Logistics Property Regional Focus M4 CORRIDOR & SOUTH WALES Go West
Superdrug’s search for up to 500,000 sq ft of Bristol distribution floorspace comes as the ‘bigger-is-better’ approach to logistics property rolls down the M4 corridor, writes David Thame
is an awful lot of land available which means the market is very competitive and no-one bargains like a retailer. So retail- ers hold most of the cards, but not all.”
FOOD FOR THOUGHT
Superdrug – understood to be looking for between 300,000 sq ft and 500,000 sq ft – joins Asda, which
is looking for 600,000 sq ft in the al- ready crowded Bristol marketplace. They may both struggle to find what they want, as may others reported to be searching for up to 4m sq ft of South-West warehouse space. Asda’s search is now understood to have been extended to a 50-mile radius of Bristol – a choice forced on the retailer by limited relocation op- tions. The cold store and pallet cleaning service centre replaces a 247,000 sq ft warehouse at Portbury, Avonmouth. Just one big warehouse – Crossflow, the 550,000 sq ft unit at ProLogis Cabot Park, Avonmouth – is ready and avail- able. Sadly for occupiers, the list of large available units ends there. “The rest will have to be design-and-build,” says Rus- sell Crofts, industrial property partner with surveyors Knight Frank in Bristol. Although the supply of completed warehouses is thin, the supply of development sites is more gener- ous. In fact, almost too generous. Crofts explains: “I can identify 4m sq ft of demand across the region, but there
Food – this time catering – also made the running at Standard Life’s Suttons business park, Reading. Brake Brothers signed up for a 200,000 sq ft temperature-controlled warehouse on a 25-year lease. Grocers are making the pace in Swin- don, too. Asda’s cold store requirement is understood to stretch to Swindon, and two further retailer requirements – one of 1m sq ft, another of 700,000 sq ft – are mesmer- ising the owners of suitable development sites. They will join B&Q, which chose the Wiltshire town’s G Park for an 800,000 sq ft depot in a deal with Gazeley Properties. James Gregory, partner with surveyors Alder King in Swindon, says: “The prob- lem is that we have so few sites with planning permission and the right trans- port links, sites that are ready to go.” The supply problem is no better for smaller warehouse units under 150,000 sq ft. “There’s not a vast choice. Some of the poor quality units have let, as have some of the better quality units, but with no new building the supply is begin- ning to dwindle,” says Gregory. Rents for second-hand space will soon begin to rise from around £4 a sq ft, he predicts. Down at the Welsh end of the M4, super- markets provide predominant source of de- mand. Rob Ladd, director of industrial agen- cy at DTZ in Cardiff, explains: “There is an encouraging level of transactions including Co-op, Yankee Candle, WH Malcolm and Chep which have all taken space recently. “There has been a lot of activity, as food retailers rationalise/upgrade their distribution
www.shdlogistics.com
network – Co-op, Tesco, Sainsbury’s and Morrisons have all taken new buildings/ sites recently in the South-West to the detri- ment of distribution parks in South Wales such as Newhouse Farm in Chepstow.” Asda and Waitrose are both believed to be hovering over the market prepar- ing to launch new requirements.
ALDI PULLS OUT
But not all grocers are expanding. Many in the Cardiff market were surprised at reports that Aldi is preparing to off-load its 30-acre site at the city’s Capital business park. It is understood that the site, acquired in 2005 for a 400,000 sq ft depot, no longer fits into its distribution plans. Aldi isn’t the only occupier with surplus space. Local agents say that the South Wales logistics market remains very com- petitive, with several large companies with their own distribution offering cheap storage/logistic solutions in surplus space. The problem in South Wales is much like that around Swindon: relatively short supply of suitable buildings, and a short list of potential development sites. Says Ladd: “There is a shortage of Grade A buildings in South Wales and M4 Cor- ridor. There is a limited supply of sites along the M4 in South Wales with planning for logistics. The main options are land at Chep- stow controlled by East Mon Estates and St Modern’s site at Llanwern, near Newport.” Renishaw PLC, buyer of the the former Bosch Plant at Junction 34, is currently working with the Council to promote surplus land for warehouse/distribution use. The 193-acre site at Lantrisant, north west of Cardiff, could be the next big thing in the region’s distribution scene. The site includes the 361,000 sq ft Bosch facility and a 10,000 sq ft clean room. n
Storage Handling Distribution May 2012 49
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