Static rents

Surprisingly, perhaps, rents for logistic and warehouse space in the Midlands has remained static over the past year. That is the conclusion of Colliers for its Logistics and Industrial Big Sheds Rent Map for 12 locations. The survey reveals that prime rents are actually below levels of 5 years ago, which also applies to secondary space.

But the picture is changing. Simon Norton of Colliers said: “Take up of Grade A space in the past three years has started to eat into existing supply, resulting in signs of severe stock shortage. The lack of speculative development has exacerbated the situation. For the first time in years, landlords are beginning to feel they may just have the upper hand and are holding out for better terms.”

He makes the point that developers and investors realise that land prices, which have fallen in the past 5 years, will now rise.

Worcester based agent, Halls Commercial, makes that point in its marketing of the Corbett Business Park, Stoke Prior, near Bromsgrove. This has a total of 10,108 sq.metres (108,800 sq.ft.) in an office and two warehouses but also a six acre plot for further development. One attraction is being within two miles of the M5 motorway. Halls’ Richard Tomlinson said: “Corbett Business Park provides a good opportunity for manufacturing or distribution companies who are considering relocating.”

He adds that “the shed market has held up very well and we are getting to the stage, particularly around Worcestershire and south of Birmingham, where there is a distinct lack of supply of big sheds.” Also on the market, through Jones Lang LaSalle, is Canmoor’s 10 acre site on the M54 with its outline planning for a 17,187 sq.metres (185,000 sq.ft.) warehouse. “The plot is well placed for industrial/warehouse premises,” said Carl Durrant of Jones Lang LaSalle. “Few opportunities exist in the Black Country for prime land with planning and we are expecting the plot to generate a lot ofinterest from occupiers.”

Jones Lang LaSalle is also handling a 9,290 sq.metres (100,000 sq.ft.) manufacturing plant for the Bamford Trust close to Junction 2 of the M5 which was formerly occupied by Pilkington Glass.

Buying secondary space

In an improving investment market, secondary markets in the West Midlands are in line for increased activity.

That is the view of DTZ ’s Money into Property 2011 report which predicts a 4% increase compared with 1% in 2010. DTZ notes that the 4% is modest in comparison with global invested stock which is due a 9% rise this year. Nick Allan of DTZ said of the Midlands market: “The big opportunity is behind us in the UK prime markets. With prime property fairly priced, investors will begin moving up the risk curve, targeting non-core

markets for opportunities.”

This process is being helped by increased lending in the process of banks and institutions working out their debt on property, a process which is well established in prime real estate. Allan said: “Activity in the secondary market is increasing, with opportunistic investors, many of whom raised funds some time ago, keen to invest. More properties have become available as lenders start to take action on defaulted loans. For example, at the end of 2010 Saltley Business Park was sold on behalf of Lloyds Banking Group for £23.285 million for a yield of 9.49%.”

One prime property that could come onto the market is Aegon Asset Management’s 55 Colmore Row. The owner has asked Abstract Land to review the 11,613 sq.metres (125,000 sq.ft.) property which could include a sale. It was leased by the law firm Wragge & Co in the early 1990s.

One deal that has gone through is the sale of the Caxtongate block of retailing in New Street, Birmingham where a client of LaSalle Investment Management has paid Cosgrove Group £16 million through Jones Lang LaSalle and Lewis Ellis for a yield of 6.5%.

Landing on Pegasus

Colliers has joined Fisher Hargreaves Proctor in marketing the expansion of Pegasus Business Park, a venture of East Midlands Airport and MAG Developments.

The 20,903 sq.metres (225,000 sq.ft.) office park will have a new 216 bedroom Radisson Blu hotel later this year and has another 25 acres available for high class offices. FHP’s John Proctor said: “When it was launched, the park proved to be highly successful and it remains one of the biggest in the region, but, in terms of the regional office market, it has slipped from the mind’s eye somewhat.” He suggested a new promotional campaign will work now the park has a new hotel adding to the attractions of being equidistant between the three major conurbations in the East Midlands.

Hitting the target

A vote of confidence in Target Park, Redditch has come from removals and storage company, Johns of Studley which has added a further unit in the second phase of the £12 million development.

This adds to its initial unit where it was the first company to move into the estate. John Finn of Johns said there has been a strong growth in business and gave the example of its client Nissan where “car production has never been busier.” Joint agents are John Truslove and KGA. Anderman & Company is also expanding by relocating its entire Midlands operation to Xylem Development’s Cortex scheme at the Hartlebury Trading Estate near Kidderminster. The company is buying a unit for its businesses which focuses on the distribution of industrial ceramic products and specialist engineering support services for high voltage electricity substations.

John Lewis leads

Rebuilding New Street is vital to the Whitby vision so it is encouraging that Network Rail, on behalf of the council, has submitted a planning application for a 23,225 sq.metres (250,000 sq.ft.) John Lewis store in a regenerated Pallasades Shopping Centre over the station.

As one of the retailer’s largest stores outside London, it is the anchor for the shopping centre, which is being designed by Foreign Office Architects and opening in 2014. This is, of course, part of the proposed EZ.

Winning formula

Another well located industrial estate in the Midlands is the 25,959 sq.m. Kelvin Way Trading Estate, a mile from Junction 1 of the M5 at West Bromwich. The refurbishment has been a success and pulled in a range of companies, such as Reliant Products, Safety- Kleen and Joseph Joseph. The estate is being marketed by Bulleys and Harris Lamb. Adam Priest of Bulleys said: “The estate has proved hugely popular with

a wide range of businesses, including manufacturing, government departments and storage operators. One of the occupiers, Reliant Products, found the location so suitable for its staff and customers that it has, said the company’s Managing Director, John Allen, “already expanded on the site and taken new units to accommodate our growth.”

Minton success

The Minton Business Centre in Far Cotton, Northampton has been one of the town’s success stories during what has been a period of reduced transaction activity in the commercial sector. The Airflow Streamline site, purchased by the Minton Group, has provided an almost unique opportunity for good value freehold industrial space in close proximity to Northampton Town Centre, St James Retail Park and Junction 15a of the M1.

Joint agents Lambert Smith Hampton and Budworth Hardcastle have successfully sold 79% of the scheme, with recent transactions including 48,000 sq.ft. sold to Bearwood Engineering and 16,000 sq.ft. sold to Keystone Roofing. Other occupiers on the scheme include InTown Automotive, Kis Coaches and Stagecoach.

The site’s location and building configuration have also provided unique opportunities for Trade Counter occupiers and Leisure uses such as The Pinnacle Challenge Climbing Centre, where the high eaves of Unit 1 has enabled them to erect a 12.5m climbing wall, which is one of the highest in the region. Ashley Bourne of The Minton Group comments, “we are absolutely delighted with the progress made to date, and expect the three remaining units to attract further purchasers shortly.” In this respect, the Agency Team are also delighted to report that they are in discussions with a number of interested parties, but welcome new enquires on the remaining 46,700 sq ft.

Hark watches Portas

As confidence in the property market rises, so the appetite for town centre regeneration becomes sharper. Historic plans are being reassessed and new schemes being given the green light.

That is the experience in the Midlands where Compendium Living, the joint venture of Lovell and the housing association Riverside, has been selected for the Urban Village scheme in Derby.

This is a large urban scheme of commercial space and 800 residential units together with community facilities with the first phase scheduled to start in Spring 2012.

In Telford, Hark Group, which owns the 92,900 sq.metres (1 million sq.ft.) shopping centre, is examining its long desired plans for redevelopment. One reason for the review is that the government has appointed Mary Portas to examine the current situation of high street retailing in the country.

Hark want to develop a multiplex cinema and new restaurant complex. A spokesman for the company said: “Recent positive developments at both national and local level have prompted us to consider how best to continue the growth of Telford town centre,” Those words will hearten other owners of town centre sites.

Government backing

The government would appear to recognise the importance of pushing for economic growth in Birmingham because it has given the city a Regional Growth Fund grant of £15.7 million. The money will be used as part of the funding of a £37 million scheme to improve the A45 road near Birmingham Airport. Apart from the government, the transport authority has contributed £10 million and the airport £7 million.

They have combined with Birmingham and Solihull City Councils to apply for the government money. Birmingham City Council leader, Mike Whitby, said: “The upgrading of the A45 will bring significant transportation and economic benefits to the region and will also remove the current constraints the road alignment has on the proposed runway extension.”

When he became council leader in 2004 he made rebuilding New Street Railway Station and extending the runway at the airport key elements in making Birmingham a globally relevant city.

Bring on the Big City

With its intense commitment to making Birmingham a world class city, the council is expecting a major boost to its plans from the creation of an Enterprise Zone, (EZ) in the city centre.

The logic of its Big City Plan is that the 304 acre centre covering five areas (Southern Gateway, New Street Station South, Westside, Snow Hill and Eastside) is the key to the economic future of Birmingham.

So it maintains its long term ambition which has already seen considerable change with the EZ offering the prospect of 1.49 million sq.metres (16.1 million sq.ft.) of new floorspace. The EZ also includes the site of a new railway station for the High Speed 2 rail link to London. That, combined with a rebuilt New Street Railway Station, will give the city exceptional transport links to boost economic growth.

Jones Lang LaSalle’s Peter Leaver commented: “The city core is the most effective location for an EZ because it will have the greatest ripple effect.” Like other property professionals, he believes an EZ will speed up regeneration.

Certainly the lessons of the 1980s are that EZs can play a significant role in boosting economic growth and changing cities, as witness London Docklands and Salford Quays. As far as the Midlands is concerned, Nottingham has already been granted an EZ for the Boots campus.

Meanwhile, Hines and Ballymore are to directly develop the key site of Two Snowhilll which Colliers International said would alleviate the looming office supply crisis. The firm’s Craig Satchwell, who advised Hines, said: “Two Snowhill will be the first significant office development outside London constructed post credit crunch with an element of speculative space. It will come to the market in 2013 when most of the existing Grade A space is likely to have been absorbed. This will not only help to boost supply it will also help attract inward investment.” Colliers International’s figures show that take up of office stock in Birmingham is the highest for five years with total occupancy up 20,608 sq.metres (221,825 sq.ft.) in 2010. Hines has already shown its commitment to Birmingham in joining with Moorfield to buy eight buildings at