Which came first: the Chicken or the Egg?

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There’s an unusual situation in the South West according to Russell Crofts of Knight Frank, in that a lack of supply seems to have led to a low take-up and that in turn has resulted in few if any new sheds being built in the region.

Crofts says: “The steady take-up in Bristol of about three million sq ft a year has created a chicken and egg scenario. With demand at that level, no one has been willing to speculatively develop large new buildings. However, without this supply, demand is unlikely ever to exceed its historic levels.”

Indeed Robert Cleeves of King Sturge is of the same opinion: “The take up for Bristol in 2006 was 2.065 million sq ft against 2.9 million sq ft in 2005, it is perceived that this drop of 28 per cent in take up is not a reflection on the lack of demand but a function of the restricted supply.”

Andrew Ridler of Alder King points out that lack of supply has been an ongoing theme in the region. And where there are sites, the need for warehousing is coming into conflict with the vision of the planners. In Bristol, he says, land suitable for logistics applications is increasingly going for housing and office development. Ridler is also concerned at the lack of speculative industrial development taking place in the region.

Atisreal’s Adam Booth last year took on the refurbished Coors building at Aztec West. The 52,000 sq ft warehouse with 18,000 sq ft of offices was given a major overhaul ensuring flexible space so that the unit could be sub-divided or multi-let depending on requirements.

Booth says: “This is one of the only sheds of its size currently available in Bristol. The market is suffering from a lack of good quality, well-located distribution facilities and this ticks all the boxes.”

Colin Steele of Rapley is also hoping the lack of supply will find in his favour. He is looking to assign the former Wm Morrison warehouse on Cribbs Causeway. The 385,000 sq ft property boasts 55 dock and five level access doors, 270 car parking spaces and 97 HGV spaces. It has everything there down to the staff canteen.

“It’s a great opportunity to provide operators with an immediate solution. No one else is quite there at the moment,” says Steele. Rapleys is quoting £5.10 per sq ft and there are 13 years remaining on the lease. At present GIST occupies 160,000 sq ft – mostly the chilled storage for a contract with M&S but the short-term lease runs out in 2008.

The lack of supply across the board has also meant that there has been strong rent growth for second hand buildings especially says Crofts ‘anything with a yard’. Rent levels for small units have increased by anything up to 20 per cent.

However, the rent growth, the feeling that lack of supply is holding the market back has had a galvanising effect on developers and finally there is movement.

Not least of course with the news that Constellation Europe has decided to opt for Rosemound’s RD Park Bristol scheme and has taken a pre-let on an 800,000 sq ft warehouse there.

The bottling company intend to construct the largest bonded warehouse in Europe alongside a dedicated bottling facility close to its existing distribution centre in Avonmouth.

The facility will increase warehousing capacity by 80,000 pallets – or approximately 53 million bottles of wine or other products and will be able to fill around 120 million bottles of wine every year. Construction will start imminently and it is intended that it will be fully operational during 2009.

Gazeley is the first off the blocks with its G.Park Bristol scheme at Redrow’s former 60-acre Western Approach development in Avonmouth. It is speculatively building two units of 206,000 sq ft and 112,000 sq ft in a joint venture with Hermes. Both buildings will have Gazeley’s standard eco initiatives as well as photovoltaics on their roofs, which will lead to substantial operational cost savings. The larger unit boasts 12m eaves height, 18 dock and four level access doors and parking for 40 HGVs on a secure 9.4-acre site. Letting agents are King Sturge and DTZ Debenham Tie Leung.


James Behrens of Gazeley says the decision to build speculatively was based on the belief that: “Now that logistics companies have addressed their south east solution a lot are looking to replicate success in the South West.”

He says research has shown a great deal of interest from both local and national distribution companies. There are two further plots; one of 26 acres, which could accommodate up to 590,000 sq ft, and one of 6 acres ideally suited for a 90,000 sq ft scheme.

Behrens says: “We are looking for pre-lets although we may start building the larger site – doing buildings in that size range is very rarefied and we will have to look at the market and see what happens.”

Rumour has it that ProLogis is going to take the bull by the horns and will develop a 540,000 sq ft cross-dock building straight out. If so it will be the biggest speculative build ever seen in the South West. Planning has yet to be finalised. Knight Frank and CBRE are joint agents on the site.

On a slightly smaller scale it looks like Rosemound will develop out the remainder of its land following the Constellation Europe deal, which could provide around 150,000 sq ft of space then there is St Modwen’s 55-acre Access 18 scheme in Avonmouth.

The company secured planning consent for 800,000 sq ft of warehousing. It has already secured detailed consent for national paper distributor Antalis for an 18,500 sq ft distribution warehouse. Antalis is taking a 20-year lease at an initial rent of £6.20 per sq ft. On the back of this St Modwen submitted a planning application for some 80,000 sq ft of speculative warehousing adjacent to Antalis, construction of which is due to start in May and be completed in November. The units will range from 11,959 sq ft to 41,915 sq ft. Alder King and Knight Frank are letting agents for St Modwen.

Rob Skelston of St Modwen says: “There still remains a shortage of good quality new build units for medium-sized operations in Bristol and the speculative scheme is aimed precisely at this market. After this phase we will still have the ability to provide more than 600,000 sq ft of industrial and warehousing space on either a bespoke basis or through further speculative phases.”

With all this activity, one would have thought that the future looked rosy. However, Rob Russell of DTZ Debenham Tie Leung is more circumspect. “We’ve done research that shows that generally in the South West if someone had a 300,000 sq ft requirement there are only three locations that could satisfy it – Bristol, Swindon and Gloucester.”

“There are not many other location along the M5 motorway corridor that you can go to. There is no other land immediately available – there might be a site in Wellington just down from Taunton and another west of Bridgwater. But the issue is that we’ve got Constellation Europe and if ProLogis is then to spec, the only land left is Gazeley’s Phase 6000.

“All you need is a couple more occupiers and then Avonmouth won’t have any land left. St Modwen talking to a number of occupiers and Nisbets has already shortlisted Rosemound or St Modwen for its 150,000 to 200,000 sq ft requirement which it hopes to fulfil in the next couple of months. Local authorities are saying they need to allocate more land but there still seems to be the perception that there are thousands of acres in Avonmouth but in reality that will only suffice for two years.”

Crofts adds: “There is probably some 1,500 acres of allocated land and it is easy to say that it will last us for years but once you start building 800,000 sq ft, 500,000 sq ft which uses 40 – 60 acres at a time it gets eaten up quickly.”

Russell says: “Local authorities need to wise up to this they need to allocate more land. The only local authority doing anything proactively is Sedgemoor which had to take things seriously after a single occupier wiped out the council’s allocated land supply in one go.”


Certainly it seems as if Sedgemoor is favourable towards distribution. When NHS Logistics started to look seriously at Bridgwater, it got consent in under two weeks. After losing several big manufacturers the council found that distribution provided it with the perfect answer not only were the jobs plentiful they were also varied from semi-skilled to professional.

Although a partially untested market, Bridgwater offers a discount to prime rents and land prices, which are much lower than its neighbouring markets at £250,000 per acre.

In 2004, Gerber Foods took a site from local landowner Express Parks for a 750,000 sq ft building to manufacture and distribute their Sunny Delight drink. This triggered wider interest in the area, and the first national logistics specialist to enter Bridgwater has been Rosemound. In a joint venture with local landowner Notaro, Rosemound intends to develop 1.3 million sq ft of distribution space on a 90-acre site. There is also a 260 acre site, the former Innovia Film site, which could have some B8 allocation.

Andrew Ridler of Alder King points out that at junction 20 of the M5 near Clevedon in North Somerset, some 18 acres is being made available for industrial use under the local plan. Finding staff is an issue for companies in the South West and there seems to be growing interest in the North Somerset area based on its labour availability rather than just the motorway junction, he says.

Looking over the Severn, the big news in Wales has to be the announcement that Amazon.co.uk is to build its fourth UK distribution centre in Swansea.

Up to 1,200 jobs will be created over the next five years in the 800,000 sq ft centre that will be built on a 33-acre site formerly owned by the Welsh Assembly Government. The first 400,000 sq ft phase, to be developed by Macquarie Goodman, is due to start shortly with completion predicted by October.

Allan Lyall of Amazon says: “This new development will play an integral part in fulfiling current and future demand and we feel that the site’s location, coupled with the ability to draw from a pool of strong local talent, will make this an extremely effective and efficient operation.”

Macquarie Goodman is not the only developer to focus on these facts – plentiful land a good labour supply. Frontier Estates is moving forward with its Newhouse scheme in Chepstow. “There is detailed consent for three units,” says Russell. “And Frontier is moving forward with a 160,000 sq ft unit which will incorporate flexibility allowing us to split the building from 60,000 sq ft – we will probably have to go back to planning for that but in the meantime work continues on the undulating site with the Section 106 so that the village is protected from noise and visibility when the bunds are built you should not be able to see the roofs. Another developer, Kenmore, has completed the refurbishment of a 180,000 sq ft warehouse at the 530,000 sq ft South Wales Distribution Centre at Kenfig.

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