In 1991, when the M40 motorway was extended from Oxford to the M42 outside Birmingham, it was described as a corridor of movement, a glorified bypass of the M1 between the capital and the West Midlands. Now, some 24 years later it is set to become a corridor of growth. Specifically, the section of road between junction 9 (Bicester) and junction 11 (Banbury) could see the development of more than 8m sq ft of logistics space in the coming years.
Technically in the South East region, though bordering both the East and West Midlands, this 16-mile ribbon of motorway cuts through rural north Oxfordshire but, unlike the M1, has seen relatively little major property development along its boundaries. Local property experts explain that this was largely due to the previous local plan, dating back to 1996, which resisted warehouse property in favour of higher job-yielding high-tech automotive uses, though these largely failed to materialise.
“For many years it seemed that the local authority was trying to dampen the market,” says John Greaves, director at Lambert Smith Hampton’s Oxford office.
With dreams of becoming a second Thames Valley in tatters, the area began to relax its objections to warehousing. As its new local plan is still stalled with the Planning Inspectorate, Cherwell district council appears to be unwilling to talk about its policy U-turn. But for developers and occupiers the shift represents an opportunity to move into the largely undiscovered bottom corner of the Golden Triangle.
“The M40’s time is coming,” predicts Chris White, founder of Banbury-based White Commercial, which has operated in the area since before the motorway arrived. He adds: “The reason the M1 was the destination of choice was because there was nothing here for occupiers to look at.” Now that is set to change, and in a big way.
Banbury, historically the most industrial of the towns close to the motorway, will lead the charge. DB Symmetry, the joint venture between Delancey and Barwood, is already on site with a speculatively built 235,000 sq ft warehouse at its Central M40, which fronts the M40 south of junction 11. That building, which is due to complete in July, is next to the 120,000 sq ft new home for motorsports specialist Prodrive, which vacated its former site to allow development of Banbury Gateway (see box).
Expectations that the speculative unit will let before completion are high. DB Symmetry development surveyor Tim Webster says: “The M40 is seeing significant growth in occupational interest. Locations such as Banbury are as well located from a logistics perspective as equivalent locations on the M1 but have the added benefit of less traffic and fewer roadworks, which are increasingly associated with the M1.”
A letting at Central M40 is likely to spark further development on a site that has planning consent for up to 1.2m sq ft. And it could grow further: local sources suggest that fields next to the scheme may be sold, adding the potential for another 200,000 sq ft of space. In the meantime, First Industrial, which let 200,000 sq ft to toy retailer The Entertainer last year on the former Alcan factory site on Southam Road, is to speculatively build two units, totalling 260,000 sq ft, which will complete early next year.
It is not all about big units, however. White says: “There is a real appetite for smaller units and when these become available they are likely to be snapped up for owner occupation.”
Around 40,000 sq ft in three units is speculatively under construction at Banbury’s Beaumont industrial estate and due to complete shortly. Nearby, 65,000 sq ft will become available in 2017 when German cleaning equipment firm Kärcher relocates to an 85,000 sq ft bespoke unit being built at AC Lloyd’s and Minns Network’s Banbury Point, next to junction 11. A neighbouring one-acre in-fill plot recently sold to an owner-occupier for a 30,000 sq ft warehouse.
“If you look forward a few years there will be development around each motorway junction – that was an anathema to the council a few years ago,” says LSH’s Greaves.
Several sites, mainly greenfield, offer huge development potential. On the eastern side of junction 11 a 117-acre agricultural plot known as BAN 15 is scheduled to be re-zoned for employment uses in the local plan. If so, it could be sold to a developer to provide around 1.75m sq ft, although around half the site may be sold directly to an owner-occupier who is reportedly interested in building a 750,000 sq ft facility there.
Further south at junction 10 more greenfield land, presently zoned as rural, could provide 165 acres of distribution space, including a railfreight terminal. And at Bicester (junction 9) two sites may be developed. The former MoD land at Graven Hill has potential for a 1.4m sq ft scheme. A neighbouring plot of around 60 acres owned by DB Symmetry could also house around 1m sq ft, although a planning application is not expected for some time.
In the short-term, supply remains limited, with the predictable effect on rents. “They have uniformly risen from £5.75 per sq ft to £6.25,” says White.
Retail
North Oxfordshire shoppers responded enthusiastically when plans for a Waitrose store on the edge of Banbury were put out to public consultation just before Easter. An overwhelming 85% strongly supported the scheme, which would be developed by Barwood Capital on behalf of landowner Mondelez International.
The site sits next to a factory operated by the US food giant (previously Kraft Foods) and the profits from the property development will be reinvested in the industrial facility. A planning application for the 42,000 sq ft (gross) food store is expected to be submitted this month. If consent is granted by the autumn, work could start on site next summer, with the store opening in 2017. Additional leisure units (see overleaf) are expected to follow on the remainder of the plot.
The Waitrose scheme is not expected to face the same planning hurdles as Banbury Gateway, an £80m retail warehouse park under construction on the edge of Banbury, just off junction 11 of the M40. LXB’s 285,000 sq ft development, pre-funded by the Crown Estate, was vehemently opposed by the owners of Banbury’s in-town Castle Quay shopping centre and existing retail warehouse location Banbury Cross retail park, which ultimately lost a high court battle to halt the project.
Ten of the 13 units have already been let to tenants including Next and Primark, as well as a 100,000 sq ft Marks & Spencer anchor. The stores are due to open in time for Christmas trading this year, when LXB expects the park to be fully let.
Leisure
A leisure extension to the 400,000 sq ft Castle Quay shopping centre in Banbury is due to start on site later this year. Landlord Aberdeen Asset Management (which absorbed the mall’s previous owner Scottish Widows Investment Partnership last year) expects to submit a detailed planning application for its 200,000 sq ft CQ2 project this month.
Discussions are under way with operators for a 117-bedroom hotel and seven-screen multiplex with Premier Inn and Odeon, respectively, in the frame, although no deals have yet been signed. Eight A3 units are reportedly under offer and a 40,000 sq ft food store is also planned. Suggestions that the scheme might not proceed following the granting of consent for edge-of-town retail scheme Banbury Gateway (see retail box), which was strongly opposed by SWIP, are roundly dismissed by Aberdeen fund manager Cameron Murray.
Leisure units are also proposed at the edge-of-town Mondelez site on Southam Road, where Barwood Capital hopes to win consent for a new Waitrose store (see above). The supermarket will occupy around one-fifth of the site, but the developer is waiting for the store to gain planning approval before finalising the leisure uses: A3 restaurants, a gym and a hotel are all possibilities.
