Midlands: bigger the better as take-up stays steady
Some of the East Midlands’ biggest industrial sites are set to change hands as housebuilder Barratt sells off the industrial arm of Wilson Bowden Developments
Barratt is believed to be asking £90m for a 290 acre portfolio that includes the 140 acre East Midlands Distribution Centre scheme at Castle Donington and the industrial element of the 112 acre Castlewood development near Nottingham.
Jones Lang LaSalle is advising on the sale and it is thought that the bidders are likely to include Palmer Capital Partners-backed Opus Land, Gazeley and Charles Clowes’ Condor Developments.
So far in 2008 there has been healthy take-up in the region’s big shed market (see table) with the biggest transaction being Primark’s agreement to lease the 640,000 sq ft former Ikea shed at Thrapston in Northamptonshire. In addition, Opus Land is close to signing up Marks & Spencer at its 460,000 sq ft Opus Axis building in Burton upon Trent, where the retailer will pay around £5.25/sq ft on a 15-year lease, and Helios Properties let a 105,000 sq ft refurbished building in Newcastle-under-Lyme at the end of August to Mercury Material Management at £3.50/sq ft.
‘The big shed market in the Midlands is not on its knees,’ says Andrew Jackson, a partner at North Rae Sanders. ‘The Primark deal demonstrates that there are tenants willing to take big buildings on reasonable terms.’
Simon Lloyd, a director at DTZ, says that, although demand is still relatively healthy overall, the number of small freehold deals has reduced considerably, leading to a fall in values of around 10%.
Speculative development has halted almost completely. Funds for most of the schemes under construction – such as ProLogis’s two buildings of 312,500 sq ft and 235,500 sq ft at Midpoint near Birmingham – were committed in late 2007 or early this year. Few, if any, are expected to go ahead with speculative construction in the latter part of 2008.
Richard Lawrence, a director at Colliers CRE, warns that the Staffordshire market could prove tough for firms such as ProLogis, Gazeley and HelioSlough, which are all developing buildings near Stoke-on-Trent and Stafford. ‘If a big requirement comes up they will all be competing against each other,’ he says.