Thursday 23rd Nov 2017 - Logistics Manager

The next big thing

It certainly seems as if the North East could be the next big sheds location. All the criteria are in place. According to Paul Nicholson of Atisreal: “There is a range of triggers which is making the sector very active. There is a good supply of land and a relaxed planning regime. The region comprises clear and separate conurbations – Wearside, Teesside and Tyneside, so having a central distribution facility makes sense to access these markets and ones further afield such as Scotland’s central belt to the north and the M62 corridor to the south.

“From an occupational cost point of view, average headline rents presently sit at about £4.25 per sq ft which I believe is competitive,” adds Nicholson.

“The final point is access to airports and ports. With two international airports, albeit with a small share of the freight business, and major ports at Teesside and the Port of Tyne, there are huge opportunities for the logistics market to cover international markets from the region as well.

Recently Teesport announced plans for significant investment in facilities. Plans are now underway to develop the North Gateway, a £300 million deep-sea container terminal on the south side of the River Tees.

Jonathan Simpson says that this has gone a long way to help put Darlington on the logistics map. “A key factor is that Darlington is a prime location in relation to the second largest port in the UK (per annual tonnage handled) which handles 50 million tonnes of cargo each year.”

In addition to these is the pull of Nissan in Washington, which has recently announced plans to build a 200,000 sq ft logistics facility to receive store and prepare in-bound car parts for its production line.

Mark Proudlock of Knight Frank says: “That the Washington Nissan plant has been renowned as Europe’s most productive car plant for the last eight years is testament not only to its staff but also its location. Close proximity to the Port of Tyne and the A19 enables the manufacturer to import parts cost effectively. The plant’s expansion is part of a plan to increase use of the Port of Tyne’s deep-water facility, importing larger volumes less frequently to improve efficiency and reduce the number of small road deliveries.

Benefits

“The infrastructure benefits that Nissan’s location affords was a significant determinant of Easter Group’s decision to build a 100,000 sq ft warehouse at Cherry Blossom Way nearby,” says Proudlock.

The high bay warehouse, marketed by joint agents Knight Frank and GVA Lamb and Edge is ideally located to serve a logistics company, which like Nissan imports in bulk and distributes.

Danny Cramman of GVA Lamb & Edge agrees: “Nissan goes from strength to strength in the region with the launch of its new model, which is constructed at its Sunderland plant. The company continues to generate enquiries from occupiers looking for units ranging from 22,000-100,000 sq ft in the Washington area. Lear Corporation, for example, moved into 125,000 sq ft of industrial space at Rainton Bridge in Sunderland towards the end of 2006 to service a seatbelt and harness contract.”

It is no wonder then that there are so many national developers trying to elbow their way in. At present HelioSlough has its Wynyard 360 scheme built and forward funded already through BA Pension Fund. The 302,027 sq ft building boasts an eaves height of 12.2m, a 50kn/sqm FM2 floor as well as two-storey offices. It has 27 dock and four level access doors and parking for 48 lorries. Inside the warehouse can accommodate upwards of 50,000 pallets on a VNA basis. Joint letting agents are King Sturge, Knight Frank and M3.

As soon as this building is away, the developer intends to push on with a further 400,000 sq ft on the remaining 22 acres.

So strong is the developer’s belief in the area, says Grant Drummond of HelioSlough, that it has just submitted a planning application for a 1.3 million sq ft scheme on a 120-acre site at Wynyard Park. Buildings up to 700,000 sq ft will be able to be accommodated at the scheme.

Expectations

Drummond says: “Teesport is very similar to Immingham with similar growth expectations. We are getting more and more enquiries which traditionally have not been there and this is directly related to the increased levels of imports.”

Not to be outdone developer Merchant Place has plans for a 1.4 million sq ft of distribution space at its Amazon Park scheme at Newton Aycliffe.

The 100-acre site at Heighington Lane, Newton Aycliffe will have units ranging from 60,000 sq ft to 1,000,000 sq ft, built using the very latest in environmentally sustainable building methods and energy management systems.

Work is due to start later this summer on the development, which claims to be one of the UK’s ‘greenest’ distribution parks. It is expected to create up to 1,000 new jobs in County Durham.

Applications

Planning applications have been submitted to Sedgefield and Darlington Borough Councils and, if the scheme is given the go-ahead, work is expected to start on the first phase of development later this summer, with completion due in 18 months’ time.

The overall scheme could take up to five years to complete, but real estate adviser Cushman & Wakefield, which is advising Merchant Place on the acquisition, planning, funding and letting of the scheme, is already looking for potential tenants.

Kevin Storey of Cushman & Wakefield says: “We can provide distribution buildings up to one million sq ft on probably the most attractive financial terms available in the UK.”

Elsewhere in County Durham, Gladman Developments has started work on a £28 million, 525,000 sq ft speculative industrial and distribution scheme in Chester-le-Street, which is expected to help create up to 540 new jobs.

The new development is being built on 26 acres of land at Drum Industrial Estate, which fronts onto the A693 and is approximately one mile from Junction 63 of the A1(M).

Available

The developer is constructing three units under its G-Space industrial brand – G-Space 265 (265,000 sq ft) G-Space 175 (175,000 sq ft) and G-Space 85 (85,000 sq ft), all of which include office space, and are available for sale or lease.

The new units will have 15m eaves height, multi dock levellers, level entry doors and bespoke floors constructed to occupiers requirements up to 65kn/sqm.

According to Gladman Developments’ Kevin Edwards, Drum Industrial Estate is in a prime location for industrial occupiers.

He says: “Drum Industrial Estate is already an established distribution location and is a good base from which occupiers can service the whole of the North of England, as well as offering good access to Yorkshire and Scotland.”

Joint agents are DTZ Debenham Tie Leung and King Sturge.

Successful

Nearby Evans Property Group has completed the letting of their speculative unit of 75,000 sq ft on its successful Follingsby Park development. The unit was pre-let to Spark Response to service a new contract. Evans is now on site at the scheme with over 150,000 sq ft of new development including units of 60,000 and 40,000 sq ft.

In Dawdon, Grantside has a 125,000 sq ft unit available at its Foxcover Distribution Park. The unit has 12m eaves, 12 dock and 2 level access doors as well as a 50kn per sq m floor loading.

Sector B8, also on Foxcover, has been developed by Gladman with Innovate as funding partner. The unit provides 139,300 sq ft of space with 12m eaves as well as 12 dock and one level access door.

Further south, Easter Developments has also built a unit of 100,000 sq ft at Faverdale Industrial Estate, Darlington.

Refurbishment

But it’s not just big new sheds, Opus Land has hit the refurbishment trail and started work on a £2.3 million refurbishment of the former MFI factory site on Teesside.

The developer has renamed the 360,000 sq ft site Opus Park and is transforming it into a modern, industrial/warehouse complex with unit sizes ranging from 13,900 sq ft to 77,800 sq ft.

Opus Park is situated in the heart of Stockton’s Preston Farm Industrial Estate and is expected to be ready for occupation in October.

Opus Land bought the 16.5-acre site adjacent to the A66 in September last year after MFI announced that it was to close its Stockton factory. Director Andrew Duncan says: “We are creating 11 high-spec, high-quality units for lease or sale – individually or in multiples to suite occupiers – as well as re-cladding and generally refurbishing the site.”

Duncan adds: “Opus Park is superbly located in the Tees Valley with excellent access to the national motorway network from the A66. It is also close to Durham Tees Valley Airport and Teesport. It will suit modern manufacturing and warehousing companies.”

Prominence

Jonathan Simpson of Sanderson Weatherall says: “Buildings of this size, nature and prominence very rarely become available in the Teesside area, particularly offering occupiers the chance to purchase. We expect demand to come from not only warehousing companies but also manufacturers looking to take advantage of the unique 5,000 KVA power supply.”

The next big shed location can be found in South Yorkshire where Dave Robinson of Jones Lang LaSalle says: “Our estimates suggest that presently there is 6.2 million sq ft of new space available or under construction in the Yorkshire region, offering unit sizes of 100,000 sq ft and over. Again, this figure is weighted towards South Yorkshire with nearly 4.5 million sq ft or just short of 70 per cent of total speculative space available in Yorkshire being located in the south of the region.

“Historically, 6.2 million sq ft of industrial space would have been viewed as a huge amount of product in Yorkshire, however this figure is actually less than take-up levels witnessed over the past 30 months. With the trend suggesting take-up is steadily increasing, we anticipate this 6.2 million sq ft of space to be occupied in the next two-three years. Only time will tell if this speculative stock, in terms of location and product, provides the market with what it needs.”

Sladen Estates is developing Quest Park, a 45-acre mixed-use scheme, which already houses furniture retailer ILVA in a 650,000 sq ft unit. The remaining two units are 90,000 sq ft and 22,000 sq ft.

This is good news says Andrew Gent of Gent Visick: “As there remains a wide choice and range of unit sizes for logistics companies. The availability of several units in all size ranges has restricted rental growth. Although incentives have remained high this has been due to the dramatic improvements in yields. As interest rates increase and yields soften we would anticipate a reduction in the level of incentives available and little real change in headline rentals.”

Stephen Tonkin of CB Richard Ellis says: “In South Yorkshire, following a feast of new speculative development, there’s 3.5 million sq ft of available warehousing built or currently under construction, plus a further capacity for 3 million sq ft within five years.

“Competition between owners of new buildings and developers is mounting, and there’s reasonable choice between existing buildings which is good for tenants. Increasing construction costs are offsetting some advantages of bespoke construction, so occupiers able to compromise to some degree can benefit from the availability of cheaper existing stock. Some of this, such as ProLogis Barnsley, offers real state-of-the-art cross-docking warehouse – at less than £4 per sq ft.”

Tonkin concludes: “Within the past five years, the North East (including Yorkshire) has seen huge growth of RDC operations, plus concentration of certain retailers’ logistics operations, eg, Next, B&Q, Wilkinson, Currys. Some of this is due to the increasing use of the east coast ports of Hull, Immingham, and Grimsby while virtually all new logistics investment is sensitive to availability and cost of new labour. In this, the region scores highly over the South East and parts of the Midlands. While road congestion and the working time directive limit the geographical area which can be served from, say Doncaster, there’s still a significant number of mouths to feed and shelves to stock north of Watford Gap.

£2.3 Million refurb gets underway at former MFI factory in Stockton

Work has started on a £2.3 million refurbishment of the former MFI factory site on Teesside.

Yorkshire-based developers Opus Land have renamed the 360,000 sq ft site Opus Park and are transforming it into a modern, industrial and warehouse complex with unit sizes ranging from 13,900 sq ft to 77,800 sq ft.

Opus Park is situated in the heart of Stockton’s Preston Farm Industrial Estate and is expected to be ready for occupation in October.

Opus Land, one of the fastest-growing development and investment companies in the country, bought the 16.5-acre site adjacent to the A66 in September last year after MFI announced that it was to close its Stockton factory.

Director Andrew Duncan said: “We are delighted that work is now underway. We are spending £2.3 million on Opus Park, creating 11 high-spec, high-quality units for lease or sale – individually or in multiples to suit occupiers – as well as re-cladding and generally refurbishing the site. This will transform the old MFI factory into a modern industrial and warehousing complex for the 21st century.”

Duncan said: “Opus Park is superbly located in the Tees Valley with excellent access to the national motorway network from the A66. It is also close to Durham Tees Valley Airport and Teesport. It will suit modern manufacturing and warehousing companies.”

Opus Park is one of the largest available manufacturing sites in the North-East this year and Opus Land is confident the site will prove extremely popular.

Duncan said: “We are in discussions with a number of potential occupiers ranging from 10,000 to 15,000 sq ft right up to 150,000 sq ft.”

Jonathan Simpson, industrial agent at Sanderson Weatherall’s Teesside office, said: “Buildings of this size, nature and prominence very rarely become available in the Teesside area, particularly offering occupiers the chance to purchase.”

Opus Land is also turning the old 450,000 sq ft MFI store at Scunthorpe into a massive, state-of-the-art single distribution unit called Opus Maximus.

It will be available for sale or lease.