Dominic Whitfield of Savills sums up the dilemma facing the South East: "The occupier market is still strong but frankly where is the product?"
His sentiment is echoed by Keith Dowley of CB Richard Ellis: "There has been a diminishing supply of speculative units in the South East over the last six months and this will be further impacted by the abolition of empty rates and the increasing difficulty in the funding markets."
The deals have been coming on thick and fast and Chip Mitton of Altus Edwin Hill says the availability of new sheds is dwindling. In the past year there have been a dozen or so large lettings, one of the largest being to Carpetright, which took Gazeley's Ultrabox building in Purfleet on a 25 year lease at a rent of £7.25 per sq ft with the addition of a two and a half year rent free period - something that developers would be unlikely to offer nowadays.
The distribution facility is set on a self-contained 30-acre site providing a prominent M25 location with close access to the Dartford Crossing. It boasts an eaves height of 12m and a floor loading of 50kn/sq m. It has 42 dock and four level access doors, and incorporates 30,500 sq ft of office accommodation arranged over ground, first and second floors. The site has been landscaped.
Standard Life Investments and Gazeley were represented by CB Richard Ellis and Savills, while Carpetright was unrepresented.
Other speculative units to be snapped up included a 178,000 sq ft unit at AMB Property Corporation's 320,000 sq ft AMB East London Distribution Park. Direct mail company DSICMM secured the facility on a ten-year lease. It will be used as a state-of-the-art printing, distribution and mailing facility.
AMB East London Distribution Park is a two-building facility situated in Binary Park adjacent to a major highway that connects Central London to the M25 motorway. Jones Lang LaSalle, M3 and Savills acted on behalf of AMB.
In yet another deal Internet fashion retailer ASOS (As Seen on Screen) snapped up ProLogis' 158,250 sq ft warehouse DC158 (Azimuth) in Hemel Hempstead a mere six weeks after practical completion.
The retailer took a ten-year lease with a tenant-only break option in year five, at a rent equating to £7.70 per sq ft.
The warehouse boasts 11.5m eaves, 14 dock and four level access loading doors, two-storey offices and 199 car parking spaces. It is located close to Junction 8 of the M1 motorway.
Jones Lang LaSalle and CBRE acted for ProLogis.
Further afield ProLogis secured a letting at its Oxfordshire scheme, ProLogis Park Didcot. Hong Kong-based power tools manufacturer Ryobi took the 167,409 sq ft speculative building on a ten-year lease with a tenant-only break option at the seventh year at a rent of £6.25 per sq ft. Lambert Smith Hampton advised Ryobi while CBRE acted for ProLogis.
This string of lettings in the region has seen even the most stubborn of buildings snapped up. After four years on the market the Olympus building on River Road in Barking has finally found an occupier - London City Bond, a leading privately owned tax warehousing company, which offers the wine and spirit trade a comprehensive nationwide logistics service.
The company will use the warehouse as a consolidation point so its access issues, which had put off other potential occupiers, will not be such an issue.
The 272,695 sq ft building is under offer at a rent in the region of £7.75 per sq ft. It has 12m eaves, 36 dock and four level access doors as well as 56 HGV parking spaces and two yards extending to 45m. It was built by ProLogis and forward sold to PropInvest in 2006. Letting agents are CB Richard Ellis and Savills.
And it was not just the new buildings, even large second hand buildings have been snapped up. Electrical goods wholesaler Moss Electrical secured a 119,780 sq ft warehouse from AXA REIM for £7.4 million known as Dartford Gateway, sits on a self-contained 4.8-acre site on Sandpit Road.
The company relocated there from East London. The deal equated to a capital value of £62 per sq ft. Altus Edwin Hill and Knight Frank advised.
If the take-up of speculatively built sheds were not enough there has also been a string of pre-lets kicked off by electrical retailer Comet, which has a 385,000 sq ft warehouse at Canmoor Developments and Kenmore's 14.75-acre Arrow Park scheme on Edinburgh Way, Harlow. The retailer took a new 20-year lease with fixed uplifts at £6.15 per sq ft. CB Richard Ellis advised the developer.
In another massive pre-let Aldi snapped up a 608,150 sq ft warehouse as its new regional distribution centre on the Isle of Sheppey in Kent to support the discount retailer's expansion in the South East of England
The South East England Development Agency (SEEDA) submitted an application for the site preparation and infrastructure works on Phase 1 of the Neats Court employment area, of some 50 acres, which is where Aldi intends to open its RDC with the creation of some 200 jobs.
Then Food distributor Keystone Distribution UK returned to Hemel Hempstead after being forced out following the Buncefield Oil Depot explosion in December 2005.
The operator secured a 20-year pre-let from ProLogis on a 245,328 sq ft warehouse on the Maylands Industrial Estate.
Just recently another huge pre-let has been agreed further reducing the amount of sites available for speculative development and the amount of land available with planning permission for distribution warehouse development.
Developer Gazeley has just announced the largest ever pre-let in Kent to retailer Morrisons.
The developer has agreed to deliver a 920,000 sq ft warehouse and distribution complex at G. Park Sittingbourne, close to the M2 motorway in Kent.
The deal is thought to be the South East's biggest ever pre-let and will deliver a large-scale warehouse complex split across two units at the site. The new development will be used by Morrisons to service and supply its South East stores and will provide up to 1,000 new jobs for local people.Environmental
Included in the plans for the site are a number of cutting edge environmental technologies such as a revolutionary new kinetic plates in the estate roads, which will generate power from every vehicle moving in and out of the site. Other state of the art eco-friendly measures including rain water harvesting and recycling, energy efficient lighting, low water use appliances and FSC approved timber will also provide massive operational cost savings for Morrisons over the lifetime of the building, while proving that environmental steps can impact positively on a company's bottom line.
James Brook of Morrisons comments: "We selected this site primarily because of its strategic location and close links to the South East motorway network."
G. Park Sittingbourne is part of a joint venture between Gazeley and Standard Life Investment Fund. The two companies have already secured outline planning permission for 1.8 million sq ft of warehouse and distribution space at the site in Kent, but the development for Morrisons will be the first unit to begin construction at the park.
Morrisons has agreed to take a 20 year lease with an approximate rent across the two buildings of £5.4m per annum. Savills, GVA Grimley and CB Richard Ellis represented Standard Life and Gazeley in the deal.
It is not just logistics companies looking for a piece of the action in the South East there are also data centre operators actively seeking suitable warehouse accommodation due to their close proximity to the City of London.
Sentrum took a 71,108 sq ft unit at ProLogis Park Beddington Lane in Croydon. It was able to sign a 25 year lease at a rent in the region of £8.50 per sq ft. So as well as being able to outbid on the rent stakes because of the nature of the business it can also accept much longer lease terms.
In fact Sentrum is believed to have secured ProLogis' Imperium 315 warehouse in Basildon, providing the data centre company can secure the power it requires and of course the planning permission.
The warehouse totals 315,102 sq ft and is located on Cranes Park Road in Basildon. It has 12m eaves and has 29 dock and seven level access doors. It boasts a 64m yard and is being let by Colliers CRE and CB Richard Ellis.
In addition, Sentrum is also believed to have bought ProLogis' DC191 building in Woking. The 191,386 sq ft warehouse has 12m eaves and a 50kn/sqm floor loading. It is being marketed through Savills and CB Richard Ellis.
Only just recently another data centre operator secured a 200,000 sq ft plus warehouse in the region.
Iron Mountain signed an agreement for the lease of two buildings at Thames Gateway, developer Tilfen Land's White Hart Triangle development in Thamesmead.
Developed in association with the London Development Agency and Greenwich Council, White Hart Triangle occupies some 52 acres at the heart of the Thames Gateway. On the A2016 at the foot of the proposed Thames Gateway Bridge, the scheme has a further 25 acres of land for design and build packages of up to 80,000 sq ft.
Glenny and King Sturge acted for Tilfen Land. Iron Mountain was represented by CBRE.
Of the speculative units that are technically available many look to be under offer or soon will be. These include Invista's 193,000 sq ft Atlas building in Edmonton, which is rumoured to be under offer, as is Henderson's Magnum building in Waltham Cross although letting agents are being coy just in case the deals fall through.
Units as yet unlinked by rumour to any particular occupier include Gazeley's Voltaic building which last year failed to secure a deal with Dixons.
The building in Dagenham totals 232,965 sq ft on an 11-acre site adjacent to the A13. It has 12m eaves, a 50kn/sq m floor loading, 20 dock levellers and three level access doors, 43 HGV and 144 car parking spaces.Photo-voltaics
On an eco level it boasts solar photo-voltaics, 15 per cent roof lights, a solar thermal hot water system, ground source heat pump and low water use appliances. Letting agents are Altus Edwin Hill and Colliers CRE.
In addition there is Sainsbury's surplus 670,000 sq ft distribution facility at ProLogis' The Bridge. Cushman & Wakefield is the letting agent. The buildings were originally let at a rent believed to be in the region of £7.50 per sq ft.
Charlie Howard of M3 says: "Because of the limited amount of speculatively built warehouses on offer, there could be a focus on second hand units."
Jon Sleeman of King Sturge agrees with Howard that there could be a focus on second hand units but he adds; "There is not a lot of it around and it is snapped up by occupiers because it is offered on more flexible terms and cheaper rents."
Howard says: "We are marketing a 124,000 sq ft warehouse in Edmonton on Picketts Lock Lane owned by Henderson. It was under offer but it is now available and we are quoting £5.95 per sq ft. That's at quite a discount, nearly £2 cheaper than new build."
The warehouse has 5.5m eaves and is being jointly marketed with Glenny.
Although there is a shortage of sites for sale there are developments coming through the pipeline, many of which are or have been extremely controversial.
It took direct intervention on behalf of the government to secure planning for ProLogis' Howbury Park scheme in Erith.
The government upheld an appeal by the developer to build a 2.1 million sq ft Strategic Rail Freight Interchange on the 156-acre site at junction 1a of the M25 motorway.
ProLogis expects to develop the scheme using the latest in sustainable construction. Its four warehouses will be "cable stay" structures, with external supports like a football stadium, enabling occupiers to rack, heat and sprinkler-fit each building more efficiently.
Other features include fully-planted intensive green roofs, bordered by windows and cedar wood cladding. Overall, Howbury's designs will achieve energy reductions of 85 per cent compared with a conventional shed and water consumption in the offices by 20 per cent. The grey water from the development will be used to re-hydrate the surrounding 130 acres of environmentally sensitive marshland, which is prone to drought. ProLogis will enhance the marshland with pathways and a visitor centre before handing it over to a management group for public use.
The £80m project is expected to take hundreds of lorries off the roads and, according to ProLogis, save 35,000 tonnes of carbon emissions a year and create up to 2,500 new jobs.
Robin Woodbridge of ProLogis says: "Howbury provided the [British] government with an opportunity to demonstrate its commitment to a greener approach for distribution through the increased use of rail freight and as part of its strategy for sustainable distribution.
"We are pleased with the announcement not just in terms of the go ahead for Howbury, but for the message it sends as to the part such facilities can play in helping the UK's distribution industry operate in a more sustainable way.
"It is a bold step and gives us confidence to pursue our broader plans of bringing to the market a network of rail-freight interchange projects across the UK. In a country with such a severe restraint on land supply plus a very complex planning system, it takes very substantial investment on our part to get a project of this nature to the point where it can be properly considered by government."
A similar scheme, being put forward by HelioSlough at Radlett in Hertfordshire, is also at appeal. The scheme proposes a £300m rail freight interchange on the former Radlett Aerodrome at Park Street near St Albans. It would incorporate five large distribution/warehouse buildings totalling some 3.5 million sq ft, parking for up to 1,665 cars and more than 600 lorries as well as the associated rail infrastructure.
The planning application has been rejected by St Albans District Council, Hertsemere Borough Council and the County Council. Opposition group STRiFE and local MP Anne Main have garnered huge support locally with the district council reporting a record number of letters against the development.
The main thrust of the opposition to the site lies in the fact that it is set within the green belt.
Nigel Godfrey of Gazeley says: "Planning is definitely getting more difficult and time consuming."
The developer has several outstanding submissions awaiting decisions in the region. These include plans for a 510,898 sq ft warehouse or production facility, at a 29 acre site on Stratton Business Park off the A1 in Biggleswade. The project is the fourth phase of Stratton Business Park. It will be built on land, which is being sold by Bedfordshire County Council which developed previous phases of the Park. The site will be accessed via a new link road from Pegasus Drive. It is anticipated the development will create between 450 and 550 new jobs.
Some sites have got through more smoothly even if they have taken a rather long time to come to fruition. These include The Dubai Ports £1.5bn initiative, which will see the regeneration of the 1,500-acre former oil refinery site at Shellhaven, to create a port and logistic centre over a ten to 15-year time frame.
London Gateway Port will be built on part of the site of the former Shellhaven oil refinery in Thurrock, Essex. Land will also be reclaimed from the Thames estuary to help form the port.
DP World and Shell are also collaborating to develop a 700-acre logistics and business park to be known as London Gateway Park on a separate part of the site. The park will be able to accommodate buildings in excess of one million sq ft and offers linkage to the rail network. High quality architecture and high levels of security will be key features of the park. Extensive landscaping on the site, including a protected "habitat" zone around the park will create an attractive environment for occupiers.
Together, the two schemes are expected to create up to 14,000 new jobs and help drive forward the Thames Gateway regeneration initiative in Thurrock. The proposals anticipate that the first container berths will be operational by 2010 and the first business units occupied within 12-18 months.
Tim Johnson of King Sturge echoes Godfrey's sentiments about the difficulty in securing planning. "Land supply is tight and that is why developers are fighting hard to get consent at the moment."
Johnson is involved with the controversial planning proposals for Hartland Park in Farnborough where developer ProLogis and PRUPIM are trying to develop a 1.25 million sq ft scheme in the teeth of fierce local opposition.
The developer originally submitted plans in 2005 for 1.5 million sq ft of distribution warehousing on the 120-acre Pyestock North site at Junction 4 of the M3 motorway, which it acquired from QinetiQ (formerly the Defence and Research Agency), for a price in the region of £50m in 2004.
SPLAT - Stop Pyestock bLot Act Today, the pressure group campaigning to prevent the development of mega sheds on the former QinetiQ site, has secured more than 12,000 formal objections.
On its web site (www.pyestock.com) the campaigners have laid out their arguments in emotive terms with vivid pictures drawn of 'morning peak time gridlock on access roads to/from the M3 J4A' and 'dangerous queuing onto both the M3 motorway carriageways' as a result of the increase in HGV movements emanating from the site and the increase in worker traffic to and from the site.
A special meeting has been convened by Hart Council to discuss the matter formally and to determine the planning application it has organised sound links to two conference rooms, which will allow about 900 people to attend.
ProLogis and PRUPIM have already started an appeal process on the outline application on the grounds of non determination.
Please complete and submit the following form to post your comment about this article. Note: all comments are subject to editorial review, so will not appear on the website immediately.