stobart has to give six months’ notice at its existing Carlisle facilities, and Butcher says: “If the planning application is accepted [Stobart was expecting to find out at the end of October] we’ll start work straight away, probably Q1 next year if all goes to plan and we expect to have a nine month build time.”

Further south, Stobart has submitted plans for the Widnes Multimodal Gateway, which comprises three sheds totalling 1.4 million sq ft, along with a biomass plant, all of which it plans to lease out.

Tesco is already on-site with phase one of its chilled distribution centre which Stobart is involved in.

The development at Widnes will also benefit from the plan to build a new bridge across the River Mersey between Runcorn and Widnes, which was awarded £470m of funding last month.

“It’s a massive hundred million pound project,” says Butcher. “The existing bridge is 100 years old so use of a new bridge will be a massive help. It can’t do anything but good for the area.”