Although the UK’s distribution market has undoubtedly widened its geographic coverage in recent years, the East and West Midlands are still the sector’s powerhouses. Combined, they accounted for one-third of all UK transactions in 2007 and a similar proportion in the first half of 2008, according to Savills’ Big shed briefing report.
In the East Midlands, one of the largest deals was to logistics operator Kuehne + Nagel, which took a 540,000 sq ft building developed speculatively by ProLogis in Wellingborough. Meanwhile, Primark has signed up for a 640,000 sq ft former Ikea distribution centre in Thrapston, near Kettering.
Whether or not demand will continue to be as strong remains to be seen – and along with it, developers’ appetite to build speculatively – but currently there is a large amount of activity under way as well as finished space on the market.
ProLogis has several major sheds available, including two units totalling 525,000 sq ft in Kettering. It also has a 330,000 sq ft building in Northampton and is constructing another 370,000 sq ft warehouse at Pineham, nearby.
Sladen Estates is another firm building speculatively and has completed its 245,000 sq ft unit called P242 at Denby Hall near Derby.
Design and build
In addition to the speculative activity, there is a wide choice of design-and-build sites available. One is Henry Boot Developments’ 585,000 sq ft Green Giant scheme in north Derbyshire. Gazeley has the capacity to develop as much as 750,000 sq ft at Newark, in buildings of sized from 100,000 sq ft upwards.
Developers are continuing to bring forward further sites, and Gazeley has purchased 100 acres in Crick from Barwood Developments and RREEF.
ProLogis has the potential to develop 3.3m sq ft at its Eurohub site in Corby and 1.9m sq ft at its Dirft 2 scheme in Daventry. Gladman could develop 2.7m sq ft – 2m in a single building if required – at Bevercotes in Nottinghamshire.
The West Midlands also continues to see large amounts of development activity, across a range of sizes. According to Gerald Eve’s Prime logistics report, almost 10m sq ft of stock has been added to the south of the region alone in the past five years, with almost three-quarters of all development in the 50,000-150,000 sq ft bracket.
Once again, the giants of shed development are heavily involved. In Staffordshire, Gazeley is developing 700,000 sq ft at Rugeley and a 390,000 sq ft scheme called G.Park Blue Planet at Chatterley Valley, which it claims will be one of the greenest logistics buildings in the world.
Fears of oversupply
HelioSlough has developed a 415,000 sq ft distribution centre at Lymedale Cross near Newcastle-under-Lyme, ProLogis is close to finishing two buildings totalling 550,000 sq ft at Minworth, near Birmingham, and Opus Land has constructed a 460,000 sq ft building at Burton-on-Trent.
The extent of the development – according to Gerald Eve there is 2m sq ft of speculative space being developed in the northern part of the region alone – could raise fears of oversupply.
So far, however, agents say that occupier demand is holding up. Co-op subsidiary Sants Pharmaceuticals took a 190,000 sq ft prelet at Henry Boot Developments’ Meir Park in Stoke-on-Trent, while logistics provider Wincanton recently took Colossus, a 365,000 sq ft building owned by UBS in Stafford.
Rents across the two regions have remained fairly static. In the East Midlands, Northampton and Nottingham have achieved the best rents of around £5.75 per sq ft, while Solihull has seen the highest levels in the West Midlands at around £6.50 per sq ft.
