Developers are jockeying for position but who will be the first to secure an occupier?
Developers are squaring up all along the M4 corridor as a shortage of space is forcing occupiers to look at build-to-suit opportunities to satisfy demand.
Focussing on the Bristol area Paul Hobbs of GVA says: “We are seeing an approaching shortage of good quality accommodation, as the grade A supply chain dries up due to the lack of speculative development. This is something developers haven’t failed to spot.
“Availability of good stock is falling fast. While there is not a drought of space, a moderate upturn could lead to a fast recovery in rents and values for existing prime stock. There is no speculative development in the region, and that is likely to continue throughout 2012.
“However, the South West has seen developers starting to buy sites, bringing forward new infrastructure and strategic planning strategies. We are in one of the strongest positions across the UK in this regards.”
Indeed Will Nell of DTZ says: “Roughly speaking there is 1,000 acres all consented, made up of a number of sites [on land formerly owned by ICI] which benefits from a 1957 planning consent for a range of commercial uses including B8 consent. Tesco was one to the first to build on the land with that consent. They proved it was a valid planning consent.”
And just as well as Russell Crofts of Knight Frank notes: “In last 12 months there has been in excess of 4 million sq ft of demand.”
As has been stated there is plenty of land to satisfy demand for build-to-suit the question is where will the occupiers land? Crofts says: “The availability of land is keeping everyone honest. Ultimately it will be who can access the cheapest capital who’ll decide, as they will be the ones who get the deals.
Crofts admits that there is an element of over simplification in that statement, as the tenant will go for best fit not cheapest deal but for the developers being able to provide the best deal will be determined by the cost of the funding.
In the Avonmouth and Severnside regions of Bristol alone, Croft says there is land that can take in excess of 10 million sq ft of space. The only problem is which sites are ready, are rail connected, have planning and have infrastructure; in essence for the occupier which sites are deliverable now.
Hugh Chesterton of Gazeley agrees: “There is a more than adequate supply of industrial development land in Avonmouth, but this appearance is deceptive to the untrained eye. The sites that are development ready are vastly outnumbered by those that are not.”
Gazeley has two development sites in Avonmouth which will be the penultimate and ultimate phases of G. Park, Western Approach. The plots are 6.15 acres and 12.78 acres respectively, each offering build to suit units from 40,000 sq ft to 250,000 sq ft.
The sites have planning, access, services and all the necessary infrastructure to make them development ready and deliverable in the purest sense of the word.
Then there is Severnside Distribution and Roxhill’s 640 acre Centre Park which is being marketed by Knight Frank and GVA. Two phases are being brought forward and have already secured master planning meaning that as soon as a deal is secured development can take place immediately. A 3km road is in place as well as other services. The scheme could accommodate up to 1.3 million sq ft in a single unit and the first phases have planning for a total of 4.4 million sq ft.
Joint venture Harrow Estates and Robert Hitchin have WestGate a 296 acre site that is being marketed by DTZ, Jones Lang LaSalle and Hartnell Taylor Cook. It could accommodate up to 4 million sq ft.
Developer Bericote has launched a 62 acre manufacturing and distribution scheme in Bristol to be known as Bericote Portside. The ex-Rhodia site, which closed in 2006 and has since been demolished, could accommodate up to 1.1 million sq ft. Indeed the developer has planning permission for a single unit of up to 1 million sq ft on the site. Units are available from 100,000 sq ft. Local agents Hartnell Taylor Cook and London based Dowley Turner Real Estate have been retained to market the development.
Bericote has another scheme in the region known as Avlon through a joint venture with Astra Zeneca. Totalling 85 acres the site is being marketed by Dowley Turner Real Estate and David Skinner. It could accommodate up to 1.3 million sq ft.
St Modwen has a number of sites in the region including the remaining 32 acres at its Access 18 scheme, which is being marketed by Alder King and Knight Frank. The scheme could accommodate up to 550,000 sq ft in total with a single unit of up to biggest 480,000 sq ft.
Looking eastwards along the M4 Corridor there is a marked difference; land is in short supply. Phil Cranstone of DTZ says: “Further East along the M4 there is limited supply of development land until Swindon but even in Swindon there is only 50-60 acres being marketed.”
Gazeley has invested over £6 million in servicing and infrastructure at G. Park Swindon, preparing the remaining 36.5 acres for immediate build to suit development. The site has planning consent for two further units of 136,000 and 437,000 sq ft.
Other sites in Swindon include Graftongate and ING’s 30 acre Echo scheme which could accommodate 400,000 sq ft of space.
In terms of standing stock there is only one new modern building available being GE’s Crossflow550 cross dock warehouse in Cabot Park built speculatively by ProLogis in 2008. Totalling 549,626 sq ft it boasts 12 m eaves, 50 dock and eight level access doors, two 50m deep yards, 172 HGV/trailer space as car parking for 403. It stands on a secure site of 27.64 acres with gatehouses. It is being marketed by Knight Frank and Savills.
On the second hand front Morrison’s move to an 800,000 sq ft warehouse in Bridgwater has left a legacy at Yate (250,000 sq ft), Bristol (365,000 sq ft), Swindon (300,000 sq ft), and Cullompton (100,000 sq ft). While Co-op’s move has left a legacy at of 200,000 sq ft in Wellington, 250,000 sq ft in Ross-on-Wye, and 90,000 sq ft in Bristol. There is also the 200,000 sq ft BCA Distribution Depot in Swindon which has an 8-12m eaves height sitting on a 12 acre site. It is being marketed by DTZ and Whitmarsh Lockhart who are looking to sell long leasehold interest and are quoting £4.5m.