While there may not be space immediately available for occupiers in the M25 east, there are still plenty of opportunities. Liza Helps reports.
According to property consultant Glenny’s latest Databook research, the troubled negotiations over Britain’s exit from the European Union have failed to dampen demand for industrial space across the eastern half of the M25 region.
Len Rosso of Colliers says: “If you look at East London, Kent and Essex take up was above the five-year average in 2017 despite being down on in 2016, which was almost double the five-year average.”
The East London and Essex industrial market has remained one of the most buoyant sub-markets in the South East region over the past few years, with activity remaining at or above trend levels in the past three years and 2018 looks set to continue that trend.
East London and Essex saw stronger demand for units over 100,000 sq ft in recent years as evidenced by Amazon taking 2.2 million sq ft in Tilbury in 2016.
There was little change in 2017 which saw several deals over 100,000 sq ft including electrical and telecoms retailer Dixons Carphone leasing 316,561 sq ft at London Gateway on a five year lease.
The facility, on Plot 3010, is a DP World joint venture with Prologis and is single-sided. The 15-metre-high unit has a 55m yard and space for potential expansion. It boasts 75 HGV and 234 car parking spaces as well as 32 dock, 10 transloader and six level access doors. The building has been designed to achieve BREEAM 2011 ‘very good’ accreditation and the best Energy Performance Certificate (EPC) rating for its size. It was reportedly being marketed at £8.50 per sq ft. Letting agents at London Gateway are JLL and Colliers International.
There were several large lettings in Enfield with Amazon taking the North London Distribution Centre totalling 166,850 sq ft. The facility has a further 3.85-acre existing yard area. It has 11m eaves height, 20 dock and three level access doors, 45- 50 m yard depth and 220 parking spaces. It was marketed by Moriarty & Co, DTRE and CBRE. It was thought to have a quoting rent of £9.50 per sq ft plus.
Also in Enfield, DHL took 100,833 sq ft at 19 Crown Road. The self-contained unit has 12m eaves, eight dock and four level access doors and a yard to a depth of 45.5m. It has a floor loading of 50kn/sqm and the site has its own substation providing three phase power with a capacity to 1000 KvA.
Going into 2018 and according to John Allan of GVA there is little change.
“As a sweeping generalisation pre-Christmas and post -Christmas we have seen an uptick in occupational demand particularly in terms of requirement for bespoke and D&B, which is encouraging – a mixture of both those who want it and those who need space anyway,”he says.
There is the usual dichotomy, there is demand but there is not much immediately available space. According to Colliers research: “Industrial availability over 100,000 sq ft in East London/Essex area currently stands at 1.5 million sq ft, a 17 per cent drop year on year. Vacancy rate has also fallen from 9 per cent to 7 per cent. Grade A supply accounts for 45 per cent of built stock on the market, predominately based at West Thurrock and London Gateway.”
The availability of prime and secondary stock coming forward to market remains constrained. The net result of this saw availability fall below trend levels in the first three quarters of 2017.
Chris Knight of JLL says: “Generally across the East London Market it is fairly stock starved with slow release of units on to the market and little in way of speculative development coming forward – there is a shortage of supply out there.”
Steve Richmond, national head of UK agency Altus Group, agrees: “There is limited supply of buildings ready for occupiers in the M25 east sector but there is reasonable amount of land that could be brought forward for larger buildings on a D&B basis.
“As matters currently stand occupiers would be looking at D&B such is the lack of supply of facilities in the 100,000 sq ft plus bracket, if an occupier wants to relocate to the area. Demand is steady – the market is lack of supply driven.”
Allan says: “Generally speaking the market around Enfield is extremely constrained in terms of new and second hand stock and I think coming round the East Thames corridor, north of the river, there are not many new buildings.
“Once you get to Thurrock there is some standing stock and although most are letting quickly, there are a couple of second hand and new units in the 80 – 160,000 sq ft mark – all units have varying specification and none are expected to remain vacant for long. I don’t see the constraint nature of the market changing in the medium term, certainly not significantly.”
That is not to say that there are no units for immediate occupation, there are– although not nearly enough to satisfy demand; and these include: Thurrock 162, which was brought forward by Legal & General and Graftongate. The single high-bay facility offers 153,467 sq ft of warehouse space as well as 8,413 sq ft of fully fitted offices along with a gatehouse on a 7.6-acre secure site. It has 13 dock and six level access doors with a 13m clear internal rising to 16m eaves height. In addition it has 119 car and 12 HGV parking spaces and service yard rising to 57m in depth. Of interest though has to be its 17MVA power supply reserve.
Being north of the Thames, it is located at West Thurrock, close to Junctions 30/31 of the M25 motorway. Joint letting agents are GVA, CBRE and Altus Group.
There is also 180,000 sq ft of new, cross-dock distribution warehousing and office space at DP World London Gateway Logistics Park.
This is the second and final phase of the DP World London Gateway Logistics Centre. Phase One is 207,000 sq ft of warehouse and office space and was completed in early 2015. It was let to Lidl in 2017 on a five-year lease. The two separate developments total 387,000 sq ft at the centre.
Phase Two, which reached practical completion in August 2017, comprises of 155,000 sq ft of warehouse accommodation, plus 10,000 sq ft of conjoined office space. In addition to this, there is a separate 15,000 sq ft of office space available for occupation. Joint letting agents are JLL and Colliers.
Knight says: The vast majority of development along the A13 in recent years has been in the mid-box range between 20 – 70,000 sq ft.”
Richmond agrees: “Generally speculative development that has been done, has been more sub-100,000 sq ft.”
First Panattoni has its two-unit scheme at Belvedere Wharf off Bronze Age Way in North Belvedere, south of the River. It has speculatively developed an 86,660 sq ft unit and has planning permission for further unit of 104,713 sq ft available on a build-to-suit basis.
Unit 1 has 12m eaves as well as eight dock level doors. It has been designed to BREEAM Very Good standards with an EPC A rating. It also has 7,878 sq ft of Grade A offices.
The site is easily get-at-able from the M25 Junction 1a but more importantly the run back up to the city centre along the A206 is fairly straightforward. The site was acquired off-market in 2015. Letting agents are Savills and Avison Young.
Even new speculative development tends to be sub-100,000 sq ft.
Having pre-let 92,000 sq ft at its Capacity Dartford development for 25 years at £9.50 per sq ft to the textile maintenance giant Berendsen, CWC and Exton Estates are planning to speculatively build out the final unit totalling 80,000 sq ft later this year.
The site was a former GSK manufacturing plant bought in April 2013 with consent for 550,000 sq ft of industrial use,
The pre-let to Berendsen follows CWC and Exton’s sale of a 132,000 sq ft unit let to TNT at the same site to Aberdeen Standard in June 2016 for £34 million.
The scheme is situated within 1.5 miles of Junction 1a of the M25 motorway. Joint letting agents are Savills, and DTRE,
Having secured the forward sale of 68,072 sq ft Axion Building in Belvedere for £11.3 million to Orchard Street Investment Management, Buccleuch Property in conjunction with Wrenbridge Land, will speculatively build with PC expected by summer 2018.
There are also a small number of second hand facilities in the market but such is demand that rent levels are barely at a discount to those for new space. Thurrock 88 is an 88,000 sq ft property that is ten-years old and has undergone refurbishment through landlord Legal & General. It is on the market and seeking an occupier at £8.50 per sq ft through joint letting agents Savills, BNP Paribas Real Estate and Altus Group.
While there is short supply of immediately available buildings there is a relatively good amount of land and sites for D&B. On the strategic front one of the biggest sites is Howbury Park, Bexley. Previously being toted by Prologis, the 149-acre site is now under the control of developer Roxhill, it could provide up to 2.1 m sq ft of space.
Next in line would be Tritax and Bericote’s 124 acre scheme at the former Littlebrook Power Station site in Dartford. The freehold was acquired for £65 million by Tritax, which will go forward to bring the site forward with developer Bericote. The entire site is capable of supporting the potential development of approximately 1.7 million sq ft of logistics distribution buildings, including several Big Box logistics facilities of over 400,000 sq ft, together with some smaller urban logistics facilities. Part of the site benefits from existing B8 use class (storage and distribution) planning consent for c.517,000 sq ft of the expected c.1.7m sq ft total. Tritax, is applying for planning consent for the remaining land. The site will be developed in phases, with site preparation costs estimated at c.£25 million. The construction of new buildings will commence on a pre-let basis.
In Enfield LaSalle and developer Fairacre Property have secured outline planning for 500,000 sq ft of space fronting the north circular at Edmonton. The first phase of the 30-acre site shows two units of 86,000 sq ft and 300,000 sq ft. Known as UrbanLogistics.London the scheme will be constructed to BREEAM ‘Excellent’ and will have 50m deep service yards and eaves heights up to 20m. Both units will be built-to-suit. Letting agents are Glenny and Cushman & Wakefield.
There is also more land at DP World’s London Gateway scheme, which could accommodate up to 9 million sq ft in total and accommodate a single unit of 1 million sq ft.
This article first appeared in Logistics Manager, March 2018