The big shed market can only continue to prosper so long as there is sufficient product suitability and competitive terms to satisfy the demand.
Andrew AherneConfidence appears to be returning to the North West following the completion of a number of major deals. In fact, take up in the region during the second quarter of 2010 reached almost 1.9 million square foot – the third highest quarterly take-up figure on record, according to Andrew Aherne of Lambert Smith Hampton.
He marks two of the most significant transactions as JD Sport’s commitment to 615,000 sq ft at Kingsway in Rochdale and Fowler Welch’s agreement to lease 500,000 sq ft at Heywood Distribution Park in Manchester.
Elsewhere, Kimberley-Clark has acquired a 360,000 sq ft distribution facility at Revolution Park in Chorley, which was originally purpose built for Wolseley UK.
F&C Commercial Property Trust purchased the freehold of the unit and leased it back to Kimberley-Clark in an 11-year deal with fixed annual uplifts.
Additionally, F&C will be funding the fit-out of an automated racking system in the warehouse.
Colliers International acted for Kimberley-Clark and arranged the funding deal with F&C Property Trust, while Wolseley UK was represented by Cushman & Wakefield.
“This is yet another deal that demonstrates both the improvement in the North West big shed market and also the strength of the funding market for this kind of unit let to undoubted covenants like Kimberley-Clark,” says head of Colliers International Manchester office Mike Walker.
Indeed, there are currently four or five unsatisfied requirements for large sheds with M6 access.
Brake Brothers is reportedly looking for a facility offering one third ambient, one third chilled and one third frozen facilities in the Haydock area. The catering firm is rumoured to have found a building that it will retrofit. However, Mark Trowell of Gerald Eve, who is advising Brake Bros, says there is “absolutely no truth in that rumour” and although they are doing some work in that area it is in the very early stages.
Online retailer Amazon is also thought to be looking in the North West, as are third party logistics companies Kuehne + Nagel and Geodis. There are a number of other unnamed requirements too.
“Things are much better than this time last year,” says Julien Kenny-Levick of Colliers International. “Despite a flurry of activity at the end of 2009, 2010 started slowly but things are now starting to pick up. Confidence is higher and there is a tentative return in demand.”
And with big properties such as Galaxy in Knowsley reportedly under offer things could be on the turn. “It’s all very hush hush at the moment,” says Kenny-Levick, “but when that goes through and with Kimberley-Clark taking Revolution Park the whole outlook in the area changes. When those deals are done the stock is going to dwindle and occupiers are going to have to start thinking about design and build options.”
Andrew Aherne agrees that while it is fantastic news for the region, “the big shed market can only continue to prosper so long as there is sufficient product suitability and competitive terms to satisfy the demand.
“With no speculative development having taken place over the past 24 months, further supply is dependent upon second-hand stock becoming available.”
Tesco is set to release almost one million sq ft of space in the region after consolidating its North West supply chain operations into a new 528,000 sq ft hub in Widnes, which Aherne says will relieve any potential shortage for the immediate future.
The supermarket giant has appointed LSH to dispose of two units in Middlewich: one totalling 460,000 sq ft and the other 180,000 sq ft, and a 300,000 sq ft temperature-controlled facility in Middleton.
“Encouragingly, there continues to be a number of larger enquiries in the marketplace. However, the significant up-front costs associated with fit-out works can often deter potential occupiers.
“The fact that these three properties have already been fitted out to a high standard and are available for immediate occupation is a major point of difference.”
Steve Brittle of BNP Paribas Real Estate agrees that having to fit-out a new build can “deter potential occupiers, so if they are able to find one which is already fitted out with racking and docks, etc, then they are more likely to make the move.”
On the design and build front, Gazeley’s G.Park Skelmersdale and G.Park Liverpool are both still available. Skelmersdale has two units for development, one at 247,000 sq ft and one at 488,215 sq ft, while at Liverpool there is 361,000 sq ft ready for development.
Bruce Topley of Gazeley says on the whole the situation is pretty encouraging. “The enquiries might be low but the people we are talking to are serious. Until the remaining stock gets taken up no-one will think about spec builds.”