You could hardly call it fever-pitch – more mild and occasionally baffled interest – but Amazon’s off-again on-again plans for a 1m sq ft depot remain the main source of fascination in the North West, writes David Thame.
The latest stories suggest, more or less simultaneously, that they plan to go to Peel’s Port Salford site (which Peel says could deliver within 12 months), to Ellesmere Port (in Wales, not the North West, but with potential public sector incentives on offer) or to Liverpool (Stonebridge Cross, early favourite and still thought to be a contender).
When the conversation isn’t about Amazon, it’s about speculative development. Whilst the Midlands has seen an increasing (if still small) list of speculative big shed developments, the North West has yet to see a developer take a really beefy risk.
Yet data from Colliers International suggest the region could support a gamble on big shed building, if anyone was prepared to take it. For now everyone prefers to play safe with design-and-built.
Colliers say there are no new distribution sheds available in the North West in excess of 336,000 sq ft and just six new or refurbished units of more than 100,000 sq ft.
The shortage of available space has nudged up land prices – up overall by 7.7 per cent for big ‘sheds’ to £263,000 an acre, and by a staggering 14 per cent in Liverpool, where port-related activity and a ready workforce is stimulating demand. Warrington - always a popular logistics location - has seen land prices rise by 9%.
Rising land prices inevitably means rising rents, and although rental figures have remained more or less static for decades there are some modest signs of growth. Colliers say the North West average is up 5.7% at £4.63 a sq ft, and up by 7.5% to £3.56 for second-hand big sheds.
Add all this together and it looks like the incentives for speculative development are growing, especially for buildings of around 200,000 sq ft where demand is strongest.
Julien Kenny-Levick, director of industrial and logistics at the North West office of Colliers International, whispers: “Rumour has it that a number of developers are now not just thinking about speculative build to redress the demand supply imbalance, they are actually putting formal plans in place to begin construction.”
Of course some developers have already taken the plunge, albeit on a smaller scale. Chancerygate built 80,560 sq ft of speculative floorspace at S. Park Stockport. The 14 small scale units are expected to go fast, say letting agents JLL and Davies Harrison.
Mark Sillitoe, director industrial and logistics at JLL, says: “The return of speculative development to the North West marks a significant turning point for the market. There’s a wealth of businesses looking to relocate and a continued lack of high-quality stock and this is driving demand. We’re finding that many investors, developers and funders have a renewed interest in the region given the opportunity available.”
When the conversation isn’t dominated by speculation about Amazon and speculation about speculative development, the talk is of Peel Group and Harworth Estates.
The two giant industrial developers teamed up in February to form a logistics property partnership controlling more than 5,600 acres of Northern warehouse land. In the North West the new partnership will control some of the most prized sites, not least Harworth’s 450-acre Logistics North scheme at Cutacre, Bolton.
Their only serious large-scale rival is Warrington’s Omega site, which has now won planning permission for a 2.1m sq ft logistics development on its southern section. Could Omega Warrington, a joint venture between RBS Real Estate Asset Management and Edinburgh-based Miller Developments, decide to develop speculatively, thus stealing a march on their rivals? That is sure to be the next subject for fevered speculation in the gossipy North West.