Buildings have been snapped up left right and centre. So what’s left, and what other options are open for occupiers?
The total amount of good quality stock in the East Midlands now stands at 3.35 million sq ft and of this some 755,000 sq ft is currently under offer says Andrew Jackson of North Rae Sanders. “Space is being steadily absorbed.”
Geoff Gibson of Lambert Smith Hampton agrees: “Supply is tight at the moment and there are very few modern, high quality 50,000 sq ft plus units available.”
The reason for this is that the region has had a bit of a purple patch recently with buildings being snapped up left right and centre. According to DTZ take up in the second quarter of 2012 was 50 per cent higher than average and double that achieved in the first quarter of the year.
Indeed David Willmer of GVA notes that competition is hotting up: “There was frantic bidding by at least three parties to buy the freehold of Hydro at Magna Park which was eventually bought by Formal Investments together with occupier Steinhoff.”
It is thought that the 422,784 sq ft building was sold for a price in the region of £58 per sq ft. The warehouse had been vacant since Primark went to Thrapston in 2010. The company that owned the building went into receivership in 2011. Knight Frank and Burbage Realty were joint agents who along with the receivers took a bullish view and refused to sell the property off at a knock down price holding out for £60 per sq ft freehold.
Hydro has 15m eaves, 36 dock level doors and a large secure yard up to 92m deep. It is an eco- friendly building with reduced running costs, one of the first in the country to incorporate Gazeley’s Eco Template in 2005. The property was originally let to TNT/Primark at a rent of £5.25 per sq ft.
Other recent deals include Great Bear Distribution taking ProLogis’ 153,000 sq ft warehouse at ProLogis Park Kettering. The facility includes an existing 123,000 sq ft building, which has an EPC A (CO2 Index 24) rating and a 30,000 sq ft extension that, subject to planning, ProLogis expects to complete in October 2012. Great Bear is currently fitting out the existing facility to meet its customer’s requirements.
CBRE recently completed a 141,000 sq ft letting at P141 Tetron Point in Swadlincote to Euro Car Parts, the UK distributor of parts for cars and light commercial vehicles. The company has taken the unit on a 10 year lease at a headline rent of £4.75 per sq ft.
And global logistics company Syncreon has recently taken 213,491 sq ft at 5110 Magna Park in Lutterworth on a 10 year lease at a rent of £5.50 per sq ft.
The building is fully sprinklered, has three surface level loading doors and 18 dock level loading doors. It has a 9m eaves height on the main warehouse extending to 15.4m on the high bay extension. CBRE advised the landlord, Blackstone, having originally acquired the building on its behalf.
Both deals were completed within four weeks of terms being agreed.
Once committed occupiers it seems are keen to secure buildings as soon as possible, only recently Lambert Smith Hampton took just 35 days to secure a 73,000 sq ft warehouse for a distribution client on a short term lease. Link 73 Interlink on the Bardon Business Park in Leicestershire has 10m eaves, a secure service yard, two-level access and three dock loading doors and is located close to Junction 22 of the M1 motorway within the Golden Triangle.
Gibson says: “The deal was completed very quickly, in just over a month from the first communication with our client, which is unusual, but was necessary to satisfy our client’s requirement.”
“Despite the challenging economic climate, companies are having to react to their markets,” says Richard Meering of CBRE.
According to CBRE’s latest UK Logistics Marketview take up of both new and second-hand units totalled 1.26 million sq ft in the first half of 2012. It is interesting to note that the majority of space taken up in the East Midlands was second hand.
“This,” says James Keeton of Jones Lang LaSalle, “reflects the fact that the East Midlands never had the over-supply of speculative space that so plagued other areas in the country.”
Such is the shortage of immediately available good quality space that even older buildings offering low eaves heights, as long as they are big enough and in the right location, are being snapped up.
Foam manufacturer Recticel picked up PRUPIM’s 1970s 82,770 sq ft warehouse in Azalea Close in Alfreton which boasted a five meter eaves height on a 19 year lease at £2.50 per sq ft while The Delivery Business hoovered up CERT’s 120,488 sq ft 1960s warehouse at Glasdale Drive East in Nottingham on a five year lease. Jones Lang LaSalle acted for CERT while Venus Estates advised The Distribution Business.
Second hand buildings on the market which are expected to garner a lot of interest include Goodman’s 275,867 sq ft Unit B warehouse at Royal Oak in Daventry being marketed by North Rae Sanders and Colliers. The building has 9.4m eaves, 15 dock levellers and level access doors which could be extended, as well as heating, lighting and sprinkler provision. It is being marketed at a rent of £4 per sq ft.
Then there is The Core, a 167,000 sq ft warehouse near Chesterfield, which had been let to marketing and logistics services company, ProLog on a ten-year lease with five-year break at a rent around £4.25 per sq ft. The building is now on the market again but already thought to be under offer. Letting agents are Fisher Hargreaves Proctor and Lambert Smith Hampton.
The biggest of them all is Moorfield and SEGRO’s LPP Corby (formerly known as Crackerjack). The 525,000 sq ft cross-docked warehouse has a 15m eaves height as well as 50 dock and four level access doors. It has capacity to store 77,000 pallets. The building has two service yards and parking for 98 lorries and 336 cars. Letting agents are Burbage Realty, CBRE and GVA.
Another big second-hand shed also due to come on the market is a 511,000 sq ft monster at Max Park, Corby which is being vacated by Wincanton. It will be available on a sublease or assignment through Savills and Cushman & Wakefield.
Of the remaining modern units there is Miller Birch and Standard Life’s Langley 255 warehouse in Nottinghamshire, totalling 255,000 sq ft at @ccess 26, Langley Mill, Derbyshire, the firm’s 30-acre industrial and distribution development.
The warehouse boasts 12m eaves, 20 dock and four level access doors, fitted offices with comfort cooling and raised floors, as well as 68 lorry parking bays and 163 car parking spaces. The building has been on the market since it was completed in 2006. Letting agents are North Rae Sanders, CBRE and Innes England.
“Buildings in good locations are being snapped up now where occupiers cannot wait for D&B there is an additional benefit that they are cheap in some cases less than half the rent of D&B. Occupiers seem to be looking at the make do and mend option and adapting to existing buildings to get the desired location fast,” says Keeton. “Those buildings in secondary locations though are still not shifting.”
With so little on the market many occupiers have turned to D&B to fulfil their needs. And developers in the region have not been slow off the mark to ensure that they are prepared to accommodate enquiries.
Sean Bremner of Lambert Smith Hampton notes: “There are a lot of sites where D&B can be offered anything from 50,000 sq ft to 1 million sq ft plus.”
Brice Topley of Gazeley says: “We have just over 2 million sq ft ready for development in the region.” The developer has been investing millions in infrastructure works across its whole of its development portfolio which includes its 95 acre G.Park Crick scheme in the East Midlands, where it has planning consent for a single unit of 1.1 million sq ft.
G.Park Crick is located just off junction 18 of the M1 motorway. Letting agents are Dowley Turner Real Estate and CBRE.
Gazeley also has Magna Park Lutterworth where there is one site known as Plot 2010 which has planning for a unit 104,000 sq ft as well as a further 40 acre plot at G.Park Newark which could accommodate up to 750,000 sq ft.
The jewel in its crown though is the 200 acre Magna Park Milton Keynes where it has planning for up to 3.4 million sq ft in units from 100,000 sq ft to 1 million sq ft. Recently it secured a D&B with Irn-Bru maker AG Barr to open a 265,000 sq ft warehouse and production plant. Letting agents are Savills, Jones Lang LaSalle and Burbage Realty.
Another developer making headway in the region is Roxhill which has just launched its 240 acre distribution and manufacturing park Gateway Peterborough. Charles Blake of Roxhill Developments says: “The reason why Roxhill is so committed to Peterborough is that we’re impressed with its ambition to grow as a city.”
The company has already sold a plot to Yearsley which has set out plans to build a 385,000 sq ft cold store as part of its national expansion programme. Yearsley hopes that the site will be operational by the end of 2013.
The clad-rack cold store will consist of two buildings of similar design and in total provide 385,000 sq ft of space, including 10,000 sq ft of office space. The highest parts of the buildings will be 35 metres with other parts of the facility at 23 metres.
Detailed planning permission at Peterborough Gateway has been obtained for 1.8 million sq ft of B1, B2 and B8 uses with no operational restrictions. The remaining land benefits from outline planning consent for the same uses. Buildings on offer will range from 95,000 sq ft to 1.3 million sq ft. Joint letting agents are North Rae Sanders, Bidwells and Burbage Realty.
The developer also has sites at Warth Park, Raunds where it has outline planning for two to three buildings up to 350,000s q ft. Letting agents are CBRE, NRS and Lambert Smith Hampton. Then there is CIRFT in Corby (formerly known as COR!) where there is permission for an 88,000 sq ft rail connected warehouse.
It’s largest and possibly most ambitious is East Midlands Gateway which Blake expects will qualify under the government’s new planning rules as a multi modal scheme of strategic national importance and thereby eligible to be brought before the secretary of state. The six million sq ft scheme has already been allocated for an SRFI in the draft North West Leicestershire Core Strategy. It is located by junction 24 of the M1 motorway near East Midlands Airport.
Developer Goodman has 100 acres at Derby Commercial Park, where it has permission for a 1.2 million sq ft unit. Letting agents are North Rae Sanders, CBRE and Innes England. Then there is Gladman’s Vertical Park on the site of the former Bevercotes colliery, near Nottingham where there is planning for outline consent for a single facility of two million sq ft with a 30m eaves height. Letting agents are Lambert Smith Hampton and DTZ.
Grafton Gate has a joint venture agreement with UK Coal on a 70 acre site near Ellistown in Leicestershire where units up to 320,000s q ft can be accommodated. Sole agent is North Rae Sanders.
ProLogis has land at Daventry Phase III which could take up to 730,000 sq ft in three building as well as a plot at Zone 2 on Phase II at DIRFT which could take a single building of 400,000 sq ft.
The final phase at DIRFT could take a further 6 million sq ft but still has a long way to go before it is brought forward. The developer still has its Eurohub Main site in Corby which could accommodate 2.5 million sq ft as well as its 49 acre ProLogis Park Mansfield scheme which is fully serviced and ready to go accommodating building from 20,000 – 500,000 sq ft.
Evander has its 18 acre Grange Park scheme in Northampton at Junction 15 of the M1 motorway which it will bring forward in conjunction with BA Pension Fund. The site could accommodate up to 360,000 sq ft. Letting agents are Dowley Turner and Butler Hardcastle.
Warwickshire-based IM Properties has teamed up with First Industrial to develop its 45 acre development site off the M1 in Eastwood, Nottingham known as Nottingham 26 where it intends to implement works to provide the site infrastructure to enable us to deliver a bespoke building within 12 months. It is thought the site could accommodate up to 900,000 sq ft of space. Letting agents are Fisher Hargreaves Proctor, North Rae Sanders and Dove Haigh Philips.