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Julien Kenny-Levick, director, Colliers International Manchester gives his view on the distribution market in the North West.

wantspacegotspace.co.uk - Julien Kenny-Levick, director, Colliers International Manchester gives his view on the distribution market in the North West.“The North West has long complained about the lack of major “strategic” development sites and with Omega North now full and Cutacre seemingly next, can the region accommodate large scale occupier interest going forward? The simple answer is yes.

“The region has Barwood’s and Legal and General’s M6Epic which can accommodate up to 640,000 sq ft in Wigan, Canmoor’s Heywood Distribution Park in Rochdale which can cater for requirements up to 525,000 sq ft and Stobart Park in Widnes offering 1m sq ft.

“Although other potential options are available - including land to the south side of Omega North - the list is not long. Occupiers with large requirements of in excess of 500,000 sq ft have a relatively small list of potential deliverable options. There are warning signs that land supply might be squeezed even further with the recent acquisition by B&M of Peel’s 22-acre LIBP site at Speke in Liverpool just one example of available land being snapped up.

“Even this well documented shortage of land will not fuel speculative development in this sector. Large RDCs are bespoke in their design and such occupiers now have no choice but to acquire a property on a build-to-suit basis.

“Rents are being driven mainly by a combination of land values, build costs and yield and will only work for developers at certain levels – so if an occupier requires a certain level of build specification they will have to pay for it.

“The recent activity in this sector does not seem to have had a positive effect on rents generally which remain static. Despite very low interest rates, capital values also remain unchanged because of a reluctance by lenders to facilitate property acquisitions on realistic terms with acceptable loan to value ratios. There is however, some evidence that tenant incentives have reduced slightly in recent months.

“At the next level down there is plenty of choice for occupiers seeking sites capable of accommodating circa 100,000 sq ft. The North West has in excess of 25 sites capable of delivering such a property.
We anticipate demand for this size of plot to continue from internet retailers and discount retailers but again any return to speculative development will be absent.

“We are beginning to see some speculative development is in small unit schemes. For example, Property Alliance Group is on site at Bury Business Park with units from  2,000 sq ft upwards to provide a much needed boost for the market.”

Posted by The Editor (wantspacegotspace) on 24th June 2013 (updated 01/07/2013)

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