Could demand push speculative development along the M6 Corridor? Liza Helps investigates.
The issue along the M6 corridor is the lack of existing stock over 100,000 sq ft, according to Rob Taylor of Knight Frank. Indeed, research by Colliers International reveals that available large scale Grade A industrial and logistics space of more than 100,000 sq ft in the North West of England will run out in early 2016, with the region having just nine months’ worth of supply left. In the West Midlands such supply is due to expire in early July 2015.
“The reason,” says Simon Lloyd of DTZ, “is that there has been a lot of market activity.”
“In Staffordshire alone,” says Jon Ryan Gill of Knight Frank, “more than 815,000 sq ft has been let in just three deals and there are other requirements bubbling away.”
The lettings saw homeware retailer Dunelm securing a 525,000 sq ft build-to-suit at Prologis Park Sideway near Stoke on Trent at Junction 15, Screwfix taking the 230,500 sq ft former GAP warehouse at Prologis Park Stafford off Junction 14, and DPD GeoPost taking a 60,000 sq ft build-to-suit at St Modwen’s Etruria Valley scheme located between Junction 15 and Junction 16.
Further north, Jason Print of Gerald Eve, says: “Good quality existing units have all but gone with recent deals to Optima Logistics, Wincanton, Agility Logistics and B&M taking out Mid Point 180 Middlewich, Crossflow 380 Crewe and Onyx 350 Runcorn. Occupiers wanting modern detached good quality units in excess of 100,000 sq ft with eaves heights of 12m or above will struggle.”
With demand still strong there is a case for developers to refurbish older space. Edinburgh-based property investment company Parabola acquired a 190,000 sq ft warehouse located four miles from Junction 16 of the M6 motorway at Kidsgrove. The building, known as Talke 16, has had a major refurbishment over the last few months. Now totalling 180,100 sq ft the property boasts 10m eaves 19 dock and five level access doors. It is being marketed at £4.75 per sq ft through Knight Frank and Moriarty & Co.
Other second hand units available include Sladen Estates and Peveril Securities’ 219,686 sq ft refurbished warehouse known as Big Stan at Trentham Lakes in Stoke on Trent. The building once finished will benefit from, 10m eaves, 22 new dock level doors, and two level loading doors. Sladen Estates’ Nick Sladen says: “With Big Stan we saw an opportunity to offer much needed high quality warehouse / industrial space to a market that is suffering from a lack of supply.”
Joint letting agents are Phillips Sutton or Moriarty & Co.
The former Bettaware unit is also on the market through CBRE, Moriarty & Co and Gerald Eve. The 169,000sq ft unit is near Junction 4A. Then there is Unit F at Nexus Point in Birmingham totalling 105,771 sq ft through North Rae Sanders and Sandford Brown. The pent up demand has triggered speculative development with a number of schemes in the pipeline and some coming out of the ground. Paul Cook of CBRE says: “At the moment speculative development is all that everyone is talking about though in the northern sector of the M6 there is not that much coming out the ground – as yet.”
Morley Estates is currently developing a 70,000 sq ft warehouse at Boston Park in Haydock that is due for completion in the New Year. It is located just off Junction 23 while an 183,000 sq ft unit is being speculatively developed at Evander Properties’ Revolution Park development near Chorley. The unit will comprise of 171,417 sq ft of warehousing space with 12,500 sq ft office space over two storeys. It will feature 12m to underside, 31 dock and two level access doors. Letting agents are DTRE, JLL, Moriarty & Co and Littler & Co.
In Wigan Legal & General and dbsymmetry (a development partnership between Barwood and Delancey) has committed to a 110,000 sq ft speculative building at its 30 acre M6Epic scheme near Junction 25.
The new building known as Epic110+ has a further three acres of expansion land which could push the building up to 180,000 sq ft. It will have 12.5 m eaves, ten dock and two drive in doors. Letting agents are CBRE, B8 and Moriarty & Co.
SEGRO and Roxhill are developing a 235,000 sq ft speculative facility at their 125-acre Rugby Gateway scheme just off Junction 1 of the M6. Gareth Osborn of SEGRO says: “Having decided to speculatively develop the building we have found we have got a good deal of interest for the space. The fact that we can deliver it in August 2015 is definitely helping garner interest.”
Rugby Gateway can accommodate up to 1.8 million sq ft in units ranging from 200,000 sq ft to 925,000 sq ft. Infrastructure works are complete and plots prepared for immediate development. There is detailed consent for an 800,000 sq ft plus unit as well. Letting agents are Cushman & Wakefield and CBRE.
Cordea Savills and Canmoor are also pushing forward with speculative development at a 7-acre site in Hams Hall just off J4A. Known as Silver Bullet, the 142,758 sq ft building has 11.5 m eaves as well as 10 dock and two level access doors. It boasts a 50m yard with 90 car and 34 HGV parking spaces. Letting agents are Savills and JLL.
Canmoor has a site opposite called Black Velvet, which could also be speculatively developed, though at present is being marketed as build-to-suit. The plot could accommodate a unit up to 172,215 sq ft with a 67m yard and two storey offices.
Bericote is speculatively developing a 102,750 sq ft unit known as Chrome 102 at Midpoint Park near Junction 5. The warehouse is due for completion in January 2016. Letting agents are JLL and Lambert Smith Hampton.
Prologis is also looking at speculatively developing two further units of 108,000 sq ft and 140,000 sq ft at its flagship Prologis Park Ryton scheme. The warehouse was let to 3PL Syncreon. Gerald Eve, Savills and JLL acted for Prologis, while Colliers represented Syncreon. Letting agents at Prologis Ryton are North Rae Sanders, JLL and Gerald Eve.
Not every site is opting for speculative development because as one agent put it when there is this much demand why speculate. Indeed such has been the success of Omega Warrington that the developers see no reason to speculatively develop. Recent deals to The Hut Group and Plastics Omnium account for circa 1m sq ft. And while it is capable of accommodating another 1.2m sq ft of B2/B8 space in just a few deals Omega could potentially be full within 12 months. Letting agents are GVA and JLL.
With strong demand and little supply along the corridor Julien Kenny-Levick of Colliers notes: “We have seen the balance of power move from the occupier to the developer because of the lack of existing good quality stock. Rents have started to show signs of moving upwards with incentive packages being compressed.”