Activity in the M25 East region is unlikely to set the distribution world alight but as there is still demand from occupiers, developers continue to seek out sites and bring forward schemes.
Paul Mussi of Knight Frank says: “A lot of the sites that are being developed are for smaller unit schemes because the majority of sites are usually small – no more than about five acres.”
However where larger sites are available Tom Gamble of Jones Lang LaSalle says: “They are going very quickly and there is a lot of competition.”
Mark Coxon of Cushman & Wakefield says: “Land transactions continue to achieve asking prices due to both the amount of money available within the funding market and general lack of opportunities.”
He says recently Newsfax, an Olympic relocation, purchased 2.7 acres on an 80-acre site owned by The London Development Agency for £825,000 per acre.
Mr Mussi of Knight Frank is marketing a 10-acre site in Barking. Welbeck Wharf has 175m of wharfage as well as a 180,000 sq ft in two buildings with eaves heights ranging from 8-11m. It is on the market at £15m.
Dominic Whitfield of Savills says: “There is a real shortage of B8 land. We have a client looking for high buildings and we are struggling to find even two to three acres.”
Despite the high prices and competition, where there are larger sites a surprising number of developers are bringing forward larger schemes.
Earlier this year Carpetright consolidated its 13 distribution depots in the southeast into one 492,000 sq ft distribution facility in Purfleet, Essex. The company secured Gazeley and Standard Life Investments’ Ultrabox development on a 25-year lease at a rent thought to be in the region of £7.25 per sq ft.
Standard Life Investments and Gazeley were represented by CB Richard Ellis and Savills, while Carpetright was unrepresented.
In another deal Bathroom and Kitchen distributor PJH Group took BlackRock Investment Management’s Interlink100 unit at 100 Millmarsh Lane, in Enfield. Advised by dohertybaines, PJH agreed a 15 year lease with a stepped rent of £6.75 per sq ft rising to £7.50 per sq ft in its fifth year. The company also negotiated a 10-year break clause lease at the refurbished former Tibbett & Britten warehouse. Developer Gazeley has also let Voltaic, a distribution warehouse facility of 232,000 sq ft in Dagenham. Market rumour has Dixons securing the scheme on a 20-year lease at a rent of £6.50 per sq ft with fixed uplifts. Edwin Hill and Colliers CRE are joint letting agents.
In Thurrock, Chip Mitton of Edwin Hill says Wincanton let a 150,000 sq ft surplus warehouse on Eastern Avenue West to EGL at £7 per sq ft.
This level of activity has spurred developers to continue to develop out their sites. Gazeley is developing its 360 at Link 25 in Enfield. The 360,000 sq ft building due for completion in 2008 boasts 15m eaves, 34 dock and two level access doors, 67 HGV spaces as well as a 50m yard all on a 15.69-acre secure site with gatehouse. Letting agents are Jones Lang LaSalle and Atisreal.
Mr Whitfield of Savills says Graftongate has two buildings at its Binary Park scheme in Dagenham ready for occupation. One is 177,367 sq ft the other 141,518 sq ft.” Letting agents Jones Lang LaSalle and Savills are quoting around £7.75 per sq ft and £135 per sq ft for the freehold.
Close at hand PropInvest is marketing Olympus on River Road, Barking. The 272,000 sq ft warehouse was built by ProLogis and is available to rent at £7.75 per sq ft through Savills and CB Richard Ellis.
Standard Life has secured planning to rebuild the 142,000 sq ft former Iron Mountain warehouse, which was destroyed by fire at Bromley-by-Bow. On completion which is due in March 2008, the building will boast 12m eaves, 12 dock levellers and four level access doors. Jones Lang LaSalle is quoting £8.25 per sq ft.
Then there is the Sainsbury’s unit at ProLogis’ Bridgeside in Dartford. The retailer is looking for a tenant to secure 670,000 sq ft.
While these buildings are in the process of construction there are a variety of sites with planning permission which may or may not be built speculatively. These include ProLogis’ 77,800 sq ft building at the Bridge in Dartford as well as Bericote’s Bronze Age Park scheme in Erith, Kent.
There is planning for three units of 85,000 sq ft, 125,000 sq ft and 425,000 sq ft. The largest building could be cross-docked. There is detailed planning permission for 30 dock and eight ground level loading doors; two loading yards of 47m and 58m, parking for 200 cars, 154 HGVs and 130 bicycle/motorbikes.
The building would also benefit from 360-degree access and two separate site access points within a secure fenced 20.32 acre-site. Edwin Hill, CB Richard Ellis and Knight Frank are joint agents.
At Waltham Cross Henderson Global Investors has the Magnum 25 building built by Astral. It totals 177,900 sq ft and has an eaves height of 12m. Knight Frank and CB Richard Ellis are joint agents. Developers TRE (Belvedere) and DMI Properties are due to submit plans for a 230,000 sq ft warehouse scheme on a 13-acre site in Erith, Kent to be known as Alchemy Park.
In June planning permission was at last granted for Shell Haven and as part of the deal approved plans for a 10 million sq ft logistics park on the 1,500 acre site. The park would be just 20 miles from London.
In total the development will provide some 14,000 jobs. Construction is planned to begin later this year, with DP World aiming to have first occupiers on the park within 12-18 months, with the port operational from 2010.