2. ▪ Speculative build is back
▪ Strong design and build market
▪ New build rental levels £5.25 - £6.25 psf
▪ Lease terms generally min 10 years
▪ Top tier sites are serviced which ensures delivery
▪ Rental growth on ‘Grade A’ existing stock, rents typically £4.50 - £5.00 psf
Overview
3. ▪ Speculative build totalling 3.6 m sq ft in build or completed
▪ Design and build/build to suit completed or on site 3.3 m sq ft:
▪ Aldi, Logistics North
▪ XPO Missguided, Trafford Park
▪ Dominos, Omega
▪ The Hut Group, Omega
▪ Plastic Omnium, Omega
▪ Grade A big sheds take up 1.7 m sq ft
▪ Major land sales
▪ Whitebirk, Blackburn
▪ Burnley Bridge, Burnley
The Last 12 months
4. ▪ 16 buildings over 100,000 sq ft where there is start on site – either construction or ground works or completed.
▪ Sizes range from 110,000 sq ft including two buildings in excess of 350,000 sq ft at Omega, Warrington and
Logistics North, Bolton.
▪ 3 speculative buildings let to Amazon:
▪ Venus 110 110,000 sq ft
▪ Mountpark/Airport City 271,000 sq ft
▪ Union Square 175,000 sq ft
▪ TOTAL 556,000 sq ft
▪ 5 buildings between 50,000 – 100,000 sq ft are in build or completed providing 387,000 sq ft
Speculative Build
5. ▪ Over 100,000 sq ft
Speculative Build by Location
No Area ( sq ft)
Greater
Manchester
8 1,551,000
Cheshire 3 717,000
Merseyside 1 175,000
Lancashire 1 185,000
0200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
Area (sq ft)
Area (sq ft)
7. ▪ Focus of take up has been from retailers/internet
▪ B & M Retail 816,000 sq ft
▪ Appliances Online 380,000 sq ft
▪ Amazon 163,000 sq ft
▪ Take up c1.7 m sq ft
▪ Remaining supply is limited c1.3 m sq ft in 8 buildings
▪ The shortage of this product leads to either more build to suit transactions or take up of speculative build
Existing Grade A Stock
8. Main focus
▪ Prime Sites – Omega, Warrington ; Logistics North, Bolton ; Airport City, South Manchester, and Kingsway,
Rochdale
▪ Success is based on:
1. Location – access to customers and workforce
2. Deliverability – all sites can be readily delivered
3. Floorplates – ability to accommodate large building floorplates
▪ Numerous locations able to deliver build to suit in the region
Build to Suit/Design and Build Market
9. ▪ Port Salford, Greater Manchester
▪ Heywood Distribution Park, Greater Manchester
▪ Midpoint 18, Middlewich, Cheshire
▪ Port Cheshire, Ellesmere Port, Cheshire
▪ 3MU, Widnes, Cheshire
▪ Crewe Commercial Park, Cheshire
▪ Preston East, Lancashire
▪ G. Park, Skelmersdale, Lancashire
▪ Whitebirk, Lancashire
▪ Burnley Bridge Phase 2, Lancashire
▪ Knowsley 800, Merseyside
▪ Atlantic Park, Merseyside
▪ Liverpool 57 – Merseyside
▪ Airfields & Nthn Gateway, Deeside
Build to Suit locations
10. ▪ Retail – Aldi have relocated, Lidl in the market for major sub regional distribution centre
▪ Internet Retail – Hut, Boohoo, Misguided
▪ Omni-channel retailers – require a seamless approach for their customers typically traditional buildings will not
satisfy their requirements – usually need large yard areas and parcel specific type hubs. Returns c40% of sold
stock an issue
▪ Automotive sector (JLR) - increase in clustering of businesses and ‘just in time delivery’. Tier 1 suppliers will need
to co-locate or be in close proximity to meet drop off times
▪ 3PLs – contract specific – contract led therefore time/term sensitive. Main issue new buildings require min 10 year
term, most contracts 3 – 5 years
▪ 3PLs – multi user facilities – the solution to the contract specific requirements?
▪ Cross docked units – generally for units over 300,000 – 400,000 sq ft, due to the need to manage the increase in
fast moving goods
▪ Parcel Hubs – due mainly to online retailing. Unit sizes have varied Hermes Parcelnet 160,000 sq ft on 13 acres at
Omega, DPD 60,000 sq ft on 5 acres. Land hungry
Trends
11. ▪ Rents – New build c£5.25 - £6.25 psf for new build, Grade A £4.50 - £5.00 psf
▪ Lease Terms
▪ New build min 10 years
▪ Grade A 5 – 10 years
▪ Rent Free
▪ New build typically 9 – 12 months
▪ Grade A 3 – 6 months
▪ Review Patterns – landlords view most buildings as reversionary, especially Grade A stock previously at c£4.00 psf
now £4.50 - £4.75 psf
▪ Yields – stabilised, funds more selective, but appetite still very strong for right product.
▪ Speculative Build – will continue to be built out, nearly 1.9 m sq ft will be delivered in 2016 and 0.9 m sq ft in Q1
2017. Next phase of spec build will become more location specific.
▪ Land values – prime sites c£425,000 - £450,000 per acre
The Market Moving Forward
12. ▪ North West has a strong logistics market
▪ Rental growth has returned
▪ 3PLs have to start taking longer leases, and look more strategically at their property portfolio
▪ North West has a varied distribution customer base which will lead to more operator specific buildings
▪ Multi - modal sites and Liverpool 2 will enhance the offer for the region
▪ Issues
▪ Limited supply of suitable sites and longevity of land allocation process
▪ Limited supply of Grade A stock
Conclusions