A clampdown on capital expenditure has led high street retailer Marks & Spencer to pull out of close to 700,000 sq ft of warehousing space in the Midlands.
The retailer, which last month announced a 6% drop in like-for-like sales, has pulled out of a deal to take a 460,000 sq ft distribution unit at Opus Land’s Axis building in Burton upon Trent, Staffordshire. M&S was also taking 210,000 sq ft at Goodman’s adjacent First Point scheme, but has now cancelled that deal. It agreed terms with Goodman only five weeks ago.
The deals were dropped following a review of M&S, which recorded a 44% decline in pretax profits in the six months ended 27 September.
M&S was to take 15-year leases on both sheds, paying around £5.75 per sq ft. The deal with Opus hinged on the developer giving M&S two-and-a-half years rent free.
Sources said that fit-out costs of more than £35m at the Axis building – which was to be the main distribution hub for M&S’s e-commerce division – finally scuppered the deal.
“Fit-out costs were enormous,” said one. “This was a cap-ex decision, not a property-driven one. The requirement may come back in the new year if trading picks up over the Christmas period.”
A spokesman for M&S said: “Over recent months we have been conducting a review of our logistics and supply chain operations. We have to ensure that we maximise the value of our investments, and that is why – instead of the Burton developments – we now plan to utilise our existing sales.”
Richard Smith, Opus joint managing director, confirmed: “The deal has fallen through. Opus Axis is back on the market.”
Jones Lang LaSalle, GVA Grimley and North Rae Sanders are letting agents at Axis Savills is advising Goodman Cushman & Wakefield advised M&S.
