Huge take-up has left the region growing seriously short of available space. Liza Helps investigates.
Large scale accommodation leased by big brands including Asda, Amazon and ASOS in South Yorkshire contributed to a “significant improvement” in take-up of warehouse space in the Yorkshire region in the second half of 2010, according to research by Knight Frank.
In the second half of the year there was 1.7m sq ft leased. Mike Baugh of DTZ says: “Only 12-18 months ago there was a huge over-supply; now that has been whittled away. Take up has exceeded expectations driven by the growing lack of space elsewhere in the UK particularly the North West, and by the availability of keen and flexible tenant friendly deals. Available space is down to roughly 4.5m sq ft.”
The majority of deals concluded were driven by the retailers and e-tailers as they sought to consolidate in to larger more economical buildings, establish large RDCs to serve the North or else took advantage of exceedingly good terms to secure NDCs where labour, rents and land prices were considerably lower than in other regions.
One of the largest lettings was department store retailer Debenhams taking Evander Properties’ 667,000 sq ft warehouse at Sherburn Distribution Park in North Yorkshire.
It took the mega-shed with 12,452 sq ft of accompanying office space on a 27-year lease at an initial rent believed to be less than £3.95 per sq ft. The property boasts 15m eaves, 58 dock and two level access doors as well as a 52m deep yard.
Fashion e-tailer ASOS made the decision to invest some £20m into a new distribution centre to aid its online expansion. It secured ProLogis’ 530,168 sq ft Crossflow 530 building in Barnsley, South Yorkshire as its headquarters and NDC. ProLogis was marketing the cross-dock facility with a headline rent of £3.95 per sq ft through letting agents BNP Paribas Real Estate, Dove Haigh Phillips and Fisher Hargreaves Proctor.
Other key deals include the letting of the 412,000 sq ft Vulcan warehouse at First Point in Doncaster to e-tail giant Amazon. Then there was Poundworld’s deal on AXA REIM’s 215,000 sq ft Axis 62 warehouse on Foxbridge Way, Normanton. The budget retailer took a ten-year lease with a five-year optional break clause at a rent of £4.25 per sq ft, 50 pence per sq ft less than the property was originally marketed through King Sturge and Carter Towler. AWS advised Poundworld.
AXA REIM also managed to secure Asda for its 263,000 sq ft Hurricane warehouse at Redhouse Interchange in Doncaster. Gent Visick and Knight Frank advised AXA while Colliers acted for Asda.
IM Properties 122,519 sq ft Aspect warehouse at West Moor Park in Doncaster, was let to clothes and homeware retailer Next. The property which has eight dock and 2 level access doors as well as 10m eaves was being marketed by CBRE, Cushman & Wakefield and Jones Lang LaSalle for £4.75 per sq ft.
In other deals pharmaceutical wholesaler Mawdsley-Brooks & Co bought GE Capital Real Estate’s 22,443 sq ft P22 office and warehouse unit at Quest Park in Doncaster. CB Richard Ellis and PPH represented GE Capital Real Estate with Savills acting as GE Capital Real Estate’s retained agent. TFC acted for Mawdsley-Brooks & Co.
Elsewhere, Scotts Miracle-Gro took Valad Europe and Shepherd Development’s 164,000 sq ft Quattro warehouse at West Moor Park, Doncaster on a 15-year lease at a rent of £4.30 per sq ft. Knight Frank, GVA Grimley and Jones Lang LaSalle advised Valad and Shepherd Developments on the letting.
Headline rents for large scale distribution space remain in the region of £4.25 to £4.50 per sq ft and £4.50 to £5.00 for prime accommodation in the 10,000 to 20,000 sq ft category.
However, with so much stock now leased Rebecca Schofield of Knight Frank says: “While there is still space to let occupiers can continue to take advantage of relatively attractive terms and incentives as a result of landlords competing to fill their voids. But terms will begin to harden on good quality small to medium sized stock such as along the M1 corridor where stock is depreciating. With an absence of speculative development, we expect incentives to harden within six to 12 months and we are already starting to see enquiries for prime locations where there is no available stock.”
Andrew Gent of Gent Visick warns: “Choice is rapidly disappearing and the balance between supply and demand is going to start to impact on incentives and rents that have been available.
We won’t see speculative development; we are far more likely to see D&B market with all that that entails with lease lengths, etc.”
Buildings that are available in the region include UK Logistic Fund’s 412,519 sq ft Blade facility in Sheffield built by Gazeley. The property boasts 40 dock and two level access doors as well as a host of eco features including a wind turbine. It is being marketed by CBRE and Knight Frank.
There are two buildings at Standard Life’s 930,000 sq ft First Point scheme in Doncaster, V246 and V277, consisting of 246,000 sq ft and 277,000 sq ft respectively. The properties boast a range of features including 14m eaves height, fully-fitted offices with comfort cooling as well as 50m deep secure yards and ample parking for both lorries and cars. Letting agents are GVA and Colliers International.
Evander Properties has three units at Sherburn Distribution Park. Sherburn 140, Sherburn 190 and Sherburn 330 available through CBRE, DTZ and Moriarty & Co.
There are two high bay distribution units of 334,781 sq ft and 291,143 sq ft available at Helios’ 30-acre SIRFT (Sheffield International Rail Freight Terminal) development, which has two private rail sidings providing direct rail access to the Tinsley line. Each building has an integral two-storey office block and can be combined to provide 647,000 sq ft facility.
Landlord CBRE Investors secured planning permission for a change of use on the scheme. The original planning approval allowed for B8 storage and distribution within the units, which essentially allows the units to be used for warehousing purposes. The new approval, which is in response to the high level of interest from manufacturing-related industries, now includes additional B2 general industrial usage, which enables manufacturing operations to be carried out on the premises.
Letting agent is CBRE, GVA, Moriarty & Co and King Sturge.
For those looking for space in West Yorkshire there is nothing over 200,000 sq ft says Toby Vernon of CBRE. “For occupiers looking for space close to the M62 Sherburn is the only option, unless they go for D&B.”
Richard Harris of King Sturge says: “What we are facing now is a shortage of supply on the M62 where there are only two second-hand units of any size at Normanton both 100-120,000 sq ft beyond that space is non-existent.”
Baugh says the only option for those contemplating a location on the M62 would be through D&B.
There are sites available including a 17-acre plot at Redhouse Interchange Tornado which is able to accommodate a building of 330,000 sq ft. It is being marketed by Gent Visick and DTZ close to the M62/A1(M) interchange; then there are two sites at Normanton, near Wakefield at PPG’s Link 62 scheme on the market through Carter Towler and Strutt & Parker.
Looking across the region Vernon says: “In broad terms there is only two years supply remaining available in Yorkshire. We can already see that occupiers will have to look at D&B as very little supply coming back to the market. However, although there are sites available, there are only a few that could do D&B within the next six months.”
Sites that are oven ready so to speak include ProLogis Bradford where there is planning for a 200 – 250,000 sq ft warehouse next door to the 1m sq ft M&S facility. Letting agents are King Sturge and Dove Haig Philips.
Rob Oliver of GVA says: “Sheffield has plenty of sites and Wakefield has enough land to be going on with but Leeds is still struggling with sites that are ready to go now.”
Sites include Temple Green, a scheme by White Rose Developments a joint venture between Evans of Leeds and Yorkshire Water.
Muse Developments has got a site called Logic Leeds at Junction 45 of M1 motorway and there is also Barwood’s Hawks Park at Junction 47 of the M1 motorway.
Gazeley has secured planning for its 100-acre site at West Moor Park in Doncaster which it bought for an undisclosed sum from Blue Anchor Leisure to create a new logistics hub. Gazeley is jointly represented by CB Richard Ellis and Jones Lang LaSalle who are both now retained to market the site.
Outline planning permission exists for around 1.5m sq ft of industrial/distribution and incorporated office accommodation over three large warehouses. When developed, the scheme is expected to create in the region of 1,700 warehousing, office and managerial jobs within the locality. The completed value of the scheme is estimated to reach circa £100m.
Roger Haworth of CBRE says: “With the recent flurry of major industrial deals reducing take-up of plus 400,000 sq ft stock in the region such as Amazon at Vulcan in Doncaster Debenhams in Leeds and ASOS at Crossflow in Barnsley, now is an excellent time for Gazeley to make this significant acquisition. Moving ahead into 2011, Gazeley will be in a prime position to capitalise on returning enquiries for large, well-linked industrial accommodation.”