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Main Feature Logistics Property .. containers


cost developers have to bear. Common sense suggests we’ll know the rail freight market is a success when tenants are prepared to pay a premium rent to be close to a railhead.” Fortunately, traffic levels at the Birch Cop- pice railhead have been encouraging. “We’ve had tenants who say they aren’t interested in using the railhead, but who end up using it all the same,” says Law- rence, of growing interest from occupiers.


PLANNING PRESSURE


Planners are increasing pressure on developers to add railheads to logistics parks, say experts. Gary Halman, one of the UK’s senior planners and director at HOW Planning in Manches- ter, says: “The government’s new National Planning Policy Framework talks about local councils working collaboratively with others to move away from a completely road-based freight system, which isn’t seen as sustainable. The trouble is you can’t easily retrofit a rail interchange into a logistics site, and so it has to be planned-in from day one. And that is what local authorities are increasingly looking for.” Pressure from planners to include rail freight - and the difficulty of making it pay - are well illustrated by Gazeley’s plans for a site to the east of Ashby-de-la-Zouch in Leicestershire. Gazeley and UK Coal development arm


Harworth Estates thought that now was the right time to revive plans for the 850,000 sq ft single unit on the A42/A511 interchange, four miles from the M42 motorway. The site has a spur to the single-track freight line from Leicester to Burton-on-Trent, mak- ing it a 10-mile rail journey to the Derby to


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Note: Not all categories have been included Head start:


developers are coming under pressure to include an element of rail in new logistics parks


cope with 9’6” (height) containers on standard rail wagons. Gazeley will have to start work on the rail works within nine months of starting work on the warehouse and must agree “that the building will only be let or sold to a com- pany, business or group which can demonstrate that it will utilise, or is prepared to commit to utilising, the rail connection to this site”. The site’s traffic assessment used that 100% of all freight using the site would travel by road, whilst the cost of upgrad- ing the rail link (which includes a tunnel) could be considerable – as much as £5m according to a local council report. Manchester-based rail freight expert Neil


Rail Freight Moved (Billion net tonne/kilometres)


Worthington says the site could make useful rail connections with London and the South Coast ports – but might find journeys to Felixstowe more tricky. He estimates a workable railhead could be built for less than £5m. “The site has definite rail freight potential,” he says. An extra £10m bill would not be welcomed by developers. Rental income on the warehouse will be in excess of £4m a year – which makes the maths look do-able, but tight. Gazeley declined to comment on the scheme when approached by SHD Magazine, but some potential outcomes are already in the mind of observers. The condition requiring the warehouse user to have plans


www.shdlogistics.com


to use rail could be significant, they say. Worthington explains: “The condition is unworkable. It’s not even defined. What does “utilise” mean? Run an engine up and down the track on Opening Day, then mothball it all?” “And even if a business shows, in all good faith, that it has a contract to receive a thousand containers of widgets a year, by rail, what happens if the market for widgets col- lapses? Or locally-manufactured widgets sud- denly become cheaper than imported Chinese widgets? Or the railways put their prices up? Or fail to deliver punctually? It’s a non-starter.” If Gazeley is patient, it could apply to have the condition removed. Says planner Gary Hal- man: “It is possible to unwind a Section 106 agreement, but by opting for an agreement, rather than a planning condition, the local coun- cil have given themselves more control. That is because there is no right of appeal against Section 106 agreements for five years. Even so, a developer could try to market the site with a railhead for three years, and failing to find a tenant would be good evidence to apply for a variation of the Section 106 agreement.” Railfreight is on a journey – and it’s still got a long way to go. But according to academic Allan Woodburn, more railheads will be built. “Domestic intermodal traffic between southern hubs and regional de- pots is small but growing,” he says. And property developers hope he is right. n


Storage Handling Distribution August 2012 45


Birmingham mainline. In January local planners approved the scheme, but insisted Gazeley sign a Sec- tion 106 planning agreement to improve the line to Burton to


Small goods: railfreight is still a minority interest in the logistics world


Source: Office of Rail Regulation


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