Reports that the Manchester shed market is dead are far from accurate. It has changed and at last developers are looking to the needs of those searching for a Mancunian base.
The latest buzz is that Adidas is to take a 360,000 sq ft warehouse scheme on the former Hotpoint site in Trafford Park, which is being redeveloped by St Modwen.
The German sportswear giant is taking a 15-year lease at a rent of £4.75 per sq ft at the distribution facility on which construction has already started.
Completion of the building is scheduled for November, which will allow it to become operational in early 2008. It is expected that some 250 new jobs will be created. King Sturge represented St Modwen.
Adidas had been in the market for a 500,000 sq ft property and the fact that it has pre-let this property shows a willingness to compromise for the sake of location.
It is this that Knight Franks says has attracted developers to the region. Its latest Manchester Market Activity Report shows the region has seen one of the highest levels of speculatively built industrial units in the UK over the past 12 months.
It says 22 per cent of the UK’s speculative new build projects over the past year have been constructed in the North West and as a result available floor space in the region has risen to 23.5 million sq ft.
On this basis Knight Frank is forecasting that land prices across the region will continue to rise – driven by the intense competition for new sites among eager developers and to the detriment of owner-occupiers.
Dan Crawshaw of Nolan Redshaw explains: “From a transport and logistics point of view small freehold depots are very much still in strong demand for example Nolan Redshaw has recently achieved a sale in excess of the asking price on a one acre depot with a unit of 6,000 sq ft and comprises a secure yard with workshops etc within one month of commencing marketing.”
Robert Tilley of Dunlop Hayward agrees: “The preference for freehold or leasehold properties still favours freehold, although there has certainly been an increase in the number of serious leasehold requirements.
“We believe this has occurred due to the cost of property rising, for example a new unit on Trafford Park in 2004 was circa £65 per sq ft but now it is nearer £90 per sq ft. This is as a result of the lack of development land, cost of materials and the scarcity of available properties.”
Jon Sullivan of Knight Frank adds: “Developers are buying freehold properties so that they can turn them and let and this means owner-occupiers are being inched out and having to rent.”
Demand
With this in mind it is hardly surprising that Crawshaw says: “As far as distribution warehousing goes it appears that there is still a reasonable level of demand for smaller scale distribution warehousing and a perceived lesser demand for the large scale warehousing.”
This has led to a plethora of properties being sold and redeveloped to be marketed as smaller units. For example Brixton is currently in the process of demolishing the former Carborundum site, which will provide around 171,000 sq ft of new industrial and distribution units ranging from 4,564-35,919 sq ft. This space is planned to be available in the third quarter of 2007.
In addition Kurt Mather of Brixton says: “The Altai building at Trafford Point is to be upgraded through refurbishment, providing an 120,800 sq ft distribution facility, set in 9.25 acres.” He added that Brixton would continue to refurbish industrial units as they become available.
Crawshaw says: “Land for the development of large scale stand alone distribution warehouses is relatively scarce and generally the price of land for such warehousing is driven up by the opportunity for developers to create smaller higher yielding business parks.”
Looking at land prices the Knight Franks report says: “Prime land values have held firm at £300,000 per net developable acre, though due to strong competition investors are becoming increasingly creative to secure sites.”
Paul Wardle of Quorum Estates says that his company has certainly been creative with the development of Merlin 310 at Trafford Park.
The company bought the 30-acre site in 2004 for Fermec and have spent the time since then demolishing the existing buildings, cleaning up the site getting planning permission and finally building a range of new warehouses for the modern market.
He says: “The main point to make is there aren’t many sites and those that are around will be brown field and may have planning restrictions.
There’s a lot of up front work to be done before a site like that can be developed.”
Merlin 310 totals 310,000 sq ft on a 14-acre secure site. It boasts 15m eaves with 30 dock levellers and six level access doors. It has a Category 2 floor with a 60kn/sqm loading as well as 15,000 sq ft of offices and a large 40m yard. And it has spaces for 50 lorries and fronts the Barton Dock Road. Agents are DGI David George and King Sturge.
Steve Johnson of King Sturge is also marketing Legal & General’s Fusion building in Electric Park, which comprises 208,000 sq ft. It has 15m eaves as well as 16 dock levellers and three level access doors.
So where does Greater Manchester stand as a logistics destination? As far as Gerald Eve is concerned its Prime Logistics report suggests: “The area will actually develop more as a regional, than national, location as its geography limits the number of people and businesses that can be reached within a national (4.5 hour) drive time.”
Andrew Aherne of Lambert Smith Hampton agrees: “The Greater Manchester distribution market is currently dominated by the development of large distribution sheds of over 200,000 sq ft.
The size of requirement makes for a more regional market as enquiries for buildings of this size are often footloose and will consider several locations if sites are close to motorway junctions. The M60, M62 and M6 motorways heavily influence this market.”
