The wrong kind of space…

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Scotland has a lot of available warehouse space but a lack of the right kind of space is beginning to cause headaches.

There is some 31.6 million sq ft of available warehouse space in Scotland according to Lambert Smith Hampton’s National Industrial & Distribution Market 2012 report. However, the vast majority is second hand and less than 250,000 sq ft in size.

Yan Stewart of James Barr says: “For the larger 50,000 sq ft 100,000 sq ft market there is a lot of space but at the smaller end of the market for those sheds ranged in size between 20,000 and 50,000 sq ft, there is a distinct shortage.”

Ian Davidson of Colliers agrees, adding: “There are a number of large buildings in the market and it is anticipated that supply will further increase over the next year or so. Notwithstanding this, with the exception of Evander’s two buildings at J4M8 and the four surplus Co-operative warehouses located throughout the central belt, most of existing big shed available stock is virtually obsolete.”

Neil Cockburn of Jones Lang LaSalle says: “There are still a number of requirements that have still to be satisfied, at letting meetings the enquiry schedule looks healthy but not a lot of anything happening.”

Cockburn puts this down to a combination of corporate uncertainty and a lack of suitable stock. “Local managers [of national companies]are keen to move because they are in outdated accommodation but due to the economic circumstances and lack of better quality stock they cannot build a business case for the move.”

Simon St Clair of Knight Frank notes: “Many enquiries relating to lease expiries and break options simply resulted in renegotiated terms at the occupier’s existing space, as landlords have opted to offer generous concessions to retain their tenants.”

Cockburn agrees: “Tenants can get some very soft deals in buildings they are already in and can get year on year extensions on good terms. Landlords don’t want to have empty buildings.”

Davidson points out that big shed take-up will improve over the next few months with several large requirements from retailers, logistics companies and manufacturers rumoured to be on the verge of committing to space. “As well as taking up existing supply, it is anticipated that some of this activity will be on a design and build basis.”

Indeed there is even speculative development. Clyde Gateway URC, MEPC and SCOT Sheridan are looking to construct three warehouses of 16,100 sq ft, 19,200 sq ft and 22,200 sq ft at Clyde Gateway east while J Smart & Co will shortly complete its speculative development of Inchwood Park in Bathgate.

And, following the letting of the 67,689 sq ft Pinnacle building at Eurocentral to Eddie Stobart Muse Development has three speculative units immediately available; the 92,997 sq ft Zenith unit, the 129,183 sq ft Vertex unit and Apex totalling 71,576 sq ft. Letting agents are CBRE and Ryden.

Muse sanctioned a £21.2 million speculative build commitment in April 2010 to construct the Pinnacle and Zenith buildings on the 17.4 acre site known as ‘Plot F’ at Eurocentral. This was followed by an additional £33 million speculative investment in March, 2011 which delivered two further buildings Apex and Vertex on Plot F and three smaller units on Plot B, all of which were completed in December last year. Eurocentral can accommodate build-to-suit enquiries from 20,000 sq ft to 500,000 sq ft.

Other immediately available buildings in the region include Evander’s scheme at J4M8 The development comprises two stand-alone units of 380,000 sq ft and 242,000 sq ft, which can be consolidated to create a single unit of 650,000 sq ft.

The new units have 15m eaves height, 65 dock levellers and level entry doors and bespoke floors constructed to occupier’s requirements up to 65kn/sqm. Evander Properties is offering the option of connecting them to form one facility through letting agents CBRE and James Barr.

Then there is Central Point where Tritax has three units with strong interest in two of them, totalling 55,000 sq ft, 85,000 sq ft and Titan which extends to 122,483 sq ft. The Titan building boasts a 48m deep yard, 12 m eaves, 12 dock levellers and 4 standard doors, a 50 kN/m2 floor loading capacity and 62 car parking spaces. It is being marketed by Jones Lang LaSalle and CBRE.

On the second hand front there is still the Big Blue Shed at Bellshill Industrial Estate in Lanarkshire, which came back on the market through Jones Lang LaSalle. It is being marketed at a reduced quoting rent of £2.75 down from £3.25 per sq ft in 2009. One suspects the landlord will be open to reasonable offers.

The building became available due to existing tenant DHL exercising a break option in June 2008. It totals 143,700 sq ft, set on a 6.1 acre site. The building itself offers a clear height of 8.5 to 10 metres, 35kn per sq m floor loading, five dock loading bays, four ground level loading doors, as well as 2 overhead crane gantries, sprinklers and CCTV monitoring. It also has 3,900 sq ft of office space, which has recently been refurbished.

For those for whom no building suits there is always the option of securing a bespoke agreement with ProLogis for the remaining land at ProLogis M8 on Junction 6 of the M8 motorway. It has planning permission for up to 471,000 sq ft. Letting agents are Colliers and Cushman & Wakefield.

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