More than 40 acres of industrial and distribution property development is planned to start in the North-east between now and mid-2005.
At Barnsley, a 40-acre greenfield site is to be developed on the Ashroyd Business Park starting this summer. According to agent Sanderson Weatherall, consent has been given for up to 55,000sq m of factory/warehousing. It is sited just of J36 of the M1.
In Wakefield, a 17,670sq m high bay warehouse on Park 40 has received planning permission. Construction, says agent King Sturge, will start mid- to late-2004 with completion expected by mid-2005. The site is adjacent to the M1’s J40. nfrom a sprinkler system. Such facilities may be seen as an extravagance and excessive cost from a developer’s point of view, however, it is important to focus upon providing the most suitable premises in order to attract an operator, and the additional build costs associated with a higher specification property can often be recovered by way of improved rental levels.
It is predominantly agents and developers who are driven by “pounds per square foot” and in practice, occupiers are led by the overall occupational cost. In basic terms, the “right” facility will enable an occupier to operate more efficiently, thus benefiting from savings in time and labour costs. Equally, a fully fitted warehouse facility may cost more to build, but as it will reduce an operator’s set-up costs, the higher rental levels he can therefore pay will offset this.
Within the North East market the availability of “true” warehouse accommodation is limited with a majority being tired, secondary space. A good example of bespoke warehouse accommodation can be seen at Viking Industrial Park where a 6,696sq m (72,000sq ft) high bay unit has been developed incorporating required features such as a secure yard with security house, 8m eaves height and tail dock loading facilities. The premises were let in late 2003 to a locally based warehouse operator.
Further good examples can be seen at Port of Seaham where a range of warehouse facilities are available on flexible terms, as well as the former Sara Lee Courtaulds premises on North West Industrial Estate, Peterlee, where there is scope to either purchase or lease accommodation.
A further significant trend in the logistics market is an increasing need for shorter-term leases, mirroring the shorter-term contracts offered by clients. This flies in the face of developers’ requirements to secure leases in the order of ten to 15 years for new build accommodation. However, increasingly operators do accept this fact and are often prepared to pay higher rental levels in return for the flexibility of a shorter lease.
The need for shorter leases has also led to increased demand for secondary accommodation; however, within the North-east market this leads back to the issues of incorrect building specification.
In looking to the future, it is essential for agents and developers to work closely with occupiers to fully understand the nature of accommodation required, as well as how their operations work to ensure that their premises work for them rather than against.
Many warehouse operators are contracted to a single client, and as such the choice of location is heavily influenced by their clients’ location. Within the North-east, the obvious example regularly sited is Nissan, which takes a whole range of components from many companies within the area on a “just-in-time” (JIT) basis.
There is an argument that all of these suppliers would benefit from the “clustering” effect of being situated within the same location. However, it is apparent that their choice of property has been somewhat limited and as such, they are scattered within the surrounding area. This raises the question: “Is there scope to develop a purpose-built logistics park in Washington?” Also, looking further afield, other significant North-east manufacturers, such as Filtronic, are strategically located close to the regions’ road network at J59 of the A1(M) within Aycliffe Industrial Park.
It is essential to understand occupiers’ needs and provide accommodation that meets their requirements, within readily accessible locations for transport links. n
Matthew McIntosh is associate director at Lambert Smith Hampton, Newcastle. Tel: 0191 261 1300.