Wednesday 13th Dec 2017 - Logistics Manager

The evolution factor

The market for distribution space in the North-west mirrors other trends experienced nationwide. Nationally the logistics and industrial market has seen major re-structuring over recent years with retailers leading the reconfiguration of distribution networks. This has meant that smaller regional distribution centres (RDCs) of 9,300-18,600sq m have been replaced by larger facilities of 46,500-65,100sq m with retailers such as B&Q, IKEA, Sainsbury’s and Debenhams taking units up to 74,400sq m.

Until recently this trend has not really affected the North-west. However, the next nine months will see the completion of three units of more than 41,850sq m on a speculative basis. These are G-Park, Skelmersdale – 44,640sqm; Liverpool International Business Park – 56,730sq m; and Pioneer Point, Ellesmere Port – 57,660sq m.

There are reasons for the developers’ confidence that speculative development of units of this size will be successful. There is a trend towards larger warehouses by retailers wanting to consolidate product lines to one central distribution source, where product availability and delivery timetables can be better coordinated. Many retailers rely on JIT delivery cycles to reduce on-site warehouse capacity at their point of sale, creating more stockholding off site in large distribution hubs.

The main distribution market has been about location, with the sites closest to the motorway network proving most popular. The Midlands has dominated this because of the excellent motorway structure and the fact that it is in the middle of the UK, reducing travel distances and overall costs. However labour supply has meant that firms have had difficulty recruiting staff in areas where there is already a large concentration of distribution units, leading to labour costs rising. Hence there has been a trend for large units to filter northwards, the effect of which has already been seen on the M1 corridor in Yorkshire and Nottinghamshire where previously unpopular areas such as Sheffield, Doncaster and north Nottinghamshire have seen some very large distribution deals.

Buoyant market

This trend has not yet matured in the North-west – major large distribution developers such as Gazeley, ProLogis, Rosemound and Gladman are all seeking to procure sites capable of accommodating large distribution development.

Rosemound is on site at Pioneer Point, building a 58,125sq m unit in Ellesmere Port. The site is situated at the M53’s J7/8 and the guide rent is £4.25 per sq ft. With construction expected to be completed this autumn, it is a joint venture with Royal London Asset Management. Gladmans is also on site constructing a 56,730sq m unit at Liverpool International Business Park in Speke. Due for completion in early 2006, the quoting rent is £4.25 per sq ft. Liverpool International Business Park is next to Liverpool John Lennon Airport and close to the M57.

At Skelmersdale Gazeley has bought 40 acres to develop G-Park, Skelmersdale. The land splits into two sites, one of which will accommodate a unit of 44,640sq m and one of 24,180sq m. Detailed planning consent is expected soon. The site has already attracted major companies such as Asda and Comet who each have units of around 41,850sq m.

There is a buoyant distribution market in the North-west. The traditionally prime areas of Warrington and Trafford Park remain so, although the opening up of the M60 orbital motorway around Manchester has meant areas to the east are now proving popular with occupiers and developers. This can be evidenced by the success of Ashton Moss at the M60’s J23, which has attracted Office Depot to relocate there for its 30,970sq m North-west headquarters.

At Heywood Distribution Park, Next has taken 46,500sq m of older refurbished accommodation, called The Hub, at a rent of £3.00 per sq ft. Colliers CRE is marketing Greengate Point in Chadderton, Oldham for Royal London Asset Management which is a 15,900sq m unit. The North-west will be a more important region in the distribution network, because ultimately it can offer good transport links, competitive rents, land values and labour.

Mike Walker is director, Logistics & Industrial Team, at Colliers CRE. T: 0161 831 3372.