There is a pent up demand for space across Scotland but faced with falling availability across the board, as well as increasing land and construction costs, occupiers should be warned that securing the ideal warehouse in Scotland could be more expensive than anticipated.
In its new national Weather Map Report, Lambert Smith Hampton pinpoints Glasgow as a future rent hot spot where prime rents are expected to increase by 9.1 per cent to £6 per sq ft. Indeed, Cass Hibbert of King Sturge says: “Lack of product in the feuhold [freehold] market is forcing people who may have wished to buy to consider leasing if they want somewhere half decent.”
He says that units between 1,000 and 20,000 sq ft are now quoting £6 per sq ft up from £5.25-£5.50 per sq ft. James Barr and GVA Grimley, the marketing agents for MEPC’s Hillington Park, are quoting £5.75 to £6.25 per sq ft for three newly built units of 9,540 sq ft, 20,700 sq ft and 26,600 sq ft.
In its latest Scotland report, Ryden says: “Around Glasgow, older obsolete stock has been steadily stripped out by redevelopment. There is little ‘bargain’ industrial space remaining. Much of the redevelopment has been for higher value uses such as retail, residential and offices.
“This has reduced over-supply of older industrial buildings and highlighted an under-supply of quality modern and well configured space.”
According to King Sturge’s Scottish Industrial Floor space figures, total availability fell nearly five per cent in the six months to June. The amount of space in large buildings over 100,000 sq ft remained virtually static, and although new floor space increased 18 per cent to 559,520 sq ft that only accounts for 2.6 per cent of the country’s total available stock.
However, in terms of the speculative pipeline, King Sturge reports that there is currently 1,349,928 sq ft under construction across 11 schemes.
Bryce Stewart of Colliers CRE says: “Although there is a lot of potential coming through there are a number of requirements that are unsatisfied.”
Looking at new stock availability Eurocentral has the lion’s share in terms of number of buildings with its 122,200 sq ft Titan warehouse as well as three others Artemis, Atlas and Pharos from 40,200 sq ft to 71,700 sq ft. Eurocentral has just announced that it is to build an additional 244,000 sq ft of high specification industrial and warehousing space following a string of recent deals at the park which included lettings to Au Naturale parent company Ossian Retail Group; school wear designer The Fielding Group; and one of the UK’s leading support service organisations, Amey.
The programme will include four new units: Apollo 53,293 sq ft; Athena 41,266 sq ft; Pegasus 64,499 sq ft; and Orion 85,179 sq ft. Letting agent is CB Richard Ellis and Ryden. Developer ProLogis has submitted outline plans for 1.1m sq ft of warehouse space on the 57-acre former Linkpark site at Junction 6 of the M8 Motorway.
The developer plans to speculatively build space on the new scheme, which has been renamed ProLogis Park M8. Colliers CRE and Cushman & Wakefield are joint letting agents.
Linkpark was sold by Saltire Developments to ProLogis in October 2006 for an undisclosed sum. Land in the region has topped £120,000 an acre. Linkpark was sold with the benefit of planning for 850,000 sq ft of warehousing, which was granted in 2002 by North Lanarkshire Council.
Gladman Developments is close to completion with the first 380,000 sq ft phase of MAX, the 650,000 sq ft speculative industrial and distribution development on a 33.5-acre site at J4 M8 Distribution Park in the Central Belt.
Positive market reaction to the launch of Phase One, encouraged the developer to start work on Phase 2, which is expected to be completed in late Autumn.
The new warehouse complex will have an end development value of £35 million and could provide up to 700 new jobs. It is available both freehold and leasehold with a quoting rent of £4.50 per sq ft.
The new units will have 15m eaves height, 65 dock levellers and level entry doors and bespoke floors constructed to occupier’s requirements up to 65kn/sqm. The two speculative warehouse units can be enlarged into one unit of 650,000 sq ft.
Not every developer is offering speculative scheme and a lack of space in the recent past has led to a run of build-to-suit solutions. The Ryden report says: “The lack of such speculative development has led to an increase in pre-let activity. This is positive, but the market also requires a supply of units available for immediate entry.”
Developer Wilson Bowden is currently finishing a 45,000 sq ft bespoke warehouse for Royal Mail and is believed to be in final negotiations on another 30,000 sq ft unit.
Hibbert says many developers are trying to keep their schemes as flexible as possible. Knight Real Estate is going for planning for the first phase of its Langlands Point scheme in East Kilbride. The scheme will involve four units from 10,000 – 20,000 sq ft, but Hibbert says: “The site could take up to 125,000 sq ft and if someone came along then we would negotiate a deal for a bespoke facility.”
Second hand units are also at a premium and there are currently only a handful of the larger ones around according to Nicola Moore of DTZ. These include Headway at Eurocentral totalling 137,000 sq ft, various units at St Modwen’s Pegasus Park through Atisreal and Colliers CRE as well as two former Tesco units which are being vacated because the retailer is moving into a 950,000 sq ft purpose built RDC in Livingstone.
Colliers CRE is marketing a 132,00 sq ft chill facility on Royston Road, Livingstone which boasts 10m plus eaves and Lambert Smith Hampton and Eric Young are marketing a 200,000 sq ft facility quoting £10m.