Speculative development took a serious nose dive when the recession hit, but we could be seeing the first glimpse that things are back on track as Muse Developments has just completed two units at Eurocentral at an investment of £21.2 million.
Zenith, the larger of the two units, offers 92,000 sq ft with sub-division options from 37,600 sq ft, while Pinnacle measures in at 67,000 sq ft. They represent the first major speculative development in Scotland for more than two years, and are about the only spec shed start-ups of any decent size in the country for the past year.
“The plot is the largest remaining industrial development site in Scotland which can still provide former Enterprise Zone benefits, offering potential occupiers a range of highly desirable incentives unlikely to be repeated, such as a competitive rent of £5.75 per sq ft and no service charge,” says Steve Turner, regional director for Muse in Scotland.
Both offer 12m eaves, 50m deep yards and a combination of ground and dock level doors and Muse is able to offer flexibility on fit-out, depending on the occupier. Eurocentral, which already counts Morrisons, Argos, DHL and Wincanton among its residents, offers direct access to the A8/M8, along with an on-site rail freight terminal and links to airports and sea ports. CBRE and Ryden are joint letting agents.
“When we first started marketing the building,” says Turner, “we had good interest from manufacturing companies, but we are back now with distribution companies. So we’ll see if one bites. We know a couple of people have it on their shortlist and we expect one of them to make a decision before Christmas.”
Muse is set to continue its speculative streak and is currently working on plans for a 205,000 sq ft development in Scotland which will be split into two units with the flexibility to divide further if needed.
On the whole, however, new build properties are somewhat sparse in the region, but there is an abundance of good quality second-hand units.
DHL is set to vacate its 85,000 sq ft warehouse at Eurocentral in August 2011, which represents the only available cross-docked facility on the market, according to Iain Davidson of Colliers International. The facility also benefits from a standalone vehicle repair workshop.
DHL recently took the former Tesco facility at Caputhall Road on Deans Industrial Estate in Livingston. The 197,000 sq ft chilled warehouse is rumoured to have been taken on an eight-year lease with a break at year three.
Joint letting agents were Lambert Smith Hampton and Eric Young & Co. Also at Deans Industrial Estate, Vion Food Group has taken a 120,000 sq ft facility at 5 Royston Road on a six month let, predominantly to cover the Christmas period. Colliers International was the sole letting agent.
While demand for industrial accommodation picked up slightly during the first half of 2010, Davidson says a more nervous sentiment has prevailed over the past few months, “more than likely as a result of the looming spending cuts announced by the chancellor last month. However, we do hope that with slightly more certainty now, occupiers that have previously postponed relocations will now resurrect their property requirements”.
Although, he warns that “supply of good quality, well located buildings is limited due to virtual moratorium in development over the past three years”.
A number of second-hand properties have come to market following The Co-operative’s move to a 500,000 sq ft facility at ProLogis Park M8 Newhouse. There is a 263,905 sq ft ambient facility on Wardpark South Industrial Estate in Cumbernauld, a 260,286 sq ft ambient and chilled property on Pitreavie Business Park in Dunfermline, a 203,737 sq ft ambient warehouse at Fairfield Place in East Kilbride and a 98,972 sq ft chilled and freezer facility at Mossburn Avenue in Lanarkshire. Colliers International is marketing all four properties.
“It is mostly second-hand at the moment,” says Bryce Stewart of Colliers International, “but in terms of grade A availability we’ve got J4M8 240 and 380 for Evander Properties.” The warehouses are available as single units of 382,391 sq ft and 244,644 sq ft, or can be combined into a single unit of 655,000 sq ft.
Both have 15m eaves height, two level entry doors, 65 kN/sq m floor loading and a 55m-80m service yard. J4M8 240 offers 22 dock levellers, 135 car parking and 24 trailer spaces, while J4M8 380 has 36 dock levellers, 208 car parking and 39 trailer spaces. Colliers International and James Barr are joint letting agents. “On the east coast now these are probably the best available. We’ve had interest but nothing desperate at this time,” adds Stewart.
While take-up remains historically low in Scotland, it did increase by 54 per cent in the third quarter of 2010, according to DTZ’s latest Research UK Property Times Industrial report. Occupiers targeted second-hand stock in particular, with the majority of lettings on buildings under 10,000 sq ft from companies in the goods and services sectors.
However, Ross Sinclair at DTZ says: “While this percentage increase is extremely encouraging at first glance, the improvement reflects a handful of sizeable transactions which significantly increased take-up on a floor space basis, but it does not suggest such a positive improvement in terms of number of units transacted.”
