The West Midlands’ industrial heartland is dominated by the motor industry – but an increasing numberof lettings are beginning to redress the balance in favour of other markets. Ian Wylie reports
At a cost of £111m, the Millennium Point science and technology centre in Birmingham is one of the country’s largest millennium projects, pointing to a high-tech future for the West Midlands. The only snag is that Britain’s manufacturing heartland remains stubbornly reliant on a handful of industries – most notably the automotive sector, which still accounts for one in six West Midlands jobs.
Indeed, automotive occupiers featured in recent deals include VDO Instruments, which took 13,935m2 (150,000 sq ft) at Holford in Aston and Somer Maslands’ 4,645m2 (50,000 sq ft) plant at Sentinel, an industrial scheme at Centurion Park, off junction 10 of the M42 near Tamworth. Meanwhile, developer Tawnywood has just sold 1ha (2.5 acres) at Bermuda Park in Nuneaton to motor components manufacturer Press Patterns – which supplies Ford, Rover and Jaguar – for £632,000. It plans to build 4,088m2 (44,000 sq ft) of factory and office accommodation.
Elsewhere, MGI Coutier, a French firm supplying plastic components, has cut the first turf on a 1.6ha (4 acre) site at Midpoint Park in Birmingham where it will build a 5,500m2 (59,200 sq ft) factory.
And BMW is actively searching for a site so that its new Rolls-Royce operation can hit the ground running in 2003.
West Midlands Development Agency has acknowledged that the importance of traditional manufacturing is overstated. But Tim Suffield, equity partner at the Birmingham office of Fuller Peiser, says that the industrial market is more evenly balanced than people realise.
“There is significant hype surrounding the new 37,160m2 (400,000 sq ft) BMW engine plant at Hams Hall and a number of significant live enquiries relating to Jaguar and Rover contracts, particularly from US-based component suppliers,” he says. “But the majority of concluded deals have been non-automotive.”
Suffield points to Mayflex’s 7,432m2 (80,000 sq ft) facility at IM Properties’ Junction Six industrial estate at Witton; the 18,580m2 (200,000 sq ft) Birds Eye Walls distribution centre at the former Powergen site at Hams Hall; and UCI’s 11,253m2 (121,130 sq ft) logistics centre at Centurion Park in Tamworth.
However, the strength of the pound has placed pressure on manufacturing exporters in the West Midlands (see Overview, p82). And the gloom has deepened still further following the announcement of 1,500 job losses at Rover, along with its plan to source more parts in Europe, which will have a knock-on effect for the region’s suppliers.
But most agents and developers remain bullish. GVA Grimley’s Birmingham office, for example, claims to have received 400 industrial enquiries in the past two months, with almost half from the manufacturing sector – a level only slightly down on the same period last year.
In the latest CBI-GVA Grimley property trends survey, demand for space is coming mostly from metal manufacturing and chemical companies. And, despite Rover’s announcement, van-maker LDV’s partnership with Daewoo should increase demand for component suppliers in the region.
“There is evidence that a number of projects have been postponed, certainly in the immediate short-term, but there is little evidence to suggest that this is affecting the general level of take-up on the major schemes,” says Suffield.
“The effect seems more pronounced on the secondhand market, where a large percentage of the exporting engineering business takes place.”
According to GVA Grimley, a third of the region’s industrial buildings were built before the second world war and are now either unsuitable for use or are in need of upgrading.
Lee Richardson, a director of Black Country-based Richardson Developments, also remains upbeat. “Despite talk of a downturn, we are experiencing continued demand from manufacturers and distributors for good-quality industrial accommodation,” he stresses.
The company has just let 18,859m2 (203,000 sq ft) of new industrial space in the West Midlands, including a double deal for its showpiece industrial estate at Parkway alongside the Black Country New Road in Wednesbury.
West Bromwich-based company Monks & Crane, which specialises in industrial tools, has taken 6,968m2 (75,000 sq ft) for a new national distribution centre at £45 per m2 (£4.15 per sq ft). And Dixons’ subsidiary Mastercare Services & Distribution has taken a 20-year lease on 5,574m2 (60,000 sq ft), joining existing tenants such as Cascades and Kennametal.
Another double deal means that Richardson’s Merlin Park estate, between junctions 5 and 6 of the M6, is now fully occupied. HMV is to open a 2,323m2 (25,000 sq ft) distribution centre while Hays Commercial Services has taken 4,013m2 (43,200 sq ft) for a document storage facility.
Other recent Merlin Park deals include Grattan, which has secured 2,508m2 (27,000 sq ft) on a 20-year lease for a distribution centre, and Amtrak Express Parcels which is taking 7,989m2 (86,000 sq ft) for a parcels sorting centre.
Agents say that national parcel distributors form a significant proportion of requirements. According to Suffield, Amtrak still has an outstanding requirement of 13,935m2 (150,000 sq ft) for a new national hub, while at least three other parcel distributors have live requirements in the West Midlands.
At Fradley Park, 4.9ha (12 acres) has been sold to Hellmann International Forwards, a German parcel carrier which is building an 11,148m2 (120,000 sq ft) parcel distribution warehouse.
According to GVA Grimley, prime rents increased 4% for industrial and warehouse sector properties during the past 12 months, and the agent expects a rise of 6% by the end of the year.
Industrial properties are also undergoing rate evaluations which could add a further 10-15% by 2000. Knight Frank reports prime investment yields of 6.75% in the West Midlands conurbation, compared to 7.25 % in Warwickshire and 7.5% in Worcestershire.
However, Coventry-based D&P Holt warns of acute shortages of good-quality space in all size brackets.
He says that the immediate effect has been an erosion of tenant incentives.
“Rent-free periods formed a significant part of the tenant package 18 months ago, but today they are the exception rather than the norm,” says D&P Holt’s Rupert Gillitt.
With secondhand space becoming scarce, several developers are proposing speculative developments, with announcements expected shortly on a number of key sites in the region.
One scheme underway is the Maximus development at Centurion Park, Tamworth, where Land Securities and Barwood are building a 13,006m2 (140,000 sq ft) distribution facility – due for completion in March. Another is the Earlplace Business Park development on the A45 Fletchhamstead Highway, comprising 4,784m2 (51,500 sq ft) of industrial space – available as a whole or split into three units. Developer Earlplace is planning for a further 7,432m2 (80,000 sq ft) of B2 space.
Morrison Developments has planning permission for The Fordrough, a 5.3ha (13 acre) design-and-build industrial park, part of a mixed development on a former BT site in Bordesley Green.
According to GVA Grimley industrial associate David Willmer, the geographical focus within the region is likely to shift.
“While there was a hub of development activity around the Black Country and Birmingham heartlands spine roads, existing sites close to the planned Birmingham northern relief road will become more popular,” he says.
However, some developers are a little more bearish, including Folkes Properties whose 6.9ha (17 acre) Britannia Park at Wednesbury is now virtually fully occupied. “It would be a brave man who would go into speculative development to any great degree at present,” says director James Folkes.
“We’re now going to be very cautious about investing in speculative schemes for the foreseeable future because of the perceived difficulty in finding clients.”
Transactions
Junction Six Industrial Park, Birmingham: Mayflex Cable & Componants has taken a 12,263 m2 (132,000 sq ft) design-and-build unit on a 15-year lease at £54 per m2 (£5 per sq ft). Phoenix Beard and Gooch Webster represented IM Properties.
Midpoint Park, Birmingham: Remainders has paid Severn Trent Property £5.5m for a 2.2ha (5.5 acre) plot on which it plans to build 8,826 m2 (95,000 sq ft) of warehouse and headquarters offices. Remainders was represented by Picton Jones. Weatherall Green Smith acted for Severn Trent Property.
Merlin Park, Spine Road, Birmingham: HMV is taking a 2,323 m2 (25,000 sq ft) unit on a 17-year lease at £122,000 pa, and Hays Commercial Services is taking a 4,013 m2 (43,200 sq ft) unit on a 20-year lease at £194,500 pa. The developer is Richardson Developments.
Britannia Park, Wednesbury: Vodafone has taken a 1,394 m2 (15,000 sq ft) unit on a 15-year lease. King Sturge is the sole letting agent for the developer, Folkes Properties. Vodafone represented itself.
