The slow start to 2014 in the North West logistics market, with just 373,000 sq ft of take-up in units over 100,000 sq ft, does not reflect the level of interest that the region’s logistics sector is now attracting from both occupiers and investors, according to new research from CBRE.
CBRE’s H1 Logistics Report highlights that so far this year a notable absence has been the big box design and build deals that dominated occupier activity throughout 2013, namely at the Omega site in Warrington. However, CBRE reports that at present a number of deals, in particular D&B transactions, are at advanced levels of negotiation on some of the North West’s key development sites. These include 6-61 Bolton, EPIC Wigan and Airport City Manchester. This increase in occupier activity is attributed in part to investment into the region’s infrastructure and pipelined facilities at the ports.
Mike Walker, Senior Director of Industrial Agency at CBRE Manchester, explains;
“Since 2009 the North West has increasingly been seen by occupiers as an important additional node within their UK distribution networks, or even an alternative to a more Midlands-centric model. During the downturn, the region has benefited from investment in the necessary infrastructure that will support the logistics sector into the future.
“Such initiatives include the funding put in place via the North West Evergreen Fund for access roads, ground works, power, drainage and other utilities at the Logistics North site near Bolton. In addition Peel is well underway with its enhancements to the region’s port facilities. Liverpool 2 will provide new deep water port facilities, allowing larger vessels to dock at Liverpool. These facilities are due to open in the second half of 2015. In addition there are new facilities planned at Port Salford as part of an enhancement of the Manchester Ship Canal. These investments are expected to have a medium term impact on demand, particularly in markets to the west of Manchester. Lack of developable land immediately adjacent to the new port will create a bubble effect and offset demand to other North West locations.”
CBRE expects occupier activity to improve into the second half of the year as the success in 2013 at sites such as Omega in Warrington has spurred developers in the region to now consider speculative development. At present, all the speculative schemes in the North West are smaller units of less than 100,000 sq ft. An example of this includes Chancerygate’s scheme at S-Park Stockport where a speculative development of fourteen units ranging from 1,539 sq ft – 13,261 sq ft available for sale/to let will be completed by Q4 2014.
“Undoubtedly there will be first mover advantage when it comes to a spec start on a larger unit, and the prospects of this happening will increase towards the end of the year. Sites in Trafford, Irlam, Wigan and Rochdale are all contenders.
“The lack of transactions in the immediate past means that prime rents in the North West remain at £5.50 per sq ft. This is the level that was achieved last year on the M62 at Warrington. However, the next major D&B is likely to move this headline rent upwards towards the £6.00 per sq ft mark. Indeed already, closer to Manchester on Trafford Park, rents of over £6.00 are now being achieved on units of circa 60,000 sq ft.”