Friday 21st Oct 2016 - Logistics Manager

The good news is…

There is lots of space available in the North East and Yorkshire. The trick is to find the best warehouses…

Flexibility is the key to finding the right space in the region at the moment – there are deals to be done provided you are not too rigid in what you want and where you want to be.

There is three times the amount of Grade A space in South Yorkshire as there is in West Yorkshire according to Robert Whatmuff of Lambert Smith Hampton.

And Jonathan McGrael of Colliers says: “Colliers is currently searching for a modern facility of 150,000-200,000 sq ft along the M62 corridor in West Yorkshire but has a very limited choice. Occupiers looking at this location are now having to cast their nets wider and consider properties at Sherburn-in-Elmet on the A1(M) and into South Yorkshire where a number of existing properties are available.”

Whatmuff notes that there are three modern institutionalised buildings of over 100,000 sq ft available in West Yorkshire, including Wilton Developments’ 135,000 sq ft Latitude 135, at junction 31 of the M62 motorway. This has 10m eaves, 11 dock level access doors and three drive in loading doors and 4,000 sq ft of office accommodation and is being marketed by DTZ, Lambert Smith Hampton and Carter Towler.

There is also ProLogis’ DC1 at ProLogis Wakefield Europort. Totalling 120,560 sq ft, the facility has 12m eaves, 10 dock and two level access doors as well as a 48m deep yard with 20 lorry and 84 car parking spaces. Letting agents are Dove Haigh Phillips and Jones Lang LaSalle. There is also the former MST building at Wakefield Europort which is thought to be under offer to Kingspan.

Prime locations

Mike Baugh of DTZ notes: “People looking for stock of 100,000 sq ft in the better locations have very few options. The difficulty is the occupier market believes there are great deals to be had in that size range, which is true in most locations, but supply in prime locations is limited.”

Those companies looking for space below 100,000 sq ft may also have problems. Andrew Gent of Gent Visick warns: “It is fair to say in the sub-100,000 sq ft bracket prime quality stock is just about exhausted.”

He continues: “There is plenty of secondary stock but that is taking a long time to let because a lot of local demand has been generated by lease events and businesses coming out of that size range of property have been able to get brand new property for less cost. The problem now is that business looking to upgrade and expand cannot find new stock and instead are only being offered similar properties to the ones they already rent making a move not worthwhile. Most renegotiate an extension with their existing landlord at a much discounted rent.”

Rebecca Schofield of Knight Frank agrees about the growing shortage: “In the absence of new development, the supply of good quality small to medium-sized units is diminishing and buildings already fitted out with offices and lighting are proving most attractive.

“In terms of outlook for the region, the larger end of the market is expected to continue to generate very competitive terms, as supply of this type of stock remains elevated. However, incentives are expected to harden for good quality small to medium-sized units in the prime locations along the M1 motorway corridor, as supply of this sort of product is tighter.”

Speculative development

So how much space is there? According to Toby Vernon of CBRE: “The complete lack of speculative development resulted in a total supply for the region now standing at circa 4.04 million sq ft. This still represents a significant amount of space but when taking into account the five-year average annual take-up of 3.03 million sq ft; this means that current availability of existing buildings represents only 16 months of supply.”

While landlords are still willing to offer short term deals to tie in with 3PL contracts incentives are hardening and cheeky offers are being resoundingly dismissed when only a year ago the same offers might have been considered seriously.

Whatmuff says: “There are still deals to be done and landlords are looking to be flexible.” But not looking to be done over. For those looking for deals on mega sheds expect to have to barter hard, while there may be facilities over 400,000 sq ft a plenty here, the canny folk of Yorkshire know that with buildings of this size they are dealing on a national basis.

Already the two properties at Sheffield International Rail Freight Terminal (SIRFT) can be joined to create a mega-shed of some 630,000 sq ft at present they are available as two units of 334,781 sq ft and 291,143 sq ft of space with rail access. Both have 15m eaves, 50kN/sq m floor loading and 30 dock and two level access doors. The units are located one mile from Junction 33 of the M1 and are available leasehold or freehold through letting agents GVA, Jones Lang LaSalle, CBRE and Moriarty & Co.

Not to be outdone the Evander and Anglesea Capital, the owner of the 1.4 million sq ft Sherburn Distribution Park near Leeds, has been granted planning permission to link two industrial units to create a 550,000 sq ft ‘supershed’.

The park located at Junction 42 of the A1(M) motorway secured national retailer, Debenhams, in 2010 with a 667,000 sq ft distribution facility which acts as a northern hub for the retailer.

Nick Sowerbutts of Anglesea Capital, explains the move: “We took the decision to seek planning to join two units of 190,000 sq ft and 330,000 sq ft to create greater flexibility for occupiers. The deal with Debenhams represented a significant investment into the region and clearly demonstrated the suitability of Sherburn Distribution Park as a Northern base for major retailers. We can now accommodate an occupier of this scale with similar requirements and can structure deals to meet individual occupiers’ requirements.”

Elite group

The 190,000 sq ft and 330,000 sq ft units were originally constructed on a common grid to allow their combination at a future date. The combined 550,000 sq ft industrial unit will join an elite group of only four new build units in excess of 500,000 sq ft, currently available in the UK.

Toby Vernon of CBRE who is marketing the unit, adds: “Of the five year take-up figures, 75 per cent of stock was new or good quality modern which highlights tenant demand for quality units like those at Sherburn Distribution Park. Recent demand has been significantly driven by retailers seeking to capitalise on economies of scale by consolidating supply chains into a smaller number of strategically located, larger footprint buildings. The creation of the 550,000 sq ft unit responds perfectly to this demand. The growth in online retailing continues to be one of the major drivers for warehouse demand and the current economic climate has also created an opportunity for growth of budget retailing which has also resulted in new demand for logistics space.”

Rob Oliver of GVA points out: “Occupiers looking for large sheds would get a 20 – 25 per cent discount in rent compared to a comparable building in say Northampton, Milton Keynes and the Golden Triangle. Additionally labour rates are more competitive.”

Other larger units in the region include SEGRO and Moorfield’s Blade facility which was developed by Gazeley. The 412,000 sq ft facility in Sheffield, offers 15m eaves, 40 dock and two level access doors, and a 50kN/sqm floor loading. It is located half a mile from Junctions 33 & 34 of the M1 motorway. Agents are CBRE and Knight Frank.

There are two buildings at Standard Life’s 930,000 sq ft First Point scheme in Doncaster, Victor and Valiant totalling 246,000 sq ft and 277,000 sq ft respectively. The properties boast a range of features including 14m eaves height, fully-fitted offices with comfort cooling as well as 50m deep secure yards and ample parking for both lorries and cars. While there are no plans to physically link these two buildings together, they are located next door to each other and landlord Standard Life is prepared to be flexible. Letting agents are GVA and Colliers.

For those looking for specific or more bespoke facilities there is of course the Design & Build solution.

Strangely there aren’t that many oven ready sites. ProLogis has a site for 250,000 sq ft at ProLogis Park Bradford. An indicative proposal envisages a self-contained facility on a 12.72 acre site boasting 19 dock and 2 level access doors, 95 car and 49 HGV parking spaces, two storey offices and a 50m deep yard.

ProLogis says it has a design team in pace to deliver a sustainable carbon neutral building in less than 24 weeks. Letting agents are Dove Haigh Phillips and Jones Lang LaSalle.

Larger warehouses

Those looking for larger warehouses might consider PPG Land’s Link 62 which has the biggest immediately deliverable plot in West Yorkshire capable of accommodating up to 480,000 sq ft. Letting agents are Carter Towler and Strutt & Parker.

Again the spectre of localised shortage rears its ugly head, according to Roger Hawarth of CBRE: “[In Sheffield] there is a genuine lack of available, prime development sites that are deliverable within the recognised ‘core’ industrial area.”

He cites only two; SIRFT Phase 3 which can accommodate up to 283,000 sq ft on 14.6 acres and the 50 acre Sheffield Business Park Phase 2 which could take up to 900,000 sq ft of space.

There are sites near Leeds including Muse developments’ 120 acre Logic Leeds scheme which is offering warehouses from 25,000 – 1 million sq ft and Bericote Properties and RREEF’s 70 acre Garforth site. Further south there is Gazeley’s 115 acre G.Park Doncaster site which has planning for three units of 650,000 sq ft 530,000 sq ft and 280,000 sq ft.

Bruce Topley of Gazeley says: “The scheme would suit a variety of occupiers who could take advantage of the scheme’s rail connectivity. We are flexible in terms of leasehold, freehold and indeed land sales.” Letting agents are Jones Lang LaSalle and Knight Frank.

Close by is the Rossington Inland Port Scheme being promoted by SEGRO, Helios Europe and Shepherd Alliance. This could accommodate up to 5.8 million sq ft of space. Letting agents are Gent Visick, BNP Paribas Real Estate and CBRE.

North East: Availability of Grade A Space in all sizes is limited

There are currently five new Grade A buildings over 50,000 sq ft available in the North East,

And a single unit at Chester-le-Street represents 46 per cent of the 560,000 sq ft of space available.

“This, says Danny Cramman of GVA “is Evander Properties 263,00 sq ft warehouse at Drum Park. After this new build product drops down to a single unit of 100,000 sq ft although there are good quality second hand buildings which provide space such as Henderson’s 160,000 sq ft former ST160 in South Shields.”

ST160 is fully fitted out with heating, lighting and sprinkler system, having an eaves height of 6.5m, rising to 9.5m at the apex with both level and dock loading. It sits on a 10.23 acre site.

The majority of space that is available is second-hand and Simon Haggie of Knight Frank notes: “Prime rents are broadly stable although incentives arguably increased slightly as landlords become increasingly desperate to lease units and avoid paying rates on empty property. Lease lengths are also shortening as tenants become more risk adverse.”

Nick Atkinson of DTZ says: “Occupiers looking for space will have to go down the D&B route.”

Indeed Clipper Logistics has signed up to a 16 year pre-let at British Airways Pension Trustees and Sladen Estate’s site at Wynyard Park near Stockton on Tees. The 350,000 sq ft will service a contract with George @Asda. Letting agents were Moriarty & Co, Jones Lang LaSalle and DTZ. Clipper Logistics was represented by Lambert Smith Hampton.

Available sites include Bericote Properties Mandarin Way Phase 2 in Washington, which has planning for a 100,000 sq ft unit. Letting agents are GVA and Colliers. Then there is UK Land Estates proposal for a 400,000 sq ft warehouse on Fleck way at Teesside industrial Estate, Thornaby. Letting agents are DTZ and Sanderson Weatherall.

St Modwen has 60 acres at Faverdale with permission for up to 1.1 million sq ft of space.