Property market speculation is mounting that Primark is the Top 25 retailer that has exchanged contracts with investor LondonMetric for a 1.06 million sq ft distribution warehouse in Northamptonshire.
LondondMetric, the UK REIT recently created through the merger of London & Stamford Property and Metric Property, has already acquired Primark’s existing 785,000 sq ft facility at Thrapston for £60.5 million and is believed to have had discussions with Primark to fulfil the retailers on-going enquiry for distribution space in the Midlands. The retailer has a 640,000 sq ft distribution centre at Magna Park Lutterworth which it took on a ten year lease in 2006.
According to the latest report and accounts Primark, a subsidiary of Associated British Foods, sales have been strong and are expected to be 13 per cent ahead of the same period last year. Retail selling space has increased by 0.6 million sq ft since the financial year end and, at 1 March 2014, 269 stores will be trading from 9.6 million sq ft. A further 0.5 million sq ft of selling space is expected to be added in this financial year, bringing the net additions for the year to 1.1 million sq ft which is substantially more than the 0.8 million achieved in 2013.
LondonMetric acquired the 70 acre East Midlands site known as Central A14 from Greatline Developments and already has an outline planning consent for the site. Construction of the main works is expected to commence late summer with practical completion targeted for summer 2015.
The new facility has been let on a 25 year lease at an initial rent of £5 per sq ft. The total cost of the development, including the site purchase, is anticipated at £77 million, reflecting a yield on cost of 6.9 per cent.
Andrew Jones, Chief Executive of LondonMetric, said: “This is one of the UK’s largest ever pre-let developments and an integral part of our strategy to deliver well let short cycle developments in partnership with our key operators. The distribution market is evolving very quickly with take-up forecast at 50 million sq ft over the next five years. We are a partner of choice to many of the UK’s leading operators and look forward to delivering this latest generation distribution centre which will materially enhance our existing portfolio and significantly grow our contracted rental income.”
CBRE advised LondonMetric on the site acquisition from Greatline Developments. Cushman & Wakefield advised LondonMetric on the acquisition of the existing Primark facility at Thrapston from Moorfield Real Estate Fund II which was in turn advised by Doherty Baines.
All parties have declined to comment.