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Logistics Property Main Feature Trains, ships and.


Are new rail freight-linked logistics parks a glimpse of a sustainable transport future – or a fig-leaf to disguise what are really road-based developments? David Thame investigates.


Everybody loves rail freight. Railfreight is clean, green, looks fabulous as part of a corporate social responsibil-


ity programme. What’s not to like? Developers are piling into the rail freight scene with rail-linked developments at Helioseurope’s 3.5m Radlett scheme, Hertfordshire, Roxhill’s 6m sq ft East Mid- lands Gateway site, Severn Trent’s 7m sq ft Etwall development, and elsewhere. The surge of interest in rail-freight re- lated logistics development comes as the UK sees real growth in domestic


Shipping forecast


Deals with Uniserve and Marks & Spencer are expected to launch DP World’s 9.3m sq ft London Gateway port-linked logistics park.


The park is part of a £1.5bn port development to provide anchorage for advanced deep- water container arrivals.


Both Universe and M&S are understood to be considering 1m sq ft lettings.


DB Schenker Rail will operate freight trains over 700m in length from London Gateway, amongst the longest in the UK. The new hub is


likely rail freight terminal.


to become the UK’s busiest Track


can also be directed directly into warehouses, if occupiers prefer.


Tim Johnson, director at Jones Lang LaSalle and an advisor on the scheme,


says: “This


facility is ideal for domestic intermodal container traffic. It will be very cost-effective and potential occupiers are seriously interested in the railhead.”


containerised transport by rail. Measured by billion tonnes/kilometre travelled, domestic intermodal freight has risen steadily from 3.38 in 2002/3 to 6.31 in 2011/12. It now rivals coal as the largest single sector of the rail freight scene, accounting for about 29% of activity.


with the 139bn tonnes/kilometres accounted for by road haulage, domestic intermodal railfreight amounts to a just 4.5%. The same is true of all rail freight, where non-coal rail freight represents just 3% of the 1.5bn tonnes carried by road. For all its benefits and the growing interest


“It’s a not-yet market, because although there is interest in future-proofing from tenants who want to be close to a railhead, it isn’t yet reflected in the price”


Dr Allan Woodburn, a specialist in rail freight working at the University of Westminster, says: “Domestic intermodal is the future of rail freight. Containerised traffic is the area that’s seen the most dramatic growth over the last decade and there is potential for a much greater shift. Many more distributors want the option of rail freight, and it is already significant for carrying container traffic from the south coast ports to the north of England and Scotland.” A £200m upgrading of the network to improve container movements is already underway, and another round of spend- ing is expected between 2014-2019.


MINORITY INTEREST


But whilst it’s grown fast, railfreight is still a mi- nority interest in the logistics world: compared


Long load: 700m+ freight trains will be accommodated at London Gateway. 44 August 2012 Storage Handling Distribution www.shdlogistics.com


in rail freight, the sector hardly looks powerful enough to justify strong developer interest and it could be pressure from planners, rather than surging demand from warehouse occupi- ers, that is prompting developers to act. Richard Lawrence is a logistics property specialist with surveyors Colliers International in Birmingham. Lawrence is an advisor at Birch Coppice which, incorporating the Birmingham Intermodal Freight Terminal, is the largest rail- served development site in the West Midlands. Says Lawrence: “It’s certainly very hard to get planning permission without a railhead. A lot of logistics schemes are seen as needing a rail- head to kick them off, and without the railhead you can’t build – it’s a planning condition.” Putting in a railhead is costly - the impres- sive Birch Coppice railhead cost £25m – but without it the development couldn’t go ahead. “It can feel like poor value for developers, because there is no premium rent attached to adding the facility. It is not as if tenants are prepared to pay £7.50/sq ft for ware- houses next to railheads, and only £5/sq ft for space without railheads,” he says. “It’s a not-yet market, because although there is interest in future-proofing from tenants who want to be close to a railhead, it isn’t yet reflected in the price. Today, it is just a


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