Design & build is soon going to be the only option in the South West & Wales as all but one new build has been snapped up. Lucy Tesseras reports.
In 12 months time, Morrisons will be freeing up around 300,000 sq ft in Swindon and 50,000 and 250,000 sq ft in Bristol. At the same time the Co-op will be vacating 70,000 sq ft in Bristol and a couple of buildings down the M5.
Paul BakerThe options in the South West and Wales are fading fast and there is now just one new build south of Birmingham still available. “There is diminishing stock left around the Bristol area,” says Paul Baker of King Sturge. “4mation is under offer and the Former Focus Unit is in the process of being let to WH Malcolm, so that really takes out everything left in the market apart from Crossflow, which will lead to a shortage of buildings of that size.”
There is, however, likely to be a considerable amount of second-hand stock coming to market as The Co-operative has now submitted planning permission for Cabot Park, which if accepted will see it moving to the site in about a year. Morrisons has also started building its 800,000 sq ft warehouse at Bridgwater which is due for completion around September.
“In 12 months time,” says Baker, “Morrisons will be freeing up around 300,000 sq ft in Swindon and 50,000 and 250,000 sq ft in Bristol. At the same time the Co-op will be vacating 70,000 sq ft in Bristol and a couple of buildings down the M5 of about 200,000 and 150,000 sq ft. However, those companies looking over the next year will have no option but to go for D&B.
Elsewhere, Calendar Club has taken 120,000 sq ft at Exe Box in Exeter; Domestic Appliances has taken the 100,000 sq ft former Somerfield distribution unit at Junction 9, Ashchurch, Tewkesbury on a freehold basis; Sapa Building Systems has moved into the Corus site at Tewkesbury Business Park; Ginsters owner Samworth Brothers has taken 86,000 sq ft at Junction 10 of the M5 motorway on a 16-year lease; and 44,000 sq ft at Poplar Park is under offer.
Incentives
In most cases deals are thought to be close to quoting rents, but with incentives. “Rental levels are likely to stay broadly where they are this year, but incentives will start to tail off,” says Paul Hobbs of GVA. “It’s the same across the country; there are still some reasonable deals on existing stock but they’re getting fewer as properties disappear.”
According to Hobbs there is an active enquiries list and a number of occupiers looking for buildings over 200,000 sq ft. He reckons: “Central Park Bristol is now probably the largest infrastructure project in the South West… it is the only site that could take a facility of one million sq ft.”
Phase one of the development, which is a joint venture between Goodman and Severnside Distribution Land, is now complete, with phase two due for completion in July. It will provide a number of buildings of up to 1.3m sq ft, and Hobbs points out it can be built on immediately.
The site is located between Junction 1 of the M48 and Junction 18 of the M6 motorway; it has existing rail connections and can accommodate the development of units with direct rail links; plus the Port of Bristol is six miles away, which incorporates Royal Portbury and Avonmouth docks. Portbury already has a deep water terminal, and there is planning in place to build a jetty out to the Severn at Avonmouth.
Hobbs says, “Avonmouth is the nearest point to the Midlands by road miles into the centre of Birmingham, so with the development of Central Park it will offer a true combination of road, rail and sea.”
Joint agents are GVA and Knight Frank.
St Modwen has more than 650 acres of land for D&B opportunities in the South West and Wales, with the capacity for some 11 million sq ft of occupier space.
It has 400,000 sq ft at Access 18, with a further 300,000 sq ft under construction for New Earth Solutions, which has bought the land and is building the property itself with completion expected in May.
“Thereafter, we have another 600,000 sq ft of available land,” says St Modwen’s Rob Skelston. “We have had a lot of interest at the larger end, 250,000 sq ft plus, and it has been reasonably steady.” He says the company is unlikely to do another land sale deal on the site though. “With this site, and all D&B sites, the focus will be on pre-lets and pre-builds.”
St Modwen also has 100 acres just off Junction 23A of the M4 motorway which it is developing in conjunction with the Welsh assembly government. The Queensway new dual carriageway which will link to the motorway is currently being built with phase one due for completion mid-2011 and the second phase expected around 2013. When complete it will offer 1.5 million sq ft, which Skelston says is the largest new build opportunity in South Wales, plus it has rail access and planning consent.
“We still see the main focus of activity will be retail and supermarkets. The Co-op has now satisfied its requirement but there are a number of others that still have active requirements. We see it as a fairly healthy market due to the fact that some haven’t yet got their South West region hubs sorted.”
However, he doesn’t think speculative development is likely, “but we will be making up plans so we can react quickly when the time is right. We will see what happens in 2011 and see how the economy recovers before looking at spec build again.”
Paul Hobbs agrees that people are talking about speculative development, but he too doesn’t see it happening until 2012. And he reckons the same is true across the border in Wales. “Wales is struggling,” he says. “As a region in the UK it is under the shadow of public spending cuts. Aldi had a site for an RDC in Cardiff but that has come onto the market again, and the value of freeholds has halved. It was never a great area for speculative development – it never had the market confidence. Of regions in the UK, South Wales was hit quite hard, but from misfortune there may be opportunity.”
