Despite rumours to the contrary the Midlands is still the best location in the country. And based on that belief developers continue to be extremely active in the region.
Nigel Dolan of Gazeley says that following the Credit Crunch there are plenty of “opportunities for developers with money who can bid strongly for sites”.
Mark Fitzpatrick of GVA Grimley explains: “Landholders have taken a knock on land prices with the general drop in the property market and where you might have seen ten to 15 bidders you are now only seeing five or six but there are still an awful lot with their own money and they are willing to spend.”
Richard Ludlow of Gerald Eve adds: “Developers have to look at sites now because it can take anything up to three to five years before you can get a spade in the ground – if you are lucky.”
The big players are taking full advantage of these circumstances. ProLogis has not been backward incoming forward and has secured preferred developer status subject to planning for a large tract of the former Peugeot site at Ryton near Coventry.
The site was bought last year by Trenport, the owner of Home Delivery Network, which delivers goods purchased through ‘Littlewoods Shop Direct’ home shopping catalogue and on-line shopping and a number of other retailers.
The 142-acre site was acquired because Home Delivery Network needed to replace and expand its outdated facility in Droitwich and could not find anywhere suitable. Luckily the owners of the company are extremely rich and were able to outbid other developer rivals for the site.
Trenport submitted plans for a new sortation centre on a 33-acre plot last year. The facility is a single 15m high cross-docked warehouse totalling 232,744 sq ft with a 33,528.16 sq ft ancillary office building over three storeys as well as an 8,629.52 sq ft garage, a security hut and a fuel island.
The proposals include 483 off door trailer bays, together with a further 122 on door trailer bays. There are 150 ‘tractor’ bays and ten ‘shunter’ bays. Around 276 car parking spaces will be provided for staff along with cycle parking in accordance with adopted standards.
That still leaves a sizeable area still to be redeveloped, which Trenport is now trying to secure planning on. The 64-acre site known as Plot B is the one where ProLogis has been selected as preferred developer for a price in the region of £60m.
The plans envisage a 1.3 million sq ft business and logistics park with up to 30 per cent being assigned for manufacturing use although the application has been made on the basis that this mix will not be the subject of a controlling planning condition.
In its submission supporting its proposals Trenport believes that up to 2,700 jobs could be created on the site.
The plans also include a new access road created to serve the scheme as well as a generous landscape corridor around the periphery of the site as well as within it and around the buildings themselves.
Elsewhere ProLogis is moving forward with its ProLogis Park Minworth scheme in Birmingham. The scheme formerly known as Midpoint Park was part of a larger group of sites acquired by the company from Severn Trent Property in 2006.
The 65-acre site is in an excellent central location, close to both the M6 and M42. ProLogis has been busy since the purchase with ground works and has recently started on site with the construction of two speculative buildings. There is planning for up to 1.25 million sq ft.
Ludlow says: “At this moment ProLogis is constructing two buildings speculatively. One of 235,500 sq ft and the other 312, 500 sq ft. We are quoting £5.95 per sq ft for the larger unit and £6.25 per sq ft for the smaller one. D&B available from 112,500 sq ft up to 423,000 sq ft. Larger buildings up to 600,000 could be accommodated at this stage.”
Joint letting agents are Gerald Eve and Jones Lang LaSalle and Savills.
Another massive scheme coming forward from ProLogis is at the Eurohub Strategic Freight Interchange in Corby. An application has just been submitted for a 1,457,162 sq ft warehouse on a 75-acre site off the A43. The massive warehouse will be linked to the rail network direct to Felixstowe. The idea being that the warehouse will be a shared user facility available in blocks from 150,000 sq ft upwards.
Between 1,692 and 2,464 jobs could be created when all the units are occupied. Corby Council is expected to give its decision on the application in April.
Gazeley has also been acquisitive. It has recently secured land at Chatterley Valley in Staffordshire, Stoke-on-Trent and in Nuneaton at the centre of the coveted Golden Triangle and is moving forward with plans for its scheme near Ashby de la Zouche.
The company was confirmed in January as the preferred developer for a 31 acre site on a former colliery in Staffordshire by Advantage West Midlands and Newcastle-under-Lyme Council after a rigorous selection process that attracted 15 submissions from across the country.
Dolan says Gazeley won because it demonstrated that it could deliver on its green credentials. The £50m pioneering project called Blue Planet Chatterley Valley will be built so that it does not add to the carbon footprint of the UK and in fact will reduce the amount of carbon generated through a variety of means including its own bio-fuel micro power station, using rapeseed oil, which will produce sufficient power and heat for the on-site buildings and a surplus that will provide enough energy to power up to 650 local homes.
Gazeley will be using the scheme as a blueprint to roll out future commercial property developments across the world, including those in China, India and Mexico.
Other sustainability credentials of the scheme include thermally efficient buildings with air tightness and thermal insulation 25 per cent better than current building regulations. They will use efficient systems for further energy reduction and this will be achieved with low-energy lighting, maximum use of natural light, under floor heating and a solar panel wall.
The latest solar cell technology will be incorporated into special roof lights, which eliminate night time light pollution. Kinetic plates will be installed to capture energy every time a vehicle enters the site.
The development has been split into two plots. Plot A will provide three units capable of offering flexible accommodation from 18,000 sq ft up to 40,000 sq ft. It offers a total development area of 116,000 sq ft. Plot B provides a larger single building with ancillary office accommodation totalling 385,000 sq ft of warehousing.
Fifty-two per cent of the site will be dedicated to open space. Gazeley worked in consultation with the local community before designing the scheme to offer extensive “greenscaping” to the site including public footpaths, links to canal towpaths and the preservation and improvements to ecological habitats.
Advantage West Midlands has already invested £9m of remediation cash to clean up the site and construct an access road for the development. Construction work has already started, says Dolan, and the main 385,000 sq ft building is expected to be complete by the end of the year. The scheme is likely to provide up to 500 jobs.
Bulleys and Lambert Smith Hampton advised Advantage West Midlands and Newcastle-under-Lyme Council, and M3 advised Gazeley.
Another large development for Gazeley is its G.Park Ashby de la Zouche scheme in Leicestershire, which it is bringing forward with partner Harworth Estates, the property arm of UK COAL. It too is being sold on its green credentials but this time through the fact that the scheme will be rail connected.
Planning is currently being sought for the 86-acre former Lounge Disposal Point where the developer hopes to be able to offer units up to 850,000 sq ft. Knight Frank and Atisreal are advising.
Eddie Peat of Harworth Estates says: “There is a major need for additional distribution facilities across the East Midlands. The proximity to the existing rail freight track makes this in an ideal location for our development. The focus on rail transport will have a positive impact as it will reduce the need to transfer goods by road, which will not only lighten congestion but also significantly reduce environmental impact.”
Demonstrating a commitment to sustainability, the proposed development will also include a number of eco-effective measures such as rain water harvesting and recycling, energy efficient lighting, low water use appliances, photovoltaic panels and FSC approved timber, all provided as standard fit out by Gazeley.
The proposals accord with the call by the East Midlands Regional Development Agency for a substantial increase in the number of new rail served distribution buildings. However, sites with good road and rail access like this one at Ashby are in very short supply.
In South Staffordshire Gazeley has started on site with its G.Park Rugeley scheme where it has planning for a 695,000 sq ft cross-dock facility. Again the warehouse will boast a range of eco-initiatives and is due for completion in the summer.
Over in the East Midlands, Gazeley powers ahead with its Magna Park Milton Keynes development, where last year it secured John Lewis. The developer recently submitted an application for a second unit on behalf of a company called Jenks.
Jenks undertakes marketing, product development, repackaging and physical distribution of many well-known brands including Del Monte tinned fruits, Mars Milk, Schwartz herbs and Fisherman’s Friend.
It is currently based in Haddenham, Buckinghamshire with ancillary accommodation in Leighton Buzzard and Warrington. Following an MBO four years ago the company needs to expand and consolidate its distribution and head office functions.
The proposed facility will total 351,413 sq ft and include nearly 30,000 sq ft of office space. Once fully operational the building is expected to provide up to 350 jobs. The building has been designed to achieve BREAM Excellent.
Gazeley is believed to have also acquired a 20 acre site in Stoke on Trent off Junction 15 of the M6 motorway and is believed to be in the process of acquiring an 11 acre site off Junction 3 of the M6 motorway in Nuneaton previously belonging to UPS.
Other developers are also keen to move forward despite the fall out from the Credit Crunch. London based Landform Developments is pursuing a development called Burnaston Cross, which extends to some 120 acres in the heart if South Derbyshire located directly adjacent to the A38/A50 interchange, three miles south of Derby.
The company has applied for outline consent for the site, which it believes could accommodate up to 1.23 million sq ft of distribution space.
Already TNT Post has expressed interest in the site, which has the potential for a railhead connection.
An application for full permission has been lodged with South Derbyshire District Council for the first phase of the scheme, which could be occupied by TNT Post. A building of 230,000 sq ft is proposed which could provide space for a mail sorting depot and offices.
Letting agents are North Rae Sanders and King Sturge.
Although the developers are actively acquiring land and applying for planning permission there is a general consensus that if they do not have to build speculatively they prefer to promote sites as D&B.
However, luckily not all landowners/developers are sticking to this mantra. Wilson Bowden says: “We are still seeing a lot of occupiers that can’t wait for Design & Build options and hence we are continuing with our programme of speculative development (albeit to a lesser degree).
“Speculative build continues on East Midlands Distribution Centre where we have committed to build 87,000 sq ft, which is due to start on site this month with practical completion in September.
At Castlewood we are on site with earthworks for the speculative build of 64,000 sq ft in two units of 40,000 sq ft and 24,000 sq ft.”
The developer already has two further units at EMDC of 40,000 sq ft and 16,000 sq ft. The 140 acre rail connected site has planning for 2.6 million sq ft of space and can accommodate a single building of up to 1.1 million sq ft. Letting agents are Savills and Fisher Hargreaves Proctor.
At Interlink Park in Bardon, Leicestershire, where Wilson Bowden has secured a 20,000 sq ft D&B with Volvo, the developer has three units immediately available of 10,000 sq ft, 60,000 sq ft and 73,000 sq ft.
Letting agents are Lambert Smith Hampton and Savills.
While there seems to be a good range of smaller units already built, larger units are more difficult to come by and judging by the recent plethora of deals they are getting scarcer.
Recently ProLogis leased 540,000 sq ft at its ProLogis Kingston Park scheme in Peterborough to Willis & Gambier, a leading British supplier of fine furniture.
Not long ago joint venture partners Stoford Developments and Terrace Hill announced the letting of their 237,444 sq ft speculative warehouse development at Ravensbank Business Park in Redditch, known as Redd 42 to iForce.
In another deal KN Drinks Logistics, a wholly-owned subsidiary of Kuehne + Nagel, has expanded its network with the opening of a new 168,700 sq ft regional distribution centre at Hams Hall near Coventry, which was developed by Wrenbridge.
Unipart Logistics snapped up Barberry Developments and GE Real Estate 157, 500 sq ft building known as Barberry 157 in Burton-upon-Trent, to serve its ten-year contract with bookseller Waterstone’s.
In Tamworth Mobis Parts Europe UK secured a pre sale on a 220,000 sq ft distribution warehouse in Tamworth, West Midlands, which will be built by Gazeley.
The £18m project is due for completion in the second quarter of 2008. This is the latest deal at the Tamworth site, following the land sale to parcel operator UPS, and the pre let to Bristan Taps.
And if that were not enough, Ceva has secured an 80,000 sq ft unit on Sopwith Way in Daventry on a five year lease. These deals alone account for some 1,403,644 sq ft of space.
So what is available? According to Robert Rae of North Rae Sanders the best pickings will be along the A38/A50 corridor.
“There’s a big rent differential here,” he says, “and labour is cheaper and more available.”
At ProLogis Stoke a 380,000 sq ft unit is being offered at £4.75 per sq ft through joint letting agents North Rae Sanders, Lamonts and GVA Grimley. Very favourable compared to the £5.55 per sq ft quoting rent the developer is asking at its 303,000 sq ft Big Swan scheme in Swan Valley, Northampton.
ProLogis is possibly the most active developer in the Midlands and has a number of other schemes in the region that are being prepared or are under construction or have units available. In the West Midlands these include ProLogis Park Crewe, which will total 350,000 sq ft; the 60 acre ProLogis Park Chatterley Valley; ProLogis Park Stoke where there is another unit proposed of 122,000 sq ft, ProLogis Park Sideway with an eco unit of 533,571 sq ft, ProLogis Park Coventry where the developer has just completed a 105,000 sq ft warehouse, ProLogis Park Stafford with three units of 70,270 sq ft, 127,845 sq ft and 230,247 sq ft. As well as Coton Park in Rugby, which is currently being brought forward and could accommodate up to 365,000 sq ft and DIRFT 2 totalling 131 acres that could take up to 1.9 million sq ft.
In the East Midlands there is ProLogis Park Wellingborough, which is offering DC3 a 540,000 sq ft warehouse. ProLogis Park Kettering boasts two units of 123,000 sq ft and 402,153 sq ft, then there is Eurohub Railhead at Corby totalling 150,000 sq ft. ProLogis Kingston Park has one unit remaining totalling 187,500 sq ft. There are two units under construction at Pineham DC136 and DC370 of 136,203 sq ft and 370,686 sq ft respectively.
Other larger units available include Wrenbridge and Gleeson’s recently completed Kingswood Lakeside 127 a 127,500 sq ft warehouse in the heart of the Midlands distribution network.
The new development is adjacent to logistics occupiers Unilever/DHL and 3663 at Kingswood Lakeside Business and Distribution Park, Cannock, which is next to Junction T7 of the M6 toll road and the A5.
The high specification warehouse has a clear internal height of 12 metres and features ten dock-level and two level access loading doors. There are 7,000 sq ft of highly specified offices, secure parking for 126 cars and 40 lorries and the potential to increase the amount of parking and storage by expanding the current 50 metre rear yard to up to 114 metres giving an average depth of 80 metres.
The warehouse is immediately available either freehold or at an annual rent of £5.50 per sq ft through joint agents North Rae Sanders and King Sturge.
In Swadlincote, Derbyshire development partners Peveril Securities, GE Real Estate and Sladen Estates have launched, Tetron Point. The new two unit warehouse and industrial development consists of P141 and P93 totalling 141,159 sq ft and 93,730 sq ft respectively. Both provide a high specification including clear internal eaves heights of 10.65 metres, secure yards, generous office and ancillary accommodation and car parking. Rushton Hickman, M3 and King Sturge are letting agents.
The same developers are also speculatively constructing a 242,000 sq ft warehouse at Denby Hall, a 27 acre scheme Derby Road at the former Denby Hall Colliery site in Derbyshire.
Although not yet built Fradley Park boasts planning consent for a 430,000 sq ft unit known as Hercules. Letting agents GVA Grimley and North Rae Sanders are quoting £4.95 per sq ft.
Another big unit available is Opus Developments’ Opus Axis cross-dock scheme at Centrum 100 Business Park on the A38. The unit totals 460,000 sq ft and has a 15m eaves height, 41 dock and six grade level doors as well as three service yards of 62m, 56m and 35m depth. Letting agents are Jones Lang LaSalle, GVA Grimley and North Rae Sanders.
In Birmingham PruPIM has launched the first speculative unit at The Hub. Unit 1 offers 120,150 sq ft of high specification accommodation space on a landscaped, fully secured estate. Marketed by Knight Frank, and joint agents M3, it is set on a 90-acre site just three miles from the city centre and 1.6 miles from junction 6 of the M6 motorway. The Hub can accommodate up to 1.5 million sq ft of warehouse and production space.
Looking at rents there seems to be a general upward trend in the Midlands. Robert Rae of North Rae Sanders says: “We are seeing rents quoted at £5.95 and £6 per sq ft [in the West Midlands] up 25p owing to higher land prices and the recent changes in yields.”
The general tone of land values for logistics in the West Midlands increased by £100,000 an acre, which in terms of percentage change represented a rise of 20 per cent, according to a recent report by King Sturge. Land prices also rose by five per cent in the East Midlands.
Richard Potter of Altus Edwin Hill says: “Rents on these big sheds [in the East Midlands] have increased and are now between £5.25 – 5.75 per sq ft depending on size.”
Mark Fitzpatrick warns: “Rents won’t be going down people may cut back on incentives luckily [for occupiers the advent of] rates will keep rents down at the moment but speculative buildings will go into short supply and that will get in the way of contracts. Costs dropped at developers doors will have to be paid by the occupier in the long run.”
There may be good news for occupiers though as the date for scrapping empty rates looms large on the horizon according to Ranjit Gil of Atisreal. “Once money starts to leave people’s pockets there may be opportunities for occupiers. A 40,000 sq ft unit will have a rates bill of around £10,000 and then there are other costs on top…”
Gil says some landlords may look to offer short term leases which although would command a premium rent would not normally be available for occupiers. However it does help postpone the advent of full rate liability.
However the best bargains will be had from those landlords sitting on empty second hand space. Potter says: “The market for second hand buildings will fall quite a bit.”
Altus Edwin Hill is advising Multipart on the assignment of its lease on a 250,000 sq ft distribution warehouse in Crick, near Daventry, Northamptonshire. The high-profile building affords good road access, being close to junction 18 of the M1. The lease is due to expire in 2014 and has a passing rent of just £4 per sq ft; a short-term letting will also be considered.
Another second hand building on the market is Bermuda 157, a 157,000 sq ft former Quinton Hazel warehouse owned by Deeley Properties. Gil says the building boasts 9m eaves has three acres of expansion land and that the owner is not necessarily looking for a premium rent, in fact it is offering the building on leases from six months and is quoting £3.75 per sq ft. Atisreal and North Rae Sanders are joint agents.