Making Way for HS2 Logistics Property
see a rash of moves after the government’s offers of compensation are made in April.” Lawrence reckons most of the demand will be for smaller units under 20,000 sq ft – but does not discount the possibility of much larger relocations.
Having got UK Mail in the bag, Prologis is cautious about the scale of HS2 relocations. Alan Sarjant, the Prologis director responsible for the West Midlands, says: “HS2 will be a driver of demand, but it won’t be fuelling a speculative development boom. The effect will be failure diffuse, there will not be a tsunami of new demand as a result of HS2.”
Chris Selway is senior director with
Talks about money
UK Mail’s relocation to Ryton came at the end of nearly three years of talks – the mail business began discussions with HS2 on the future of its Erdington site in 2011. UK Mail has won a compensation package from HS2. In addition, the building of the new hub will mean a £10m contribution from UK Mail. Chris Selway, senior director at surveyor DTZ and an advisor to UK Mail, says: “We began talks in 2011 and by spring 2012 the negotiations were serious. The business wanted to make a serious investment in automation, and didn’t think it could do this in the existing premises if they were under threat of compulsory purchase. The compensation claim to HS2 took account of this.
“In planning this move, UK Mail worked backwards from the autumn 2014 run-up to Christmas, so they had a strict timeline for a new building.”
Selway says now is a good time to negotiate with HS2: “During 2014, the promoters of the Parliamentary bill will want to remove as many objectors as possible, to allow the bill to move ahead,” he says.
The compensation budget for the London to Birmingham phase of HS2 is £2.8bn.
www.shdlogistics.com March 2014 15
surveyor DTZ and the man who advised UK Mail on its Ryton move. He is also one of the UK’s leading experts on the property implications of the HS2 project. He says the number of businesses forced to move could be smaller than some expect: “Thanks to route re-alignments, we’ll see a lot less business relocations than originally anticipated. For instance, around Birmingham there were to have been two tunnels at Castle Bromwich [at the LDV site] and now there’s only one, which means just one industrial estate is affected, not three as originally planned.”
WIDER CONSEQUENCES
Yet whilst the scale of the disruption to existing premises isn’t yet clear, there are wider consequences that could affect all West Midlands logistics fi rms.
The supply of industrial development land in Birmingham already running short. Some experts fear that the additional demand
created by HS2 relocations could push a tight supply situation into a crisis. Supply – already around 480 acres short of what the council believe is needed – is being eaten into by growing demand from occupiers and potential relocations caused by the HS2 high-speed train line. Prologis’ Alan Sarjant explains: “The issue is that we don’t have enough logistics land in the region in any case. The Birmingham Development Plan has proposals to release more, but I’m not convinced that the additional effect of displacement by HS2 hasn’t been taken into account.” Birmingham City Council says it isn’t ignoring the problem – on the contrary, it has launched an inquiry to fi nd more warehouse and industrial land, as pressure on limited supply grows. A Birmingham City Council spokesperson says: “We are aware that there is a potential shortfall, and we are working hard to address this. The Birmingham Development Plan recommends the release of 192 acres from the green belt in Pedimore for industrial and warehousing land, a proposal contained in a cabinet report last year. “We are also looking at alternative sites through the duty to co-operate with other local authorities. In fact, the chief executives’ group has commissioned a study looking at identifying employment land and other large sites.” The fi rst high-speed train will pull into
Birmingham in just 12 short years. But the property journey is already well underway.
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