Report of the West Midlands - West Midlands Combined Authority
Industrial & Logistics Midlands Ian Cornock Lead Director – Midlands Region 11th July 2012...
-
Upload
garry-franklin -
Category
Documents
-
view
221 -
download
0
Transcript of Industrial & Logistics Midlands Ian Cornock Lead Director – Midlands Region 11th July 2012...
Industrial & LogisticsMidlands
Ian CornockLead Director – Midlands Region11th July 2012
Overview
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.
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 ft2 for new industrial buildings
• Modern second hand - £4.00 to £4.50 ft2
5
Conclusions
• Stock Diminishing
• Speculative Development: Prime Locations?
• Funding?
• Preparation of sites for swift Design and Build
6
The Birmingham Office Market
Fit for purpose for the cities growth aspirations?
Charles Toogood - GVA
July 2012
gva.co.uk
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
Historic Demand and Rents
Lease incentives – 50,000 sq ft letting, 10 year term - 36 months
Headline Rental
10 year average 695,000 sq ft
0
5
10
15
20
25
30
35
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Year
Pri
me
Re
nt
0
200000
400000
600000
800000
1000000
1200000
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Year
sq ft
Availability in Key Schemes
Eleven Brindleyplace ArgentSize: 75,000 sq ftGuide rent: £25.00 psf
45 Church Street Standard LifeSize: 43,000 sq ftGuide rent: £28.00 psf
Two Colmore SquareNurton DevelopmentsSize: 120,000 sq ftGuide rent £25.00 psf
Colmore Plaza Carlyle GroupSize: 174,000 sq ftGuide rent £28.00 psf
Availability in Key Schemes
1 Snowhill Commerz RealSize: 38,000 sq ft to letGuide rent: £28.50 psf
2 Snowhill Hines120,000 sq ft to letGuide rent: £28.50 psfCompletion Jan 2013.
Five BrindleyplaceHines and MoorfieldSize: 133,000 sq ftGuide rent: £27.00 psfCompletion Autumn 2012
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Proje
cte
d C
om
ple
tions
(sq
ft)
Year
Development Pipeline
150,000
107,000
37,000
118,000
Langley Point
1 Snow Hill
Calthorpe House
Two Colmore Square
11 Brindleyplace
The Cube
5 Brindleyplace 2 Snow
Hill
106,000
108,000118,000
44,000
? ? ?
Supply vs. Demand – The Tipping Point
0
200000
400000
600000
800000
1000000
1200000
2011 2012 2013 2014 2015 2016 2017
Gra
de
A A
vaila
bili
ty (s
q ft
)
Year
Average annual grade A take up
Tipping point?
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
Colliers International
David Smeeton Investment Review
• Where have all the buyers gone?
15
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
• 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
Photoor
Illustration
21
Unit 5, Logix Park, Hinckley
• 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
PhotoorIllustration
22
Kingfisher Centre, Redditch
• 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%
Photoor
Illustration
23
Stechford Retail Park, Birmingham
• 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%
Photoor
Illustration
24
Chase Point, Phoenix Way, Coventry
• 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
Photoor
Illustration
25
The Cornerhouse, Nottingham
• 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
Photoor
Illustration
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