A major £275m retail destination is planned for Stoke-on-Trent, with the Eden Project’s architect appointed for the first part. And owners of empty sheds are eagerly watching. Lisa Pilkington reports
Large-scale retail development might be the last thing you would expect in the current climate, but that is exactly what is planned in Stoke-on-Trent, where Realis Estates is pressing ahead with plans to transform the empty 685,000 sq ft East West Centre into a regional shopping destination.
Last month, Grimshaw, designer of Cornwall’s Eden Project, was appointed lead architect on the bus station that forms the first part of the £275m scheme. It will include 650,000 sq ft of retail, leisure facilities, including a six-screen cinema, and an 80-bedroom, 3-4 star hotel.
Duncan Mathieson, managing director of Realis Estates, says: “The decision reiterates our desire to press ahead with a scheme that will enable Stoke-on-Trent to take its rightful place as one of the top 30 shopping destinations in the country.”
Grimshaw intends to complete the final designs for the bus station in November before work begins on site in March next year.
Work on the retail element is due to start in 2012 – as long as prelets can be secured. Discussions are now taking place with potential scheme anchors. The whole scheme has outline consent, and a detailed planning application will be submitted by the end of this year for the bus station.
Elsewhere, Sainsbury’s is gearing up to open a 70,000 sq ft store in Newcastle-under-Lyme, on the site of a former college. The move will more than double the supermarket’s retail presence in the town when it is completed in November. It forms part of a larger mixed-use scheme that includes residential, a petrol station and offices.
Nearby, on the site of the former Holborn Paper Mill, developer Urban Waterside is making progress with the development of a £6m Travelodge and Lidl store. The 14,000 sq ft Lidl is due to open later this month.
Shed hopes from retail rise
Owners of industrial space will be hoping that a resurgence in retail fortunes will feed through into increased demand for distribution centres. Of the 3.9m sq ft of speculatively built vacant space in the West Midlands, a whopping 60% – around 2.3m sq ft – is in Staffordshire.
Neil Starkie, industrial agency director at Savills, says that there is no single reason why so many sheds were built before the global economy nosedived. “It’s a combination of factors based on land availability, cheaper labour and the perception of a strong occupational market,” he says.
According to Savills, the largest vacant shed available is Gazeley’s and Metlife’s Flair development in Rugeley. At 697,000 sq ft, the supershed has been available since Q4 2008. Market speculation suggests that logistics firm Kuehne & Nagle has looked seriously at the building, though no deal has been struck.
However, in Stafford, ProLogis agreed a significant deal last month with US fashion retailer Gap. It is launching its online retail business in the UK at ProLogis Park in Stafford, where it has taken the 230,350 sq ft DC4 unit (see box p70).
ProLogis Park Stafford is now fully let following deals with Screwfix, luxury goods group WWRD Holdings and Altecnic, a retailer of plumbing products.
ProLogis has also filled its park in Stoke-on-Trent by agreeing a deal with existing occupier Dunelm Mill. The retailer has signed a build-to-suit lease agreement for a 250,000 sq ft extension, doubling its distribution capacity.
Good communication played a vital role in ProLogis retaining the retailer. Steve Barton, property director at Dunelm Mill, says: “Situated on the M6, and within 90 minutes drive-time Birmingham, Manchester and Liverpool, Stoke is a prime location for us.”
The Gap and Dunelm deals will boost this year’s take-up which, according to Lambert Smith Hampton, already stands at 1.62m sq ft, compared with around 1.93m sq ft for the whole of 2009. LSH points out that rents remain competitive, averaging around £4.25-£4.50 per sq ft.
Alex Hanna, senior surveyor at LSH, says: “Industrial activity in Staffordshire is performing strongly and, so far this year, the area has outperformed areas such as Warwickshire and the West Midlands in terms of take-up in the big shed sector.”
Lack of availability in neighbouring areas has also worked in Staffordshire’s favour. Hanna says: “While a good run of activity in Coventry and Birmingham was experienced towards the end of last year and in the second quarter this year, there is now a scarcity of suitable buildings, leaving occupiers with no alternative but to look elsewhere.”
Anwar Hussain, of Burton on Trent-based agent Salloway, says incentives for both sheds and offices have remained static: “Average terms are three months rent-free on a three-year lease or phased rentals on longer leases.”
Investment hot spot
With investors scouring the market for premium products, Staffordshire could be one of 2010’s must-consider locations, with two distribution park deals completed or in the bag so far this year.
As EG went to press, Deutsche Bank’s RREEF had exchanged contracts to purchase New Look’s 300,000 sq ft building on Lymedale Business Park in Newcastle-under-Lyme from Gladman Developments. RREEF has simultaneously entered into a funding agreement to pay for a 100,000 sq ft extension to the building.
New Look has regeared its lease and will occupy the 400,000 sq ft distribution warehouse once the extension is complete. According to sources, the deal has a total transaction value of £24.5m – representing a net initial yield of 6.85%. Neither Gladman Developments nor its adviser, King Sturge, were available for comment.
This deal comes only months after Boots Alliance purchased the freehold of the 466,000 sq ft Opus Axis scheme in Burton on Trent in January for an undisclosed sum that is believed to be around £23m.
The building on Centrum 100 Business Park is a refurbished warehouse developed and extended by Opus Land, to which Boots will consolidate from a distribution unit in Worcester and two in Nottinghamshire.
Neil Starkie, industrial agency director at Savills, says: “Because of its sheer scale, the Boots deal is not only important locally, but it is also of national significance.”
Green light and prelet for Cannock offices
Although Staffordshire’s office market is usually dominated by sub-5,000 sq ft deals, the region saw its largest office deal for two years in Q1 2010, with the 40,000 sq ft prelet by Veolia Environmental Services in Cannock from Midlands developer Opus Land.
Cannock Chase council has given the go-ahead for the building at the Kingswood Lakeside site, where Veolia has signed an 18-year lease. The recycling and waste management company plans to relocate staff from its offices at Wolverhampton, Brownhills and Walsall in summer 2011.
Staffordshire Technology Park has seen a flurry of smaller deals lately including NFU Mutual taking just under 5,000 sq ft, and European Automation taking around 3,500 sq ft at a rent of £12.50 per sq ft.
According to the latest research from development agency InStaffs, average office rents across the region are bouncing back.
All areas, with the exception of East Staffordshire, have seen office values increase, it says.
Lichfield has seen the largest rental rise during the past year, and the city has regained its position of having the most expensive office property in the county at more than £15.30 per sq ft.
