Where have all the good sheds gone?

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Slowly but surely stock is diminishing along the south of the M1/A1. Like the rest of the country the region hasn’t seen any speculative development for a significant period of time so what’s left has all but gone.

Even so-called “problem” buildings such as Magnum 25 have now been snapped up. “Magnum must have been on the market for five or six years, but in the end it had quite a lot of demand as there was little else around,” says Robin Catlin of BNP Paribas Real Estate.

The 177,900 sq ft shed was taken by Delta Print for £70 per sq ft freehold. It had been under offer to salad grower and packager Stubbins but that fell through. It sits on an eight-acre site, and has an eaves height of 12m. There are 14 dock and three level access doors, as well as a yard depth of 53.5m and 143 car parking spaces. It also has two-storey offices totalling 9,760 sq ft. Letting agents were King Sturge, CBRE and Knight Frank.

Earlier in the year, budget retailer 99p Stores secured a 372,572 warehouse at ProLogis Park Pineham in Northampton as its new headquarters and national distribution centre as part of its expansion to 350 stores.

The building has 32 dock and four level access doors, a 12.5m eaves height, as well as 87 trailer and 280 car parking spaces and two-storey offices totalling some 14,726 sq ft. Chief executive Nadir Lalani said the company hopes to add another distribution centre to its network in the north of England within four years. Letting agents were Burbage Realty and Readings Hope & Mann, while Proteus Properties advised 99p Stores.

There is still a 139,000 sq ft facility available at ProLogis Park Pineham, along with a number of design and build options. Towards the back end of 2010 BMW signed a lease agreement with ProLogis for a new 457,546 sq ft built to suit warehouse at the park.

On the larger side, Celestia in Milton Keynes is now one of the few remaining spec sheds in the area, but possibly not for much longer as it is rumoured to be under offer to a major retail chain. The 318,526 sq ft facility sits on a 14- acre site at Snelshall West near Junctions 13 and 14 of the M1 motorway and boasts 24 dock level loading doors, two surface level loading doors, as well as 50kN/sq m floor loading and a clear height of 12m. It has office space totalling 17,674 sq ft, along with 200 car parking and 39 lorry parking spaces. DTZ and Bidwells are joint agents.

There have been reports that Kuehne + Nagel is looking for a new distribution centre on behalf of Waitrose in Milton Keynes, but as yet nothing has been confirmed.

The supermarket chain currently operates from a regional depot at Brinklow in Milton Keynes, but is in the process of expanding into the convenience store market after identifying 6.5 million potential customers that don’t have easy access to a Waitrose store.

Darren Cheeseman of DTZ says: “It is a tenants’ market, but there are still good enquiries.” Marks & Spencer is looking for one million sq ft in the area and Arcadia is thought to be on the hunt for around 400,000 sq ft, but with little grade A stock left in the area it looks like D&B is going to be the most favourable option.

“It’s an interesting market at the moment but one that will continue to be challenging throughout 2010,” adds Cheeseman. “Design and build picked up this year so it can only increase next year as existing stock runs out.”

It’s a similar story in the second-hand market; as good quality stock begins to dwindle rents are likely to increase and incentives diminish pushing forward the likelihood of D&B. Confectionary wholesaler Barnack UK recently took a 109,000 sq ft second-hand building on a nine-acre site in Orton Southgate. The company is currently in the process of extending the eaves height to 12 metres and plans to move in early this year.

“We’re seeing there is pressure in terms of people taking second-hand buildings because they are the only ones available,” says Richard Jones of Barker Storey Matthews, “but some aren’t quite right, particularly as a lot of the older buildings only have eaves up to seven or eight metres.”

As a result, by the middle to end of next year design and build will be the only option as speculative development is unlikely to restart.

“The pressure will build as there definitely are enquiries around,” says Richard Jones. “During the first two months of 2011 we will see most of the remaining second-hand stock taken up so the chance of people turning to design and build options is much more likely.”

Newly on the market is dot.com160 in Hemel Hempstead as current occupant ASOS begins plans to reorganise its network.

The fully fitted out 393,344 sq ft distribution centre offers a 160,000 sq ft warehouse and 230,000 sq ft of mezzanine space.

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