Thursday 27th Oct 2016 - Logistics Manager

A market dominated by small beer is about to be swamped.

The overflow of national occupiers from the Midlands, looking for available sites and workforces, means that locations such as Skelmersdale are mentioned freely and without the hint of a smirk in conversations that usually centre around Northampton. Many distribution space developers have foundered in Manchester, however – and most of the developers active there are dealing in small sheds.
Stuart Murray at Savills’ Manchester office, says: “On the large scale distribution side, developers Gazeley, Rosemound, Gladman, Patrick Properties and Arlington/Barwood, are all speculatively developing units between 250,000 and 600,000 sq ft. These units have been designed to meet with the increasing need for large scale regional distribution centres. These units will become available during 2006, and will be a key indicator for the future of the distribution market in the area.”
However, Murray also says: “Generally in the North West, the industrial sector is dominated by distribution users with a small number of high tech manufacturing companies taking space. Generally, these users have adapted their operations to meet a more standard distribution specification of unit. It is our experience that the actual manufacturing side of the business will usually only take up a small area of space within a company’s unit, and normally consists of assembly as opposed to production.
“Old manufacturing stock has been well received by the market, and there are a number of high quality break up and refurbishments, such as Premier Point at Runcorn, and Rhodes Business Park at Middleton, where previously manufacturing facilities, in this case (tin cans and kitchens) have been fully refurbished and broken into more smaller more manageable units to meet with modern requirements.”
Developers such as Commercial Development Projects (Marshalls), Easter, Williams Tarr and Urban Waterside have or are constructing speculative schemes comprising smaller freehold units, which have been well received by a previously unsatisfied sector of the market. These units command top rents of between £80 and £90 per sq ft.
The reason the big developers want to be in the North-West is put clearly by an agent at the Midlands end of the North-West area, Neil Starkie, director of industrial at Savills Birmingham, says that one of the key factors of the market in 2005 is the sustained upward pressure on land values in the Midlands, driven by the level of prime yields, shortage of land and competition for land from developers supplemented with new players in the market.
Starkie’s colleague, Andy Hartwright at Savills says: “Unit sizes have increasingly been grouped between 200,000 sq ft and 400,000 sq ft. now considered the size of regional facilities, but there is emerging evidence of an appetite to build even larger. In providing this space, developers and investors seem to be content with meeting occupiers’ requirements of flexibility – increasingly five and ten year lease commitments are available for new build product.”
Among developers active in the Manchester area, Brixton has announced it has received detailed planning consent for the last remaining plot at the highly successful Electric Park development in Trafford Park. It has permission to build either a single unit of 109,805 sq ft or two units of 74,242 sq ft and 47,199 sq ft at the six acre site situated close to junction nine of the M60.
Brixton applied for the two consents to offer a choice of design and build opportunities in which prospective tenants or purchasers would join high profile occupiers including Kellogg’s, L’Oreal and Associated British Foods at the 48-acre site.
The level of speculative developments around Trafford Park has increased over the last 12 months resulting in Electric Park being one of only a handful of design and build opportunities in the area. Having already gained detailed consent Brixton is now in a position to offer bespoke units on either a freehold or leasehold basis.
Steve Johnson of King Sturge, one of the joint agents, says: “We are now experiencing greater demand from occupiers requiring units of 50,000 sq ft – 100,000 sq ft and this is likely to increase following the introduction of the Working Time Directive. We anticipate end users will require more regional distribution centres to service the larger “super sheds” currently under construction. Electric Park is in an ideal position to offer this type of facility. It is in an established area that has critical mass and is able to serve Manchester city centre and the surrounding areas .”