Securing space in the M25 East region calls for a fairly robust attitude towards compromise as there isn’t much immediately available. DTZ’s latest Property Times research notes that there is less than six months prime stock supply left at current take-up levels while Lambert Smith Hampton in its National Industrial & Distribution Market 2012 report says that: “Availability [across Greater London] fell slightly to 24 million sq ft – the lowest it has been in three years.”
Actually that sounds like a lot of space and indeed it is, but as with all things the devil is in the detail. Looking at Grade A space across the region there is less than 4 million sq ft and the majority of that is in West London.
Charles Binks of Knight Frank notes that there is only one unit over 200,000 sq ft, Isis Reach in Belvedere. The building was rumoured to be under offer to Poundland, however it is believed that the retailer represented by Cushman & Wakefield, has decided to reassess its requirement. It is thought to have satisfied its need for space temporarily by taking a short term let in Hoddesdon.
Poundland is not the only occupier to reassess its requirements in the light of a dearth of space in the region; Kuehne + Nagel had a 300,000 sq ft requirement which it has satisfied with an extension to its short term let in Goresbrooke.
Isis Reach, the former Office Depot distribution warehouse was built in 2001; the cross dock warehouse extends to 320,825 sq ft and has 14 dock and 7 ground level doors with covered van docks with 40 bays. It has a 2400kva incoming power supply and boasts 13.3m eaves. The passing rent is £6.46 per sq ft and the lease has 14 years remaining. Letting agent is Cronin & Co.
For those looking for slightly smaller accommodation there is always the second hand route to plunder though rents and incentives for good quality stock are not as soft as perhaps expected.
Rental uplift
Ben Wiley of Strutt & Parker notes: “We’ve got two 100,000 sq ft units in Thurrock and while 18 months ago we would have been quoting £5-£5.50 per sq ft with significant take up in the last 9 – 12 months we are now quoting £6.95 per sq ft.
“There is definitely a rental uplift in these areas because of restrictions of supply of modern prime buildings.”
Strutt & Parker is marketing DC1 Central Avenue, Thurrock totalling 110,771 sq ft which was built by ProLogis in 2006. Now owned by Rugby Estates the unit has come back to the market. The property boasts 10-10.5 m eaves, 11 dock and two level access doors as well as a 50kn/sqm floor loading. Joint agent is CBRE.
Other large second-hand properties available in West Thurrock include: 30/31 Eastern Avenue which totals 156,803 sq ft and has 12m eaves as well as 11 dock and two level access doors. It is located just a mile from Junction 30/31 of the M25 motorway and is being let through Cushman & Wakefield and Savills at a quoting rent of £7 per sq ft.
Another new second hand unit onto the market is the former Royal Mail building in Bow. Capita Symonds and DTZ have jointly been appointed as letting agents on the 185,000 sq ft warehouse which is held on a lease which expires in 2022, and has a passing rent in excess of £1.5 million (£8.10 per sq ft). The building was constructed in 2002, and has the capacity to be extended to provide up to an additional 40,000 sq ft.
Tunde Adegbemile, of DTZ says “There is limited supply of good quality buildings in the Greater London market, and with the proximity to the City, and the access to the A406 North Circular and A12 and A13, we consider that there will be strong interest in the opportunity.”
Right next door is DC142, a 142,000 sq ft warehouse facility built on the site of the former Iron Mountain building. The facility includes approximately 16,500 sq ft of comfort-cooled office accommodation over two floors while the warehouse benefits from 12.5m eaves height, 12 docks and four level access doors, a 50kN/sq m floor loading and 1,000 KVA power transformer.
The property is held on a 15-year lease from 16th September 2002, expiring on 15th September 2017 and is available by way of an assignment or a sub-letting, subject to terms. The passing rent is believed to be in there region of £8.50 per sq ft. Letting agents are Savills and Doherty Baines.
There is also Evander Properties’ rebranded DDC160 Dartford Distribution Centre on Sandpit Road, which provides a direct dual carriageway link to Junction 1A of the M25 motorway and the QE2 Bridge Dartford River Crossing.
Chip Mitton of Altus Edwin Hill says: “[This] is the only high bay distribution unit in the south east M25 area. It is refurbished and ready for immediate occupation on flexible lease terms or freehold. The key point is there is nothing else in that broad size range.
“Any occupier needing such space for example on a five year contract will struggle to find a developer who would build exactly what they want unless they took a 10 year plus term.”
The facility totals 160,552 sq ft with 15,653 sq ft of two-storey fitted offices. The warehouse has 12m clear internal height with high bay lighting as well as loading on two elevations with 15 dock and five level access doors. It also benefits from 40m deep service yards and has parking for 198 cars.
Joint letting agents Altus Edwin Hill, CBRE and GVA are quoting £6.95 per sq ft.
Lambert Smith Hampton has the 200,000 sq ft Portside building at Fortress Distribution Park in Tilbury. The space provides 10m eaves height dock and ground level loading facilities and is adjacent to the Port of Tilbury Dock gate offering an occupier the potential to use rail connections for freight movements.
For those not fussy about their warehousing, good deals can be secured on older stock. Indeed, James Haestier of Colliers notes: “There are good incentives on existing buildings if you can find them.”
In South Ockendon, Essex there is 120,000 sq ft available on a short term leases from £2 per sq ft. Landlord St Modwen has secured planning for residential redevelopment in the long term and is only too happy to secure short term leases until such a time as redevelopment can start. It has already leased space to Littlehampton Book Services (200,000 sq ft) and Office Team (100,000 sq ft). The facility has 5m eaves.
Port-centric
Jon Sleeman of Jones Lang LaSalle notes: “The supply issue is likely to become tighter and occupiers will have to look towards build-to-suit.”
Tim Johnson of Jones Lang LaSalle points out there are quite a number of options for occupiers though not all of them are particularly advanced.
One of the biggest has to be DP World’s London Gateway scheme which as well as providing a deep water port will also have a port-centric logistics park of up to 10,118,400 sq ft. The logistics park will be able to handle build-to-suit facilities of up to around 1 million sq ft. In total, London Gateway incorporates over 1,800 acres, this includes the port and park and areas for environmental mitigation.
The current infrastructure will serve an initial Phase I of development with roads connecting to the A13 and Junction 20 of the M25 motorway as well as the port. The facility is also rail connected. Sole agent is Jones Lang LaSalle.
Bericote Properties’ Crossdox scheme in Erith has planning permission for 640,000 sq ft of space including a single unit of 423,900 sq ft, the only one of its size within the M25. It would boast 17m eaves, 30 dock and eight level access doors, as well as 50kN/sq m floor loading. Letting agents are Altus Edwin Hill, Jones Lang LaSalle and Dowley Turner Real Estate. Bericote purchased the 38-acre site for £800,000 per acre from Apollo/Astral in 2007.
There are rumours that Tesco is looking to acquire space for a dot.com store on the site totalling in the region of 150,000 sq ft.
The other strategic site in the region is ProLogis’ RFI Howbury rail freight interchange scheme in Erith just off Junction 1A of the M25 motorway. The 156-acre distribution park could accommodate up to 2.1 million sq ft of rail-connected space in four units from 145,000 sq ft to 1.1 million sq ft. The £80 million 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. Letting agents are Savills and BNP Paribas Real Estate.
Jonjo Lyles of BNP Paribas Real Estate says: “In general there is a shortage of [land] supply: if there was more land, more deals would be done.”
According to Paul Mussi of Knight Frank: “There is quite a bit [of land] available within the A13 corridor, but when you look at the larger plots of 15 acres plus, they are scarce.”
When land does come up for sale it is expensive. It is thought that Mercedes paid £1 million an acre for a two acre industrial site along the A13 for a second hand car showroom.
Sites on the market include the former GSK manufacturing site in Dartford. Mark Webster of Cushman & Wakefield is bringing the site to market. Totalling 73 acres there are 33 acres of marshland as well as a 27 acre manufacturing plant which is in the process of being demolished.
Webster says: “The demolition should be completed by October to slab level and the site could accommodate a warehouse in the region of 450,000 sq ft. The strategic site is close to Junction 1a of the M25 motorway and sits within the Dartford Council’s core planning strategy.”
Other sites primed for build-to suit include Graftongate’s Hardcase2 scheme in West Thurrock, which could take 162,508 sq ft on a 7.6 acre site. Letting agents are GVA, CBRE and Altus Edwin Hill. Then there is Standard Life and Ravenbourne’s 17 acre Thames Gateway Park in Dagenham which could accommodate up to 300,000 sq ft. Letting agents are GVA and Altus Edwin Hill.
ProLogis has its 14 acre ProLogis Park Littlebrook in Dartford that could accommodate a single shed of up to 273,885 sq ft. The warehouse would benefit from 26 dock and two level access doors as well as having a 12.5m eaves height. Colliers and CBRE are joint letting agents.
Benefit
In Enfield there are a number of sites including Gazeley’s G.Park Enfield where the developer has a single 5 acre site left capable of accommodating a 120,000 sq ft warehouse. The building would benefit from 34 dock levellers, have a 15m eaves height and a floor loading of 50kn/sqm. Letting agents are Jones Lang LaSalle, CBRE and Lambert Smith Hampton.
Knight Frank has a range of open storage sites along the A13 totalling 22 acres. The owner is seeking planning consent for up to 400,000 sq ft of space.
Goodman has its Aylesford Commercial Park scheme which could take 340,000 sq ft through joint letting agents Altus Edwin Hill and CBRE. The developer also has a large strategic site known as Kingsnorth Commercial Park in Medway, Kent. Totalling 115 acres the scheme is expected to accommodate up to two million sq ft of space. Letting agents are CBRE, Colliers and Piers Pollard.
For those opting to go down the build-to-suit route, James Haestier of Colliers notes: “On build-to-suit, rents are holding at market levels and incentives are not as good as those found on existing buildings. Occupiers looking for a site only have one option and that is to take a 15 year lease at a market rent and realise that there are probably no real incentives. Developers just will not do it [any other way] because it doesn’t make financial sense.”
