Tuesday 25th Oct 2016 - Logistics Manager

Beauty and the little sister

You’re at a party, a pub or a club and two girls (they travel in pairs) walk in who knock the competition dead. Sorry to bring you back to business but, if you can think of those girls as sheds markets, that’s what the East and West Midlands is like to the rest of the UK’s logistics space industry. Later on in the evening, you will find they bicker. The West Midlands remains a nagging little sister to the East Midlands, constantly reminding it that, despite the East’s beauty in the eyes of logistics occupiers, the West can pull in the fancymen too.

Look where in the UK the developers are building sheds. At 26.5 per cent, the level of speculative development under construction (as at January 2006) was highest in the East Midlands and second highest at 16.6 per cent in the North West – but figures from property consultant King Sturge put the West Midlands a good third with 13.6 per cent.

Despite a cocksure performance from the North West in recent months, the total Midlands market crushes all other statistics. The East and West Midlands accounted for close to half (49.8 per cent) of take-up across Britain in 2005, according to King Sturge. It is notable that building in the West Midlands boomed last year. Available floorspace in the West Midlands increased by 3.7 per cent (82,000 sq m) to 2.27 million sq m at December 2005 compared to a decrease in the same period the year before.

Floorspace availability in large units significantly increased by 178.6 per cent (518,000 sq m) to 808,000 sq m, providing 35.5 per cent of the region’s total available stock. The amount of available new floorspace increased by 14.4 per cent (22,000 sq m) to 175,000 sq m, equating to 7.7 per cent of the region’s overall total.

The East Midlands remains, however, the Kylie Minogue to the West Midlands’ Danni. It’s an A-list location. Available floorspace hovers round the 1.5 million sq m mark with 20 per cent of that space in units bigger than 10,000 sq m. The level of industrial development under construction on a speculative basis in the East Midlands has increased substantially in the past year. King Sturge’s research in the spring put it at 295,324 sq m in 17 schemes. Some 197,599 sq m of this total can be accounted for by just six large warehouses.

Earlier in the year, ProLogis’ started building a speculative 65,030 sq m unit on its Kettering Business Park. The rest of the offer from developer ProLogis is just as punchy. It is offering speculatively-built space at four schemes in the East Midlands.

At Wellingborough, it has the 260,000 sq ft DC1, the 350,000 sq ft DC2 – both available now – and up to 550,000 sq ft build-to-suit in DC3. In Kettering it now has 400,000 sq ft under construction and is offering plots from 50,000 sq ft. In Corby, it has a 150,000 sq ft building and in Peterborough 545,000 sq ft. According to King Sturge’s research into the big sheds market, ProLogis’s schemes represent 31.2 per cent of the market. Gladman, Gazeley and Rosemound were the other major developers in the market, holding an 11.9 per cent, a 9.6 per cent and a 9.4 per cent market share respectively.

ProLogis’s record looks set to fall in, surprisingly, the West Midlands with a shed by Evans of Leeds. Evans plans a 950,000 sq ft unit at Fradley Park, Lichfield, which awaits a pre-let. Evans has also won full consent for two speculative warehouses of 430,000 sq ft and 100,000 sq ft. Existing occupiers at Fradley include Wincanton, DHL, Caterpillar, Hellmann and 3663. Called Maximus, Evans is looking for a rent of around £4.50 per sq ft for its new big baby. Agents are GVA Grimley, Kingston & Partners and North Rae Sanders.

At the paradigm of the logistics über-park – Magna Park in Lutterworth – Gazeley let the 110,215 sq ft (10,239 sq m) Plot 6130 to Geodis in February to serve Geodis’s Indesit white goods contract. Also on the park, following the fire at Primark’s premises, Primark’s 3PL TNT is to take a 230,000 sq ft extension to its soon-to-be-rebuilt 410,000 sq ft building. TNT took Hydro on a short-term basis to cover its supply contract with Primark retail stores. The largest speculative building on the park, Hydro provides almost 40,000 sq m and incorporates the developer’s EcoTemplate initiatives.

Gazeley grabbed an initiative with Eco-Template but ProLogis has come back strongly in Stoke-on-Trent. ProLogis won the chance to develop the Sideway site because of its eco offer.

The scheme will include building fabrics that decrease air leakage and loss of energy; enhanced skylights that increase natural light and decrease consumption of electrical power; and high efficiency lighting. ProLogis is also looking at grass roofs to insulate the building and laminated timber as an alternative to steel for some parts of the building, although this is driven, in part, by rising steel costs.

ProLogis was selected in favour of 20 other bidders for the former Sideway Colliery site in Stoke because Advantage West Midlands believed that the developer offered “sustainability (which) was a key consideration in the selection of ProLogis to develop this project.”

Elsewhere in the Midlands, works at Gazeley’s 6.5ha former Nestle Purina site at Worksop are due to start. “G Park Worksop” will provide a single speculative warehouse of up to 30,657 sq m.

Among other lettings in Leicestershire, Caterpillar has taken 132,000 sq ft of space at Rosemound’s development in Hinckley. Rent for the 10-year lease is a reported £6 per sq ft. It joins logistics operator Walsh Western and laundry firm Johnson Services. Savills and North Rae Sanders were agents.

Rosemound has built phase two at Maxpark, Corby. It offers two high-bay industrial/warehouse buildings providing 19,741 sq m (212,500 sq ft) each. Alongside the A43, the first phase of this park is occupied by Wincanton and Neat Ideas. Agents are M3, GVA Grimley and North Rae Sanders. And at DIRFT Logistics Park in Daventry, Rosemound is developing two units of 10,219 and 20,902 sq m.

On the instruction of Wilson Bowden Developments, King Sturge is marketing Centrix Phoenix Parkway in Corby. The 15.8ha (39-acre) industrial/ warehouse development site, which is located six miles north of the A14, can accommodate requirements up to 400,000 sq ft in a single building. Wilson Bowden has three schemes under construction in Leicestershire. A 5,248 sq m unit is being built at Bardon 22, which could be split into two units. Work is also under way at the final phase of Castle Business Park in Loughborough. This phase comprises 3,623 sq m in seven units between 418 sq m and 604 sq m. The developer also has a unit of 1,424 sq m under construction at Willow Farm Business Park in Castle Donington.

In Northampton, Astral Developments has a 28,056 sq m unit at Swan Valley. Daventry North is a new high-bay warehouse of 22,808 sq m to let, fronting the A5 trunk road by the M1 Watford Gap services. On a site of 5.1 ha, the 12m clear height building is served by 18 dock and four surface loading doors.

New build Unit 1 was the last building to be constructed at Station Park, Kirkby in Ashfield, and offers a detached industrial/warehouse facility of 5,202 sq m. It is about 3.5 miles from junction 28 of the M1 via the A38 dual carriageway.

Work has started at The Nursery in Nottingham, on junction 28 of the M1, where Sladen Estates and Peveril Securities are offering units of 35,230 sq ft (3,273 sq m) and 51,063 sq ft (4,743 sq m). The detached buildings have a high specification including clear internal eaves heights of 10 metres, three or four dock level doors, floor loading of 50 kN/sq m, two-storey fully fitted offices and full landscaping with separate, secure yards and parking. The Nursery development got off to a great start with a pre sale of unit one to Moto Direct as a national distribution centre. Joint agents are M3, Innes England and King Sturge. In Swadlincote, Astral and Kenmore Property Group are constructing a single unit of 22,296 sq m at Tetron Point.

Prime rents in the East Midlands are highest in Northampton and Leicester at around £59.20 per sq m, and £56.50 per sq m in Derby and Nottingham. The end of last year saw a small drop-off in rental values but agents are sanguine that they will rise.

Investors are still keen to snap up freeholds of let buildings in the area. In the East Midlands, prime yields are currently between 6.00 per cent and 6.25 per cent for industrial estates and between 5.75 per cent and 6.00 per cent for distribution property.

King Sturge’s research shows that West Midlands’ headline rents remain highest in Solihull at £67.30 per sq m, around £61.90 per sq m in Birmingham and are lowest in the Black Country, where prime rents of between £51.10 and £53.80 per sq m are currently being achieved. Unit 2 at Prime Point, Stafford, let to Culina Logistics for a shared-user chilled distribution facility.

The high-bay warehouse of 15,790 sq m is served by 15 dock and two surface loading doors. The scheme overlooks the M6 at junction 14 and is adjacent to ProLogis Park.

Among big schemes on the market, ProLogis Park, Stoke-on-Trent offers a high-bay warehouse/industrial building of 35,303 sq m, which is capable of expansion to provide a total of about 46,450 sq m.

Meanwhile, Express Point, Erdington, Birmingham is a high-bay distribution/production facility of 9,755 sq m to let. The development is located between junctions 5 and 6 of the M6, about three miles from Birmingham city centre. Near junction 10 of the M42 and with a rail interchange for the longed-for day when railfreight becomes a commercial reality, the 400-acre (162 ha) Birch Coppice Business Park offers plot sizes for design-and-build schemes from two to 20 acres (0.80 to 8.0 ha).

TNT Logistics has taken a 733,000-sq ft (68,095 sq m) distribution facility there to serve its Volkswagen automotive components contract. Developer IM Properties is represented by agent Eagleton & Co.

Also in Birmingham, the Langtree Group has one unit of 31,000 sq m and two of 27,775 sq m. And at Witton, Boultbee Land is developing a 7,897 sq m unit on Deykin Avenue.

Sprint Point at Coventry Business Park, Coventry offers a warehouse/industrial unit of 4,575 sq m. The premises are served by four dock levellers and two surface loading doors. The park is about two miles west of the city centre.

A scheme planned at Central Park, Rugby could see 18,580 sq m on a 4.5ha site. Central Park is just off the A426 dual carriageway which connects with junction 1 of the M6. In Stoke-on-Trent, Sladen Estates has two units of 23,690 sq m and 17,001 sq m respectively at Radial Point. Also in Staffordshire, Eden Park Developments has a 19,509 sq m unit at First Point, Centrum 100 Business Park.

Rents in the market for secondary space are set to rise. According to research by GVA Grimley, growth in demand for secondary market property will continue, especially in cost pressure centres such as the Midlands and London.

Unit 7000, Magna Park, Lutterworth is a 15m high distribution centre of 21,836 sq m with expansion potential. One of the original buildings on this development, it is alongside the A5 and A4303 at the entrance to the park. And Unit 1 at Sanders Lodge Industrial Estate, Rushden, offers 12,218sq m of warehousing with offices.

Which is the market where developers see the most future? East or West Midlands? The answer is in that most accurate pop chart: land values. The West Midlands has seen a significant uplift in land values. In the past year, they have gone up from £350,000 to £500,000 per acre, a 42.9 per cent rise.