CBRE: Expect busy logistics H2
The big box deals which dominated 2013 have been absent from the logistics market so far this year according to CBRE's North West H1 Logistics Report, but take-up is due to improve.
The first half of 2014 has seen a slow start, with 373,000 sq ft exchanged across the region in units of more than 100,000 sq ft. However, CBRE said that this does not reflect the level of interest that the sector is attracting from both occupiers and investors.
CBRE reported that a number of deals, in particular design and build transactions, are at an advanced stage at some of the North West's key development sites. These include 6-61 Bolton at Wingates Industrial Estate, Epic Wigan in South Lancashire and Airport City Manchester.
CBRE attributed the increase in occupier activity to investment into the region's infrastructure and pipelined facilities at the ports.
In comparison, the first half of 2013 was dominated by design and build deals, led by 850,000 sq ft signed for at the Omega scheme in Warrington.
At present, all the speculative schemes in the North West are smaller units of less than 100,000 sq ft, such as Chancerygate's S-Park Stockport development of fourteen units ranging from 1,539 sq ft to 13,261 sq ft.
Mike Walker, senior director of industrial agency at CBRE in Manchester, said: "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.
"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.
"The lack of transactions in the immediate past means that prime rents in the North West remain at £5.50/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/sq ft mark. Indeed already, closer to Manchester on Trafford Park, rents of more than £6 are now being achieved on units of circa 60,000 sq ft."
