[asset_ref id=”1299″]There may be a dearth of existing buildings and no speculative development on the horizon, but there are other options, says Liza Helps.
A spate of lettings in late 2010 and early 2011 means that the East Midlands can offer only a few modern units over 100,000 sq ft for immediate occupation. But that is not the whole story. While there may not be that many immediately available properties for occupation there are a large number of sites out there.
Which is good news given the importance of the East Midlands to logistics operations. If you want a base for a national distribution operation, then the area around Northampton is as central as you can get.
So it is no surprise that good quality warehouses have been moving. Just recently one of the larger remaining units was let. The Core, a 167,000 sq ft warehouse near Chesterfield in the north of the region, was let to East Anglia-based privately-owned marketing and logistics services company, ProLog on a ten-year lease with five-year break at a rent around £4.25 per sq ft, a little less than the original quoting rent of £4.75 per sq ft.
The property, built by Langham Developments, boasts 12.5m eaves, 15 dock and two level access doors, a 50kN/sq m floor loading, as well as up to 2mVA power availability. Letting agents are Fisher Hargreaves Proctor and Lambert Smith Hampton.
Of the remaining units there is Miller Birch and Standard Life’s Langley 255 warehouse in Nottinghamshire, totalling 255,000 sq ft at @ccess 26, Langley Mill, Derbyshire, the firm’s 30-acre industrial and distribution development.
The warehouse boasts 12m eaves, 20 dock and four level access doors, fitted offices with comfort cooling and raised floors, as well as 68 lorry parking bays and 163 car parking spaces. The building has been on the market since it was completed in 2006. Letting agents are North Rae Sanders, CBRE and Innes England.
Solar
Then there is Gazeley’s Solar warehouse at its Magna Park development in Leicestershire. The building totals 275,534 sq ft and boasts a 15m eaves height and 50kN/sq m floor loading. It has 24 dock and two level access doors and is set on a 14-acre site. Joint letting agents are CBRE and Colliers International.
Developer ProLogis has three warehouses over 100,000 sq ft available immediately in the region. DC4 at ProLogis Park Daventry totalling 152,498 sq ft has 12m eaves, two-storey offices and is being marketed by Budworth Hardcastle and Burbage Realty at a quoting rent of £4.95 per sq ft.
There is also a 123,000 sq ft unit at ProLogis Park Kettering also available at £4.95 per sq ft. It boasts 12m eaves, 12 dock and two level access doors a 50kN/sq m floor loading and two-storey offices. Letting agents are again Budworth Hardcastle and Burbage Realty.
Finally there is DC139 at ProLogis Park Pineham in Northamptonshire. The 139,580 sq ft building is being marketed at £5.75 per sq ft and has 12 dock levellers, two level access doors, 106 car parking spaces, 24 lorry spaces, a 50m yard depth and a 12.5m eaves height. Letting agents are Burbage Realty and Readings Hope & Mann.
The biggest of them all is Great Line Developments’ Crackerjack building in Corby. The 525,000 sq ft cross-docked warehouse has a 15m eaves height as well as 50 dock and four level access doors. It has capacity to store 77,000 pallets. The building has two service yards and parking for 98 HGVs and 336 cars. Letting agents are CBRE and GVA.
Mike Price of Knight Frank says: “The take up is falling away [in the second quarter] because of lack of product. Only 12 months ago there were loads of deals but the buildings are not there anymore. They have been let and the good quality standing stock has gone.
Helen Longstaffe of DTZ agrees: “There is a distinct lack of stock over 100,000 sq ft, even on the second-hand front anything of reasonable quality and close to the motorway already has interest. In fact we are seeing anything that comes up starting to go as well.”
Price adds that although there is second-hand stock there is not that much and the stock coming to the market tends to be brought back through consolidation or else through administration.
However, he warns, just because it is being handled by receivers, occupiers will not get fire sale deals.
Hydro at Magna Park is being offered through the receivers. The warehouse has been vacant since Primark went to Thrapston in 2010.
Overvalued
“There is an understanding that buildings do have a value, they may have been overvalued at the top of market but the receivers are willing to hold out for a market deal; not a fire sale deal,” says Price.
“Banks are more educated than they were and they will try to work the property through so it is unlikely that they would sell at £30 per sq ft when the property is worth £60 per sq ft and that stands for the majority.”
Hydro totals 422,784 sq ft and has 15m eaves, 36 dock level doors and a large secure yard up to 92m deep. It is an eco-friendly building with reduced running costs, one of the first in the country to incorporate Gazeley’s Eco Template in 2005. The property was originally let to TNT/Primark at a rent of £5.25 per sq ft. The joint agents, acting on behalf of the receivers are Knight Frank and Burbage Realty. They are seeking a letting at £5.25 per sq ft or to sell it at £60 per sq ft.
Ranjit Gill of BNP Paribas Real Estate is marketing Eurohub 277 in Corby. The property is on the market following Comet’s decision to consolidate its distribution in Hemel Hempstead.
The fully fitted racked warehouse totals 277,828 sq ft and benefits from an 18m eaves height, heating, lighting and sprinklers and is racked (7,830 wide / 22,850 narrow aisle) totalling approximately 30,960 pallet spaces. There are 21 dock and 12 level access doors. The warehouse has expansion up to 50,000 sq ft. Joint letting agent is North Rae Sanders.
Other second-hand buildings include the former Nissan Express building known as Unit 5110 at Magna Park owned by Stamford & London and Angelsea Capital and managed by Evander Properties. It totals 213,491 sq ft on a site of 10.71 acres. It is fully sprinklered, has three surface level loading doors and 18 dock level loading doors. It has a 9m eaves height on the main warehouse extending to 15.4m on the high bay extension. Letting agents are CBRE and Moriarty & Co.
There is also the 275,000 sq ft building at Goodman’s Royal Oak complex in Daventry which was let to Diageo. The property has 9.4m eaves, 15 dock levellers and level access doors which could be extended, as well as heating, lighting and sprinkler provision. It is being marketed by North Rae Sanders at a rent of £4 per sq ft.
According to Andrew Jackson of North Rae Sanders, because of the lack of stock, even on second-hand space, lease terms have started to harden. “There is some hardening of incentives which has become apparent. Occupiers would have got 12 months’ rent free for every five years of lease but now that is back to nine months and probably not much further than that.”
Hardening
It is this hardening of lease terms and lack of stock which some fear may force occupiers out of the region, especially those occupiers based in the north such as Derbyshire and Nottinghamshire. Marc Ballard of Salloway says: “The reducing supply means that opportunities for tenants and purchasers to negotiate ‘soft’ deals are becoming less common due to the lack of built stock now available.
“It’s apparent that East Midlands companies with growth plans looking for warehousing or larger premises are now beginning to experience a very limited choice of build stock. My fear is these companies will start looking further afield for new industrial space. We don’t want to lose talented firms to the likes of the West Midlands or Yorkshire just because we have a shortage of stock.”
One of the areas which has the biggest dearth of standing stock, says James Keeton of Jones Lang LaSalle, is the prime M1 corridor. He agrees with Ballard that: “the real shortage coupled with empty rates and lack of finance” has stopped development and is forcing occupiers to look at D&B solutions.
Ballard adds: “What I would say is that companies which have requirements now or think they may have in the near future should act quickly before commercial availability becomes critically low or indeed to allow adequate time to identify design and build opportunities.”
Bruce Topley of developer Gazeley says that occupiers looking at sites for D&B which already have infrastructure and planning may not have to wait for too long before the properties are operational. Indeed he cites the Tesco.com deal at G.Park Enfield which had a 20 week build programme.
Using its G.Track programme Gazeley was able to offer Tesco.com early access in week nine for customer fit out with planning permission granted in just nine weeks, half the time of typical planning applications.
While there may not be that many immediately available properties for occupation there are a large number of sites.
Gazeley has G.Park Newark where it can accommodate up to 750,000 sq ft. Letting agents Jones Lang LaSalle, Colliers International and Fisher Hargreaves Proctor are quoting £4.50 per sq ft.
There is Plot 2110 at Magna Park Lutterworth which could take 104,000 sq ft. A further 100 acres is going through the planning process to make Phase III of the flagship development.
Then there is the 95-acre G.Park Crick scheme where the developer has secured planning for up to 1.1 million sq ft in a single building. The building will be designed as a cross dock on a build-to-suit basis only with rents at £5.95 per sq ft. Letting agents are CBRE and Dowley Turner.
Gazeley also has Magna Park Milton Keynes where there is up to three million sq ft of space available on a D&B basis according to Alex Verbeek of Gazeley. “Here, we can deliver a completed building in about seven months.” Letting agents Burbage Realty, Jones Lang LaSalle and Savills are quoting rents of £6.50 per sq ft.
Developer Goodman has 100 acres at Derby Commercial Park, where the developer has permission for a 1.2m sq ft unit. Letting agents are North Rae Sanders, CBRE and Innes England.
Another site which could take such a large facility is Gladman’s Vertical Park on the site of the former Bevercotes colliery, near Nottingham. The developer has secured outline planning for up to 2.7 million sq ft of space with outline consent for a single facility of 2 million sq ft with a 30m eaves height.
The total site extends over 200 acres. Developer Gladman can accommodate enquiries from 200,000 sq ft upwards. Letting agents are Lambert Smith Hampton and DTZ.
Resolution
Grafton Gate has a joint venture agreement with Harworth Estates on a 70-acre site near Ellistown in Leicestershire where there is a resolution to grant planning for up to 570,000 sq ft in two phases subject to a Section 106 agreement.
While developer ProLogis has a 60-acre site in Eastwood, Nottinghamshire which could accommodate up to 800,000 sq ft of distribution space. Letting agents for ProLogis Park Eastwood are North Rae Sanders, Dove Haigh Philips and Fisher Hargreaves Proctor.
Evander has its 18-acre Grange Park scheme in Northampton at Junction 15 of the M1 motorway which it will bring forward in conjunction with BA Pension Fund. The site could accommodate up to 360,000 sq ft. Letting agents are Dowley Turner and Budworth Hardcastle.
And Roxhill Developments is pushing ahead to secure planning on the former Gefco site in Corby with joint venture partner Legal & General. The site could accommodate up to 850,000 sq ft of rail-connected warehousing space. The developer also has a site at Warth Park which could take a further 900,000 sq ft.
Sean Bremner of Lambert Smith Hampton says: “Occupiers looking at D&B have to accept that leases will be institutional in length upwards of 15 years. However, developers will be looking at rent free periods and will be agreeable to partially or even completely underwrite incentives for that level of commitment. Developers are going to need time to make money for themselves.”
