A number of chunky requirements have got Bristol’s shed agents salivating, but the big question is when and where they will land.
Four major retailers have requirements (see below) which form part of what Knight Frank partner Russell Crofts estimates to be 4m sq ft of demand for large sheds.
“The deals will inevitably happen at some point because the companies involved have made strategic decisions to change their networks,” he says.
So that is a “don’t hold your breath just yet” then.
Jones Lang LaSalle director Paul Baker is another who believes it will be steady as she goes. He says that the market is “encouraging” but that there will be no rush of deals.
BNP Paribas Real Estate director Jeremy Hughes adds: “There is a good prospect of two to three good-sized prelets this year.”
If at least some of these big deals do land in 2012, it will enliven the region’s overall take-up, which was 2.4m sq ft in 2011, according to the Industrial Agents Society for the South West. That is virtually unchanged from 2010, but ahead of 2009’s figure of 2.1m sq ft.
As to where the deals might land, most of those looking for space are likely to have to take a prelet because there is only one speculative shed available, a 550,000 sq ft building called Crossflow 550, completed by Prologis in 2007.
A letting to Accolade Wines that was expected last autumn did not happen.
The only other sizeable new building – a 165,000 sq ft unit called 4mation – was let to Yankee Candles in March.
The good news for occupiers is that there is a huge choice of development land available.
Knight Frank’s Russell Crofts says there is around 1,000 acres of consented land in the Severnside area alone.
According to GVA director Paul Hobbs, the competition between sites is likely to help keep prices down – but only to an extent.
He believes that the ability to deliver buildings reliably will be the telling factor in winning business.
“Margins are so slight that I don’t think the price will vary much between the sites. Getting a competitive edge comes down to having planning in place and a fully-serviced site with infrastructure,” he says.
Some developers have taken this need on board. At St Modwen’s Access 18 development in Avonmouth, a spine road is already in place, and a new road junction will be completed in September. Similarly, Severnside Distribution Land and Roxhill Developments have invested in a spine road at their Central Park development.
As well as a large amount of total land in the area, there are a number of sites in Severnside capable of taking very big sheds. Bericote, for example, has two schemes – Avlon and Portside – both of which could accommodate buildings of 1m sq ft.
Companies that want to locate in Swindon have less choice and, in the longer term, agents are concerned about a lack of land being allocated by the council.
Loveday partner Alastair Andrews says: “You could see all the land gone in a few transactions, at which point Swindon could not satisfy demand.”
Currently, Gazeley could develop buildings of 135,000 sq ft and 437,000 sq ft at G.Park Swindon, while GraftonGate could develop 450,000 sq ft at its Ecco scheme.
As well as big sheds, agents in the region are optimistic about the mid-range market, from 25,000 sq ft to 100,000 sq ft.
Andrew Ridler, a partner of Alder King, says: “The quality of enquiries is good and often linked to a lease event or a particular business reason for doing something.”
Who’s looking for space?
• Asda has a requirement for two buildings of 450,000 sq ft and 125,000 sq ft and is looking in Swindon, having examined options in Avonmouth.
• TJ Morris, owner of discount retailer Home Bargain, requires up to 400,000 sq ft.
• Marks & Spencer is looking for up to 1m sq ft as part of its plans to open four large regional centres around the UK.
• Supergroup, owner of the Superdry brand, recently took a short-term lease on 250,000 sq ft in Gloucester but is looking for a 400,000 sq ft shed.
• Several unnamed requirements include a retailer seeking 400,000 sq ft, an online retailer requiring 70,000 sq ft and two manufacturers looking for 100,000 sq ft and 150,000 sq ft.
The Co-operative Group chooses Avonmouth
The Co-operative Group had a wide choice of development sites available when it looked for a new facility to serve 450 stores in the South West and Wales. Construction of its 435,000 sq ft building at Cabot Park in Avonmouth will be complete in August with the first deliveries being handled from October.
Mark Leonard, the Co-op’s head of logistics service, says: “Seven potential sites were identified, which was reduced to a shortlist of four and then two, which were both in the heart of Avonmouth.”
The Co-op looked across a wide area, stretching from Wellington in Somerset to Gloucester, Swindon and Cardiff. “In the end, Avonmouth provided the best all-round solution, in terms of scale, transport links and location, to meet our long-term needs,” Leonard says.
Gallan Group and Stoford are building the warehouse on land acquired from The Crown Estate. The development is being forward-funded by AXA Real Estate, with whom the Co-op signed a 20-year lease at £2.1m pa.
