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Industrial & Logistics Midlands

Industrial & Logistics Midlands. Overview. Ian Cornock Lead Director – Midlands Region 11th July 2012. Supply & Demand. Supply of Grade A, high bay distribution space rapidly reducing Supply of good quality second hand space also reducing

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Industrial & Logistics Midlands

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  1. Industrial & LogisticsMidlands Overview Ian Cornock Lead Director – Midlands Region 11th July 2012

  2. Supply & Demand • Supply of Grade A, high bay distribution space rapidly reducing • Supply of good quality second hand space also reducing • Demand – Robust demand particularly on new/good quality industrial space • Sectors showing particular activity include: • Automotive (proposed JLR 1,000,000 sq ft engine plant) • Food • Internet retailing • Underlying fragile economic circumstances • Funding is generally still very difficult

  3. Example of Internet Parcel Hub • APC Logistics – Kingswood Lakeside Cannock New 130,000 sq ft cross dock facility currently under construction

  4. Pre-Let Market • Most of the activity at the moment is from occupiers looking at existing buildings which can be acquired on perhaps more favourable terms. • With the diminishing stock of grade A space, we anticipate the pre-let/pre-sale market will improve later this year heading into 2013. Speculative Development • We are only seeing potential spec development in very prime core logistics areas and this is on a modest scale to start with.

  5. Land Values/Rents • These can vary dramatically on location and quality of land and whether it is owner occupier or developer led. • As a range £200,000 per acre up to £400,000 per acre • Rents appear to be fairly static at around £5.50 ft2for new industrial buildings • Modern second hand - £4.00 to £4.50 ft2

  6. Conclusions • Stock Diminishing • Speculative Development: Prime Locations? • Funding? • Preparation of sites for swift Design and Build

  7. July 2012 The Birmingham Office Market Fit for purpose for the cities growth aspirations? Charles Toogood - GVA gva.co.uk

  8. Headline Statistics 18.64 m sq ft stock 930,000 sq ft grade A supply – new and second hand Of which 475,000 sq ft brand new 10 year average take-up 695,000 sq ft Grade A take-up typically 51% (32% in downturn) Current supply equivalent to 2.5 to 4 years grade A take-up

  9. Historic Demand and Rents 10 year average695,000 sq ft Headline Rental Lease incentives – 50,000 sq ft letting, 10 year term - 36 months

  10. Availability in Key Schemes Eleven Brindleyplace Argent Size: 75,000 sq ft Guide rent: £25.00 psf 45 Church Street Standard Life Size: 43,000 sq ft Guide rent: £28.00 psf Two Colmore Square Nurton Developments Size: 120,000 sq ft Guide rent £25.00 psf Colmore Plaza Carlyle Group Size: 174,000 sq ft Guide rent £28.00 psf

  11. Availability in Key Schemes 1 Snowhill Commerz Real Size: 38,000 sq ft to let Guide rent: £28.50 psf Five Brindleyplace Hines and Moorfield Size: 133,000 sq ft Guide rent: £27.00 psf Completion Autumn 2012 2 Snowhill Hines 120,000 sq ft to let Guide rent: £28.50 psf Completion Jan 2013.

  12. Development Pipeline Langley Point 44,000 1 Snow Hill 37,000 106,000 Calthorpe House 11 Brindleyplace 107,000 5 Brindleyplace Two Colmore Square 2 Snow Hill 150,000 118,000 ? 108,000 The Cube ? 118,000 ?

  13. Supply vs. Demand – The Tipping Point Tipping point? Average annual grade A take up

  14. Key Trends / Conclusions • 2015 demand will outstrip supply • Limited speculative development finance • C 2m sq ft of major lease events by 2020 • Transport infrastructure completions • The return of the pre-let • More Grade A refurbishments • Constrained ability to meet tenant demand

  15. Colliers International David Smeeton Investment Review • Where have all the buyers gone?

  16. Just where is the market?

  17. London’s another world

  18. Where are the banks? LBG £80 bn invested in property £30 bn in Business Support Unit £19 bn impaired You have to add up the top six funds to get to £80bn RBS is smaller but only just They are the market!

  19. So where is pricing? • The market is in the hands of the following players • The Funds • Property Companies who’ve survived • High net worths • Overseas investors

  20. One Snowhill, Birmingham Photo or Illustration 263,415 sq ft office building constructed in 2009 located in Birmingham’s prime core Freehold Let to KPMG and Barclays Bank with an AWUXT of 13.05 years to expiries (9.8 years to breaks) 38,375 sq ft currently vacant (being sold with a 30 month rental guarantee) Total passing rent £8,200,000 per annum Three rent reviews in 2014 Available June 2012, asking price £124 m, 6.25& NIY

  21. Unit 5, Logix Park, Hinckley Photo or Illustration Situated in the “Golden Triangle” of the UK distribution industry, immediately adjacent to the A5 and close to J1 of the M69 and J10 of the M42, Logix Park provides excellent transport links to the rest of the UK The 362,000 sq ft distribution warehouse is let to logistics service provider Syncreon Technology (UK) Ltd, on a 6.5 year lease for an annual rent of around £2 m equating to £5.52 per sq ft In April 2012 Cabot Properties ltd purchased the freehold interest from Orchard Street Investment Management LLP on behalf of St James’ Place Property Funds for £23,225,000 reflecting 8.1% NIY

  22. Kingfisher Centre, Redditch Photo or Illustration 920,000 sq ft covered centre comprising 160 units. 2,800 car spaces in a multi storey car park Freehold Retailers include Marks & Spencer, Debenhams, Bhs, Primark, Wilkinson, H&M, Next and T K Maxx MWUXT circa nine years to expiry Current income after landlords shortfalls equates to £10,985,288 per annum Market Rent approximately £13,782,115 per annum based on £30 ZA – £70 ZA Sold May 2012 for £130M reflecting 8.00%

  23. Stechford Retail Park, Birmingham Photo or Illustration Freehold 104,079 sq ft; 11 units Unrestricted open A1 planning consent (except for one A3 unit) Tenants include DSG, Argos, McDonalds, Poundworld, Cartpetright and Peacocks Aggregate current rent of £1,635,331 per annum Fully let; passing rents range between £9.96 and £18.80 per sq ft. Fixed increased on two units WAULT of 10.8 years Sold in March 2012 for £20.5M 7.53%

  24. Chase Point, Phoenix Way, Coventry Photo or Illustration The property is well located on the Gallagher Business Park adjoining the A444 Coventry is the hub of the national motorway network. The M6, M1, M12, M69 and M40 are all within a few miles The property comprises two modern warehouses of steel portal frame construction, with fully fitted offices, service yards and separate car parking Point 1 let to Aston Martin Lagonda Ltd on a ten year lease commencing no later than 1 May 2012 at £411,070 per annum equating to £5.23 per sq ft Point 2 let to Schenker Ltd at £212,465 per annum with a WAULT of five years In March 2012 Legal & General Property Ltd purchased the freehold interest for £6,930,000 reflecting 8.5% NIY

  25. The Cornerhouse, Nottingham Photo or Illustration Freehold interest Off market deal Circa 225,000 sq ft of space encompassing a 14 screen cinema, 11 restaurants, two bars, a nightclub and a casino Purchased by Land Securities April 2012, £50M; 6.6% NIY

  26. Is this the bottom of the market? Only time will tell Things seem out of kilter London could be a bubble The secondary market may be over discounted

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