The M5 Corridor linking the South West with the Midlands looks like offering occupiers a great deal for their money despite the fact that there is a restricted supply of land. Neil Starkie of Savills says: “The corridor is growing in importance not least because it is cheaper than Birmingham.”
Simon Norton of Colliers CRE agrees: “The M5 corridor remains a buoyant and influential market for the distribution sector with land availability remaining difficult to secure, which is underpinning values, which range from £400,000 – £500,000 per acre dependant upon size and location.”
However this compares with land prices in the region of £600,000 an acre in Birmingham. Obviously this has a direct influence on rents, which, says Norton, “appear to be on the move in an upward direction as a compensation for the yield shift which we have experienced. Typically the range for new builds is in the region of £5.50 – £5.75 per sq ft and deals have been achieved at these levels at the Stoford & AXA scheme at Stonebridge Cross Droitwich.” These rents compare to £6 plus per sq ft in Birmingham.
Admittedly those rents were achieved on smaller units. For larger units the rents can be greatly reduced. Indeed six months ago Stoford Developments completed the biggest ever pre-let at Stonebridge Cross to food distributor Atchison Topeka on the back of a 15 year lease at £4.90 per sq ft. The developer agreed to build a 130,000 sq ft temperature-controlled food-grade facility where the firm will consolidate its operations.
Jason Adderley of Stoford says: “We can still accommodate buildings up to 150,000 sq ft, though space is rapidly running out.” Other recent occupiers include TM Logistics, AKW Medicare, Barton Coldform and JCC Lighting. Moving further south Norton says: “There are a number of schemes that are in the pipeline of just about to hit the market.”
These include Easter Developments’ Easter Park scheme in Kidderminster. The developer has nine units from 3,391 to 46,593 sq ft available either to let or for sale through joint letting agents Harris Lamb and Cosnett Price.
The buildings boast 6 to 8m eaves, fully fitted offices, ample yard areas and car parking as well as electrically-operated sectional loading doors. Also in Kidderminster Graftongate has its Finepoint Business Park of 11 units, one of which totals 102,300 sq ft.
The building boasts 12m eaves, 50kn per sq ft floor loading, a 40m yard depth, 24 hour access, secure yards and ample car and HGV parking. It has a 21,680 sq ft office incorporated. There is also a 43,700 sq ft unit with 4,200 sq ft offices available. Joint letting agents are M3 and GVA Grimley.
Norton adds: “Developer Stoford has just commenced site infrastructure works on its 40 acre Vale Park West scheme at Evesham, where they have already secured a pre-let of 75,000 sq ft and are talking to other parties for similar if not bigger buildings.”
As well as its Kidderminster scheme, Easter Developments is gearing up to commence the next landmark distribution scheme on the M5 corridor. Situated one minute from Junction 9 at Tewkesbury, the company has a 9.5-acre plot that can accommodate up to 200,000 sq ft as a single distribution unit, or buildings from 5,000 sq ft to 50,000 sq ft as a multi unit scheme. The site was purchased from global industrial group Trelleborg. Construction is expected to start in Spring 2008.
Paul Hobbs of GVA Grimley says: “Tewkesbury has seen unprecedented take up in recent years, particularly as its neighbour, Cheltenham, lacks any significant and available industrial employment sites. The Ashchurch employment area permits the 24 / 7 working that most occupiers now demand and staff availability remains a key attraction to Tewkesbury.
Further south Graftontgate recently acquired Javelin Park on Junction 12, which can deliver a single unit of 485,000 sq ft. Hobbs says: “The development of the Direct Wines 200,000 sq ft national distribution centre at Gloucester Business Park was a good indicator of the potential for this corridor in the future, beating a number of locations for the business. The relatively un-congested corridor is ideal to push into the southwest and Wales where supply chains can be stretched.”
Developers have confidence in the region because research has shown there is demand. In Worcestershire demand is up tenfold in some areas. The latest figures from Worcestershire Property Service (WPS) show a surge in demand for commercial property. Enquiries were up every month during the 2006/07 financial year, compared with 2005/06. In some cases, demand was almost ten times higher.
In total, demand over the whole year was almost double what it was in 2005/06, with the majority of enquiries – 89 per cent – coming from businesses in the West Midlands. Industrial property was most in demand, attracting 46 per cent of enquiries.