Large scale demand

LinkedIn +

The shortage of land supply and increasing costs of locating in the South-east and Midlands, along with growing concerns over the availability of labour, are driving occupiers to look further afield, dispersing the spread of distribution facilities throughout the UK. In conjunction with this, the requirement for large-scale distribution amenities is growing and, as such, the North-west is becoming increasingly attractive. Much of the demand is due to good levels of land supply, in close proximity to the motorway networks, offering companies the opportunity to take advantage of geographically strategic locations in which to grow their businesses.

Clearly, the availability of labour is a key driver in the decision making process. Many companies require sufficient levels of labour supply, in addition to its existing workforce, when relocating premises – particularly if the business is consolidating operations. In response to this, distribution facilities in the North-west tend to be located in areas where the potential labour catchment locations are relatively abundant.

Similarly, land rental and purchase in parts of the North-west are more competitive compared to locations in the South-east and Midlands. Grants and other financial incentives are available form local government and regional development agencies, which certainly makes the North-west an attractive proposition.

According to official estimates from the Office of the Deputy Prime Minister (ODPM), the total size of the North-west’s built industrial market in November 2003 stood at more than 59 million sq m (643 million sq ft), making it the largest regional distribution market in the country. Warehouse facilities of 10,000sq m (107,642sq ft) or more represented some 22.5 million sq m (241 million sq ft) of this floorspace, accounting for more than a third (37%) of the North-west’s total industrial stock. Of the built distribution stock, factories account for 69% of floorspace and warehousing occupies the remaining 31%.

Take up of new units of 9,290sq m (100,000sq ft) or more taken in 2003 accounted for 223,200sq m (2.4 million sq ft) of floorspace equating to a quarter of the national figures. In the previous three years this figure was just 10%.

During the course of 2004, demand for large distribution facilities has remained strong with preliminary figures showing North-west take-up of 111,600sq m (1.2 million sq ft). This represents 20.5% of occupancy across Britain, and initial findings suggest the trend is likely to continue. The current level of supply for units over 9,290sq m (100,000 ft2) in the North-west stands at 760,000sq m (8,182,160sq ft) according to the latest data from King Sturge (April 2004). This figure reflects a fall of 20,000sq m (2.3%) on the previous survey taken last December.

Several large scale transactions have been struck since the beginning of the year namely; Office Depot signing up for a 27,870sq m (300,000sq ft) distribution and call centre facility at AMEC’s Ashton Moss site, Tesco leasing a speculative development of 17,224sq m (185,400sq ft) from ProLogis at Midpoint 18, AXA’s Winsford Industrial Estate leasing a 9,755sq m (105,000sq ft) speculative unit to Boughey Distribution and Gladman’s 48,153sq m (518,333sq ft) deal with Great Bear Distribution, on behalf of Cadbury’s, at Stanley Industrial Estate in Skelmersdale.

Despite increasing levels of demand, however, there is a significant lack of new accommodation of units over 9,290sq m (100,000sq ft) in the North-west. One such unit is M2 at Moorfield Group’s Heywood Distribution Park in Greater Manchester offering 9,578sq m (103,095sq ft) of space, being capable of sub-division into two units and available at a quoting rent of £5 per sq ft.

Situated just off J3 of the M66 and M60, Heywood Distribution Park is one of the North-west’s leading distribution parks. Currently, Heywood offers a range of different unit sizes, including design and build opportunities of up to 46,450sq m (500,000sq ft) as well as second-hand space including ‘The Hub’, a fully fitted distribution warehouse of 46,913sq m (504,981sq ft). The building is sprinklered, with both dock level and drive-in access and can accommodate 94,000 pallet spaces. Refurbishment works are taking place across the park, the latest being Block B8 which has already secured three new tenants, and further plans are underway to renovate other areas of Heywood.

Talks are taking place with a retailer to provide an on-site convenience store and cafe along with other amenities, adding value for existing and current occupiers.

David Brooks, head of King Sturge’s industrial agency team in the North, says: “Heywood Distribution Park is well-placed to cater for a range of different occupier requirements.”

The demand for large-scale distribution facilities is expected to continue in the North-west with competition for land and labour availability still a driving factor. Jon Sleeman, partner responsible for logistics research at King Sturge, adds: “Companies can secure substantial supply chain economies by consolidating their inventory in a small number of large facilities, rather than holding it in a large

Share this story: