Changes in the distribution sector have seen the North-west market shift focus from the ‘traditional’ 7,432sq m-9,290sq m unit to mega sheds as a consequence of market demand. The introduction of these super sheds is in response to several factors, not least the financial benefit of streamlining efficiencies by consolidating operations under one roof. Similarly, the Working Time Directive has had significant impact on the market. Sourcing strategic locations close to the motorway networks, and labour pools, has lead to an influx in companies looking at the North-west for satellite depots.
Inevitably, with businesses fighting it out for the best sites, it’s clear that hot spots will start appearing. Interest continues in Skelmersdale, the South Preston / Leyland M65 Corridor and Trafford Park. Naturally, where there’s demand, the land values have increased over and above the average.
Continued low interest rates have kept the owner occupier market buoyant for freehold land disposals and changes planned to Self Invested Pension Fund schemes will relax a number of rules, resulting in the likely increase of activity in this area. As with land values, build costs have risen and, while purchase prices have gone up, rental values have remained more or less constant. This cannot be sustained and it will not be too long before rents rise.
With all this activity it would be reasonable to expect a shortage of available land, but despite speculation there are still opportunities to be had. A planning application has been submitted for a speculative high bay warehouse in excess of 27,870sq m on the Pochin land at Midpoint 18, Middlewich and negotiations have been concluded with Geopost / Parceline at Big Apple in Warrington who are on-site building a 2,787sq m facility.
Andrew Aherne, at Matthews & Goodman’s Manchester office, says: “There are a number of issues affecting the market, namely the rise and rise of the mega shed, which Gladman appears to have taken the lead on. Four years ago the usual requirement was for units in region of 7,432sq m-9,290sq m, but the sign of the times is that this has been superseded with requests of 37,160sq m upwards. That said, markets tend to be cyclical so I wouldn’t be at all surprised if, in a couple, of years there’ll be a resurgence of smaller requirements, although there are one or two developers who are still catering for the smaller end of the market.
“The Working Time Directive has had quite an impact on the industry, putting pressure on companies to source satellite depots. This will continue to influence the market as businesses come into line with the legislation. Furthermore, the country’s road infrastructure has come under the spotlight quite a lot recently and the publication of the Government’s white paper Transport 2030 compounds this by suggesting that the current road network can’t support the increasing number of vehicles using it. There has also been discussion about the introduction of a congestion charge on the M60 orbital road. While this is just talk at the moment it could be a very real possibility in the not too distant future, so it’s clear that operators need to start considering alternative methods of transportation sooner rather than later. If it did happen, it would have massive ramifications on the North-west market.
Aherne continues: “Something else that will affect the sector is environmental policy. There have been several pieces of legislation brought in recently and, looking forward, this will certainly have an impact on the market. Having said that, however, there are a small number of developers that are stealing a march here, in particular Gazeley’s EcoTemplate initiative, and it will be interesting to see how other developers react.”
Nevertheless, the North-west market has witnessed a number of deals including ERF’s 34,450sq m letting to Wincanton to service a contract for Glaxo SmithKline and the Big Apple is under offer for a design and build 18,580sq m high bay warehouse. Rosemound in Ellesmere Port has acquired land off Peel Developments (ex Pioneer Park) for a speculative high bay unit of 58,062sq m and Gladman is to carry out a speculative high bay warehouse of 57,319sq m on the Liverpool International Business Park at Speke. Heywood Distribution Park recently announced that Next has taken 46,450sq m at The Hub following the vacation of Littlewoods, which is sure to boost the region and deals are coming through there thick and fast. Moorfield Group, owner of Heywood, has also signed up a Greggs Bakery Shop and Aleef Newsagents to be accommodated in a 465sq m building, for use by the park’s occupiers.
East of Manchester, Office Depot’s regional distribution centre is now fully operational at Ashton Moss. Construction of the 4,770sq m Norbain SD unit is well underway with handover scheduled for June, while terms have also been agreed with an occupier for a further 3,252sq m warehouse. AMEC, joint developer with Stayley, is also in detailed discussion with two further occupiers for units of 1,858-2,787sq m.
The on-going saga with Omega in Warrington looks set to continue as discussion rages as to whether there is the right balance between industrial and offices. The development programme has been extended to address issues raised by the Highways Agency and it is hoped work will start on site in spring 2006 – providing the planning application isn’t called in.
Andrew concludes: “As distribution locations are becoming ever more part of the social fabric, many developers are looking at integrating on site amenities to attract occupiers as part of the overall offer. Certainly, in planning terms it is especially useful to have ancillary uses, but that said, a landlord will always try to provide facilities that reflect a higher value use, which is perhaps why pubs and travel lodges on the edge of distribution parks are becoming quite a common these days.” n