Much of the demand has been generated by retailers eager to improve their supply chain networks both to meet their customers’ demands in the store, and to drive down costs. There are a number of reasons why companies need to improve their supply chains.
Firstly, there has been a migration of manufacturing away from the UK to low cost areas such as Asia Pacific and Central Europe. Therefore, many goods sold in the UK are manufactured abroad, and with often long delivery lead times, import centres are required to sustain the supply chain.
Secondly, the amount of stock sold within stores is now more varied, as evidenced by the expansion of food retailers into household, clothing and other goods. Lastly, congestion on the roads will get worse with journey times being extended, therefore companies will need to locate their distribution facilities closer to customers. This is particularly true of the South-east which, together with London and the Eastern region, has around 35 % of the UK population and generates 43 % of the UK’s economic activity.
So far in 2004, just over 995,100sq m (10,700,000sq ft) of distribution space has been committed in the UK. Already this is in excess of the total take-up for 2003. Furthermore, 32% of this take-up was in the South-east reflecting the importance of the region as a distribution location.
There have been a number of significant deals. Sainsbury’s recently signed an agreement with ProLogis to construct a new purpose-built 65,100sq m (700,000sq ft) facility at Dartford Park, just off J1a of the M25. It has also signed a five-year lease on the 10,881sq m (117,000sq ft) Caberello at Knights Park in Basingstoke which was originally built speculatively and has been available for more than three years.
Asda has acquired the remaining 20,370sq m (219,000sq ft) and expansion land for another 9,300sq m (100,000sq ft) at ISIS Reach in Belvedere and is also building a new 32,085sq m (345,000sq ft) chilled and frozen food facility at Didcot.
To the north of London, Tesco has recently taken Astral Developments’ 15,070sq m (162,000sq ft) Max facility at Welham Green where it will consolidate its operation with an existing unit next door.
Other significant deals, all on a freehold basis, include Porcelanosa’s acquisition of 18,600sq m (200,000sq ft) at Otterspool Way, Watford which is being constructed by Gazeley. Brakes has also acquired a new 8,370sq m (90,000sq ft) unit at Magnitude in Aylesford and Suzuki GB acquired 15,440sq m (166,000sq ft) with expansion land in Milton Keynes from Rosemound Developments.
This year has also seen considerable success in the letting of speculative units, some of which have been available for sometime. At Marston Gate, near Milton Keynes, the last two units of 9,300sq m (100,000sq ft) each have been let to Aid Pack and DTS Logistics. In Thurrock, an occupier is close to leasing 10,510sq m (113,000sq ft) at QED and over the QED II Bridge at Dartford, following a fire at its Gravesend facility, TDG on behalf of Kimberley Clark has taken ProLogis’s 14,880sq m (160,000sq ft) unit at Sandpit Lane.
With so much take-up and continued demand around the South-East, developers have embarked upon a number of new speculative developments aimed at the distribution market, particularly the very large requirements in excess of 250,000 sq ft.
Gazeley has committed to building some 209,250sq m (2.25 million sq ft) of speculative space around the UK with four schemes in and around the M25; Ultrabox a 45,390sq m (488,000sq ft) bulk distribution unit at Purfleet, Godzilla another unit of 41,385sq m (445,0000sq ft) at Marsh Leys, Bedford, Q a 20,925sq m (255,000sq ft) unit at its Mill Park site in Thatcham and at the G Park in Hemel Hempstead where 23,620sq m (254,000sq ft) has just started. In addition, pending discussions on a potential pre-let, the developer will build another 21,580sq m (232,000sq ft) at 3D in Dagenham.
The Meteor Fund, a joint venture between Astral Developments and Legal & General, has just finished the construction of a 15,810sq m (170,000sq ft) Magnum 25 unit at Waltham Cross. The Fund has also just obtained planning consent for another 22,600sq m (243,000sq ft) at Magnitude, Aylesford and construction will start shortly.
A number of new development opportunities have also been identified, many of which will have a significant effect on the South-east market, and are at various stages of the planning and development process. Of most significance will be the Secretary of State’s decision from the Inquiry into the London Gateway proposals in south Essex. The scheme proposes a major port facility as well as more than 930,000sq m (ten million sq ft) of distribution space, which will be only ten minutes from the M25.
Also to the East of the region, ProLogis has recently submitted a planning application for 186,000sq m (two million sq ft) of space at Crayford Marshes, not far from the new Sainsbury’s facility at Dartford Park near to M25’s J1a.
Staying in this area, Pirelli is vacating its 38-acre site fronting Bronze Age Way in Belvedere and preferred developer, Astral Developments, is working up proposals for about 69,750sq m (750,000sq ft) of distribution space.
To the West of the region the most significant move has been Astral and Prudential’s acquisition of the 120-acre Pyestock North site, Farnborough, just off J4a of the M3. Planning discussions are at an early stage, but the site will provide one of the few opportunities for large-scale distribution requirements. Closer to London, ProLogis is about to submit an application on the 30-acre MoD