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Logistics Property Regional Focus M25 WEST & SOUTH Air pressure


Plane attraction: A growth in air cargo means Heathrow proximity attracts a premium


News that Heathrow warehouse rents have hit £16/sq ft comes as no surprise in the busy M25 West warehouse market, says David Thame.


florid. Around £13/sq ft is still a full price in the Heathrow area, dipping to £11/ sq ft nearer Staines. Park Royal at £13.50/sq ft and Slough at £11/ sq ft are also high rented, according to figures from Jones Lang LaSalle.


HIGH RENTS, HIGH DEMAND


The revival in air cargo traffic since the recession has meant growing interest in well-located airport properties. Freight


lifted at Heathrow has recovered sharply from a 2009 low and now stands at around 380,000 tonnes a quarter. Scottish Widows Investment Partnership’s airport property unit trust, represented by Canmoor Developments, has capitalised on the growth. It prelet a 141,500 sq ft distribu- tion unit at Heathrow to Dubai-based cargo handler dnata. The occupier will pay a rent understood to be £16/sq ft on a 10-year lease for a site which will be opposite the Heathrow Cargo Terminal. All eyes will down turn to the fate of the 3.5 acre development site next door - and Scottish Widows will be hoping for an equally impres- sive rent.


Major landlords have much to celebrate. Segro has completed significant pre-let deals around Heathrow, including 110,000 sq ft to DB Schenker and 60,000 sq ft to Rolls Royce. Elsewhere in the region, rents remain less


46 August 2012 Storage Handling Distribution


High rents are explained by high demand. According to Jones Lang LaSalle, Thames Val- ley take-up is now at a 17-year high of 2.3m sq ft, whilst the last half of 2011 turned out to be a glittering one for the Western Corridor warehouse markets. Some 3.6m sq ft of indus- trial and warehouse floorspace let, up 43% compared to the first half of the year. Key Thames Valley deals saw Tesco signing for a new 950,000 sq ft depot at the former Berkshire Brewery site, and Brakes Group signing for a new 207,000 sq ft unit at Sut- tons Business Park. Take-up dipped in most markets in the first quarter of 2012 - in the south-east, for instance, JLL reports a fall-back of 22% compared to late 2011, and says that no floorspace taken up involved units larger than 100,000 sq ft.


Meantime, supply is up very slightly to 12.7m sq ft, although much of this is due to second-hand properties returning to the market. Grade B space like this accounts for about three-quarters of all the available floorspace.


Developers have been quick to appreciate that the market is see-sawing back in their favour.


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Legal & General Property, on behalf of its Linked Life Fund, is to press ahead with plans for a new 77,000 sq ft single warehouse unit at Lovelace Road, Bracknell, which has been named Lovelace Park. Vail Williams and Strutt & Parker are advising on the scheme. LGP plans to develop a warehouse unit on the former Honeywell site with ancillary office space and a secure service yard on the 3.88 acre site. Near neighbours include Waitrose, BMW, Panasonic, Hyundai and Fujitsu. Legal & General’s Craig Westmacott ex- plains: “A number of international businesses have already chosen the southern industrial area of Bracknell for its proximity to a talented, skilled workforce, and easy road and rail ac- cess to Heathrow and London.”


FEEDING FRENZY


GVA says that food retail is the dominant source of regional demand, with Tesco leading the way. Supermarket chain Tesco has won planning permission for a new 120,000 sq ft depot in Crawley. The grocery chain also acquired land at Beam Reach for a 650,000 sq ft distribution centre, and is buying the Courage Brewery site in Reading for a 930,000 sq ft depot. Tesco has also taken 100,000 sq ft buildings in Enfield and Crawley.


A number of other supermarkets are also active in the local market, not least for their growing internet operations. John Lewis and Waitrose are leading the pack, but are not alone. n


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