LOGISTICS - 2020 UK - Colliers
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INDUSTRIAL & LOGISTICS VIEWPOINT 2020 UK
CONTENTS
FOREWORD 4
NATIONAL MARKET 6
LONDON & THE SOUTH EAST 8
WEST LONDON 10
SOUTH WEST 12
MIDLANDS 14
NORTH WEST 16
YORKSHIRE & THE NORTH EAST 18
SCOTLAND 20
NORTHERN IRELAND 22
CAPITAL MARKETS 24
2 3
We are pleased to launch our new
Industrial and Logistics Viewpoint 2020,
which is designed to give you an overview
of national and regional activity.
Despite the political and economic uncertainty that many
businesses in the UK faced in 2019, the Industrial and Logistics
sector has remained resilient.
Some of the key findings of this Viewpoint include:
• Demand for industrial and logistics space in 2019 remained
strong with take-up reaching in excess of 30m sq ft for the
year, exceeding the 10-year annual average by 17%, but
14% below the record breaking 2018
• The industrial sector out-performed all other property
asset classes in 2019, partly driven by very strong rental
growth in London and key South East locations
• Rental growth is expected to moderate in 2020, although
logistics units located in heavily populated areas will reach
above average returns
• At the beginning of the year we were expecting 2020 to
be a record year in terms of demand. However, material
downside risks associated with the Covid-19 virus may
limit the occupational upside. Should the virus run its
course in the first half of 2020, we may expect to see a
busy second half as occupiers regroup and press ahead
with urgent projects
For an informal chat, please do not hesitate to get in touch with
either myself or one of the team. I look forward to meeting
you personally.
LEN ROSSO
Head of Industrial & Logistics
+44 7831 436 096
len.rosso@colliers.com
ANDREA FERRANTI
Head of Industrial & Logistics Research
+44 7522 357 441
andrea.ferranti@colliers.com
4 5
NATIONAL MARKET
Economic outlook Supply chain challenges
The heightened economic volatility that we have seen in GDP growth in 2019 is expected to reach 1.3% (Oxford The success of a retailer’s online strategy is closely linked robotics and the implementation of the 5G network
the wake of the Government’s Brexit negotiations and Economics), partly impacted by trade protectionism and to the distribution sector and supply side functions. This will allow greater control over stock management and
planning in 2019 has placed an unprecedented strain an associated rise in global uncertainty which caused explains the strong levels of take-up nationally for both turnaround times. Consequently, the use of ‘big data’ and
on UK supply chains. There are concerns that economic a deterioration in business investment. The economic large distribution warehouses and urban logistics space as increased digitisation will be the next battleground for
weakness could impact consumer spending. While the performance in 2020 is forecast to moderate to 1%, companies seek to cope with increasing demand. supply chain operators and retailers as they look to exploit
latest ONS data shows a very strong labour market with before picking up to 1.9% in 2021. synergies within their global business. The continuous
Colliers predicts that the next 10 years will be
an unemployment rate of 3.8%, Q4 2019 household growth of ecommerce, coupled with moderate economic
It is worth mentioning that the impact of Covid-19, transformational in the way that occupiers use their
spending saw a negligible 0.1% q/q rise. Annual wage growth prospects, will force retailers to continue to develop
commonly called Coronavirus, is not yet visible in the industrial space and integrate technology. The use of
growth in December 2019 topped 2.9% and with a their omnichannel strategy more efficiently.
official data, but given China’s position at the centre of
sluggish inflation at about 1.4%, this should support
many global supply chains, a temporary negative impact
consumer spending in 2020.
of some scale is likely. Take-up by type of unit - Strong fundamentals continue to drive the sector forward
2nd hand New D&B % Share Spec % Share
Market overview
40
60
Strong market fundamentals are expected to drive Supply has increased and now stands at around 36m sq 35
the industrial sector forward as occupiers’ focus on ft, but considering that 9.0m sq ft of new-build space was 50
30
streamlining supply chains continues unabated. Based on completed in 2019, the market remains well-balanced in
Take-up sq ft (m)
current market dynamics, total space under offer, and the terms of supply and demand, with developers seemingly 25 40
wider consumer and technological landscape, we were unfazed by the current economic jitters. In this respect, our
Share (%)
expecting 2020 to be a record year in terms of demand. records show that 6.6m sq ft is either under construction 20
30
However, material downside risks associated with the as of February 2020, or recently completed and available
15
Covid-19 virus may limit the occupational upside over the to let.
first half of the year. 20
In terms of MSCI performance measurements, the 10
2019 was a very challenging year for business planning. industrial sector out-performed all other property asset
5 10
Political uncertainty and exchange rate volatility made it classes, partly driven by very strong rental growth in
extremely difficult for businesses to commit to large capital London and key South East locations. The sector has 0
expenditures. Nevertheless, the sector has been supported enjoyed strong rental growth for several years now 2011 2012 2013 2014 2015 2016 2017 2018 2019 0
by strong occupational demand driven by occupier needs to and consequently, we expect this to moderate in 2020, Note: units 100,000+sq ft | Source: Colliers International
future-proof supply chain operations. In this regard, take-up although logistics units located in densely populated areas
figures for large distribution warehouses (greater than will reach above average returns. National Supply - The market remains well-balanced with supply in line with the five-year average
100,000 sq ft) topped 30m sq ft, in line with the Supply 5yr avg (2014-’18)
five-year average. 100
90
The view from the expert 80
Now that the political impasse around Brexit has been We should expect to see consolidation in the UK based 70
Supply sq ft (m)
resolved following the December 2019 election, the sector freight forwarding and 3PL sectors, particularly 60
can start to move forward. The big challenge facing the amongst SMEs.
50
logistics industry remains the low margins with retailers
and consumers still expecting more for less. This is not 40
sustainable in the long-term. 30
CHRIS EVANS
The conundrum of low margins versus large investments 20
Supply Chain Specialist
required for new technologies, mechanisation and
+44 77 99 58 72 30 10
automation will continue to define who will be able to chris.evans@colliers.com
future-proof their supply chain. 0
2009 2014 2015 2016 2017 2018 2019
Source: Colliers International
6 7
LONDON & TRACK RECORD
HIGHLIGHTS
THE SOUTH EAST
Occupier market
The London and South East market had a strong year in 2019 with take-up for
distribution warehouses larger than 100,000 sq ft reaching 6.1m sq ft. This is 9% up
on 2018. When analysed within the national context, take-up in the wider South East
market (including London) accounted for a national share of 21%, the second largest TRITAX SYMMETRY
share after the Midlands (45%). Leasehold disposal
Symmetry Park, Biggleswade
A recurring theme over the past few years has been the lack of sites and limited
choice for occupiers to fulfil their requirements and based on the latest study, there
is less than 10 months’ worth of supply in the wider London and South East market.
Consequently, both London and the South East out-performed other UK locations in
terms of rental growth, with the latest MSCI quarterly data for Q4 2019 showing an
annualised rental growth of 3.9% in both markets.
While there has been slight uptick in the development pipeline, availability still remains
For more information very tight and occupiers, in some instances, are exploring a wider range of locations
please contact: due to several factors, such as rental growth, labour availability and most importantly,
unit specifications. Emerging locations along the A1(M), such as Biggleswade,
AGENCY and M40, like Banbury and Bicester, have attracted interest from occupiers and
developers. Amongst some of the most notable deals, Colliers advised Tritax
Prologis
William Bellman Symmetry on the pre-let of a new 661,000 sq ft purpose-built RDC at Symmetry Park
+44 7881 553 904 Site acquisition
Biggleswade. Upon practical completion, targeted for Q1 2021, Co-op will take a new
william.bellman@colliers.com Former Brooklands Bakery’s site, Weybridge
20-year lease. Furthermore, the electric vehicles and components manufacturer,
Arrival Automotive Ltd, took Unit 1A, Link 9 in Bicester (120,599 sq ft). The unit was
James Haestier let in December 2019, around eight months after practical completion. Key occupational transactions
+44 7818 038 009
james.haestier@colliers.com With regards to activity inside the M25, the capital continues to attract a wide range of
occupiers. Some of the key deals include Amazon taking 180,000 sq ft at Wembley180,
Address/Site Size (sq ft) Tenant Landlord Notes
whilst the food wholesaler, Wanis Ltd, agreed terms on a freehold turnkey distribution
warehouse (140,000 sq ft) at SEGRO Park Rainham and Beavertown Brewery signed
Akhtar Alibhai Symmetry Park, 20-year lease
+44 7909 684 801 a pre-let of a 126,595 sq ft design and build unit at Enfield Distribution Park. 661,200 Co-op Food Tritax Symmetry
Biggleswade Design and build
akhtar.alibhai@colliers.com
Looking forward, we expect this strong demand, partially driven by the growth of
ecommerce, to continue to put further pressure on rents. Due to the lack of available Freehold turn-key
SEGRO Park, Rainham 140,000 Wanis Ltd GLA/Segro
sites, industrial investors will be increasingly assessing alternative use investment Design and build
Tim Harding
opportunities, for a long-term industrial play. This will potentially be facilitated as the
+44 7860 180 328
change in consumer behaviour, advances in technology and urbanisation continue to Unit 1A,
tim.harding@colliers.com 120,600 Arrival Automotive Ltd RDI REIT Spec unit
bring the industrial and retail sectors closer together. Link 9, Bicester
Georgia Pirbhai
+44 7599 533 143
Key investment transactions
georgia.pirbhai@colliers.com
Investment
Sale price - £m
Ailish Dove Address/Site Buyer Seller WALT (WAULT) Notes
Investor appetite for assets located in London and the South East of England NIY (%)
+44 7514 944081
ailish.dove@colliers.com continues unabated as propcos, UK institutions and overseas funds remain attracted
by reversionary investment opportunities and the long-term prospects that the market Towers Industrial Estate, Three unit multi-let
£56m (3.90%) Royal London Blackrock 7.70 yrs
has been offering. As a result, provisional investment volumes reached almost £1bn West Thurrock logistics estate
Investment in London in 2019, up 43% year-on-year. On the other hand, volumes for the wider
Gatwick Distribution Park, Aberdeen Two South East
South East market registered a 17% contraction, over the period, to £1.6bn. £45.75m (3.50%) OLIM Property 14.60 yrs
Crawley Standard logistics facilities
John Hanson
+44 7825 251 894 6.00 yrs
Oyster Park, Chertsey BA Pension Nine unit multi-let
john.hanson@colliers.com £14m (4.35%) InfraRed (4.50 yrs)
Road, West Byfleet Fund industrial estate
8 9
WEST TRACK RECORD
HIGHLIGHTS
LONDON
Occupier market
The wider West London market remains a key UK hotspot for industrial occupiers
who are seeking to capitalise on London’s growing consumer economy as well as
long-term structural changes in the sector. Over the past couple of years, the London
market in general has witnessed a broadening of the occupier base with firms from AVIVA
the entertainment industry and food & drink sector which continues to thrive. Leasehold disposal
UX1 Uxbridge Industrial Park, Uxbridge
Occupiers from the ‘Alternative’ sector have also been increasingly active in West
London and, in this regard, Pinewood MBS Lighting’s 10-year lease of a speculatively
developed unit at UX1 Uxbridge Industrial Park (134,168 sq ft) is a further testimony
to this.
Similarly, in 2019, Virtus Data Centres took occupation of DC1 (75,000 sq ft) and
DC2 (250,000 sq ft) at Prologis Park, West Drayton and Ark Data Centres is also
understood to have paid a record land value per acre for the purchase of the entire
Bullsbridge site (Impact Park). Langley Business Park, a 16.5 acre industrial site sale,
has also been targeting the data centre sector.
For more information With regard to rents, the chronic supply shortage and limited development land have,
please contact: in turn, driven rental growth in the market. Prime rents for small industrial units have
reached £20 psf in Park Royal, £14 psf in Feltham, £15 psf in Greenford and £16.50 AVIVA
psf in Heathrow. On the other hand, prime rents for units larger than 100,000 sq ft Leasehold disposal
AGENCY stabilised in 2019. 360 Stockley Close, West Drayton
Looking ahead, the market will continue to witness strong demand and we expect
Patrick Rosso
+44 7825 571 048
further rental growth to come. In this respect, prime rents in London are forecast Key occupational transactions
patrick.rosso@colliers.com to grow by an annual average of 3.5% to 2023 and West London market’s supply/
demand dynamic makes it well-placed to capture this growth.
Address/Site Size (sq ft) Tenant Landlord Notes
Isa Naeem
+44 7889 432 972
isa.naeem@colliers.com UX1 Uxbridge Pinewood MBS 10-year lease
Investment Industrial Park
134,168
Lighting Ltd
Aviva Investors
£12.50 psf
UX2 Uxbridge Galaxy Insulation and 10-year lease
Investment There is a limited supply of investment stock in the wider West London market as Industrial Park
37,917
Dry Lining (Holdings) Ltd
Aviva Investors
£13.50 psf
investors tend to hold on to their best performing assets. As a result, following a
Michael Kershaw Unit 5 The Planet 10-year lease
competitive bidding process, the limited amount of investment opportunities becoming 7,816 NCM Distributors Colliers Capital
+44 7834 083 126
available are quickly snapped up. Prime yields are at around 4% but, for the best Centre, Feltham 6-year break
michael.kershaw@colliers.com
assets, investors are willing to pay sub-4%. In London, Prologis acquired Matthew
Clark’s warehouse in Park Royal for circa £35 million at a NIY of sub-3.5%, while
Valor Real Estate purchased Booker’s 65,000 sq ft in Acton at a NIY of 3.5% for £18.9
million. Looking forward, investor appetite will not wane and we expect this strong
Key investment transactions
demand to continue this year.
Sale price - £m
Address/Site Buyer Seller WALT (WAULT) Notes
NIY (%)
Distribution
Aberdeen
Central Way, Park Royal £34.50m (3.23%) Prologis 4.16 yrs warehouse let to
Standard
Matthew Clark
Distribution
Allied Way Industrial Schroder
£18.87m (3.5%) Valor Real Estate Confidential warehouse let
Estate, Acton REIT
to Booker
Feltham Corporate St James 8.86 yrs Six unit multi-let
£45.30m (4.75% ) Westbrook
Centre, Feltham Place PF (7.40 yrs) industrial estate
10 11
SOUTH TRACK RECORD
HIGHLIGHTS
WEST
Occupier market
The South West market has witnessed a renaissance over the past few years with
large occupiers, such as Amazon and B&Q acquiring space in the region in 2018. That
said, 2019 was impacted by the recent political uncertainty, which resulted in a lack of
large deals being completed. BALLYTHERM UK LIMITED
Freehold acquisition
While activity remained subdued, occupiers continued to target Grade A space.
Overross Industrial Estate, Ross On Wye
Ocado’s acquisition of a speculative unit at St. Modwen Park Access 18, in Q4 2019,
is testimony to the strength of this market. The 151,330 sq ft distribution warehouse
reached practical completion in Q1 2019, but was let on a 17-year term at a rent of
£6.75 psf the largest deal of the year occurred when Colliers advised Ballytherm on
the freehold purchase of the 253,737 sq ft former XPO Logistics unit at Overross
Industrial Estate, Ross on Wye.
According to the Colliers’ Rents Map, prime rents have remained stable across the
region with the average prime rent for large distribution warehouses at £6.40 psf.
Similarly, average prime rents for smaller units saw no changes and remain at £7.90
psf, although MSCI annualised quarterly ERV growth to the end of Q4 was recorded
For more information at 2.3%.
please contact:
On the supply side, there is considerable activity and developers remain confident. In PANATTONI
addition to Barwood Capital’s practical completion of 139,061 sq ft at Junction One in New instruction
AGENCY Avonmouth in Q4 2019, Trebor Developments has plans to deliver a 134,269 sq ft unit 50 acres site in Swindon
at Central Approach in Avonmouth and Barberry Group also plans to build a 101,500
Tom Watkins sq ft distribution warehouse at More+ Central Park. Panattoni is also marketing Key occupational transactions
+44 7917 093 167 its speculative scheme in Swindon, which comprises 613,644 sq ft in Phase 1 and
tom.watkins@colliers.com
353,280 sq ft in Phase 2.
Address/Site Size (sq ft) Tenant Landlord Notes
Looking ahead to 2020, we expect take-up activity to pick-up, which will result in
Alex Van Den Bogerd more absorption of Grade A planned supply. Occupiers have been waiting in the wings
+44 7902 702882 to continue their expansion into the South West, but understandably, decided to delay St. Modwen Park Access 17-year lease spec unit
alex.vandenbogerd@colliers.com
151,330 Ocado Group St. Modwen
18, Avonmouth £6.75 psf
their boardroom decisions due to the political uncertainty; hence, it is expected more
leasing requirements to come to fruition this year. 10-year lease
Unit 5, Kendall
56,078 Selecta UK Mileway Second-hand unit
Investment Close, Bristol
£6.95 psf
15-year lease
Richard Coombs Unit G8, Horizon
+44 7795 652 030 Investment 38, Bristol
52,497 Secure Express Delivery St Francis Group Spec unit
£7.75 psf
richard.coombs@colliers.com
Investment activity in the South West was moderate with volumes topping £255
million in 2019 (provisional data), down 17% on 2018 as investors focused on more Key investment transactions
established prime UK locations. Nevertheless, this drop in activity did not result in
yields moving out. Prime yields in the region remained stable at between 4.75% and
Sale price - £m
5.00%. The largest transaction occurred when Hines Global Income Trust purchased Address/Site Buyer Seller WALT (WAULT) Notes
NIY (%)
the single-let warehouse to DSG from M&G for £36.5 million at Avonmouth in Bristol,
at a NIY of 5%. The unit, which was built in 2006, and at the time of the purchase, had Western Appoach
Hines Global Distribution ware-
11.75 years until lease expiry. With regards to multi-let, Bamfurlong Industrial Park in Distribution Park, £36.50m (5.00%) M&G RE 11.75 yrs
Income Trust house let to DSG
Cheltenham, a 28 unit multi-let estate priced at £7.45 million at a NIY of 4.52%, was Avonmouth
bought by Dunmoor from CBRE GI. Indexed rent reviews
1%-3% pa x 5.
Looking ahead, in 2020 we expect investment volumes to recover in the region as St. Francis
GKN, Horizon 38, Filton £27m (5.00%) BP Pension Fund 20 yrs Hybrid space split
the greater political stability will make South West investment opportunities more Group
50/50
attractive to national and overseas investors. Forward funding
Bamfurlong Industrial 28-unit multi-let
£7.45m (4.52%) Dunmoor CBRE GI 3.90 yrs
Park, Cheltenham estate
12 13
TRACK RECORD
MIDLANDS HIGHLIGHTS
Occupier market
The Midlands has continued to attract large national and international occupiers, whilst
capitalising on the growth of online demand. Take-up in 2019 reached a new historical
high at 13.3m sq ft, which also resulted in a record-breaking 45% share of
national activity. JAGUAR LAND ROVER
Site Acquisition
Amongst some of the most notable deals for the year: VF Corporation agreed a
Appleby Magna - 2.94m sq ft
578,620 sq ft pre-let at Unit 1 Mountpark Bardon, Cummins Diesel’s pre-let (10-year
lease) for a 430,000 sq ft design and build warehouse at Apex Park Daventry at a
rent of £5.75 psf, and Urban Outfitters committed to building a 432,000 sq ft bespoke
unit at Peterborough Gateway. These are just a few of a flurry of deals. In addition,
Prologis also let two units to IAC (77,484 sq ft and 233,085 sq ft) at Prologis Park
Birmingham Interchange in Solihull on a 11-year lease, at a rent of £7.25 psf and
£6.65 psf, respectively.
The deal of the year occurred when Jaguar Land Rover (JLR) agreed to lease five
design and build units at Appleby Magna, where the campus will total 2.94 million
sq ft. This is the biggest pre-let in history and Colliers advised the occupier on this
For more information transaction. Furthermore, freight forwarder DSV will be joining JLR at the site as it
please contact: has agreed a 450,000 sq ft pre-let from IM Properties.
LASALLE IM
In terms of rents, prime rents for large distribution warehouses range between Leasehold disposal
AGENCY £6.50 psf. and £7.00 psf with smaller distribution warehouses in south and east of Stoke 108, Radial Park, Stoke-on-Trent
Birmingham reaching £7.75 psf, with Solihull commanding prime rents of circa
Simon Norton
+44 7788 436 273
£8.00 psf.
Key occupational transactions
simon.norton@colliers.com To conclude, on the supply side, developers have responded to this strong demand,
and availability has increased marginally due to a pick-up in speculative development.
That said, some new speculative schemes are being let and Eddie Stobart’s pre-let of Address/Site Size (sq ft) Tenant Landlord Notes
Sam Robinson circa 620,000 sq ft of space, across three speculatively-built units, from Panattoni,
+44 7825 437 213 is testament. 20-year lease
sam.robinson@colliers.com Appleby Magna 2.94 m – 5 units Jaguar Land Rover IM Properties
Design and build
15-year lease
Mountpark Bardon 578,620 VF Corporation Mountpark / USS
Tom Arnold
+44 7880 091 416
Investment Design and build
tom.arnold@colliers.com
Peterborough Gateway 432,000 Urban Outfitters Newlands Freehold sale
The Midlands investment market defied Brexit uncertainty in 2019 with investment
volumes only recording a 4% annual contraction. Following the record-breaking
Charlie Andrews
activity of £1.5 billion in 2018, this result was the second best turnover on record,
+44 7902 709533
charlie.andrews@colliers.com according to Property Data. The region is a prime hotspot for investment opportunities
and well-known by overseas investors who want to be exposed to the growth
Key investment transactions
prospects of the UK supply chain.
Investment Prime yields in the Midlands are between 4.25% and 4.50%, although, further afield Address/Site
Sale price - £m
Buyer Seller WALT (WAULT) Notes
NIY (%)
from the more established locations in the region, Alpha Capital is currently forward
John Hanson
funding, at a NIY of 4.20%, a purpose-built distribution warehouse pre-let to DHL Forward commitment
+44 7825 251 894
john.hanson@colliers.com on a 20-year lease term in Manton Wood, Worksop. Aside from large distribution of a distribution
Manton Wood, Worksop £67.00m (4.20%) Alpha Capital DHL 20.00 yrs
warehouses, investors have also remained attracted by good quality multi-let industrial warehouse let to
estates in supply stricken markets. M&G Real Estate’s acquisition of Brackmills Central DHL
industrial estate for £28.25 million, at a NIY of 4.60% further reinforces this. Brackmills Industrial Pears Property 32 unit multi-let
£28.25m (4.60%) M&G 5.65 yrs (3.95 yrs)
Estate, Northampton Group industrial estate
Distribution
Birmingham 100, Walsall Barwood
£12.48m (4.71%) Private 10.00 yrs warehouse let to
Road, Birmingham Capital
Primaflow
14 15
NORTH TRACK RECORD
HIGHLIGHTS
WEST
Occupier market
Demand for large distribution warehouses moderated in 2019 when compared to
the strong levels witnessed over the preceding two-year period. Amongst the most
notable deals of 2019: North West Farmers Ltd snapped up the speculatively-built
distribution warehouse, Crewe 240 at Panattoni Commercial Park; Dnata will occupy A PLANT UK
a 145,000 sq ft design and build unit at World Freight Terminal at Manchester Airport; Tenant acquisition
while the ecommerce, mail and pallet specialist, The Delivery Group, took a unit of Rugby Business Park, Chadderton
137,865 sq ft at Mountpark’s Omega scheme in Warrington.
Rents wise, the most interesting deal saw Alpha LSG signing a pre-let in Q2 for the
102,500 sq ft Unit 4 Icon Manchester Airport at a headline rent of £6.75 psf.
Buoyed by the positive market backdrop, investors and developers have put forward
several speculative schemes over the past couple of years, which have exerted some
upward pressure on supply for distribution warehouses greater than 100,000 sq ft.
Some of the latest schemes completed in 2019, which are still available, include: 375
at Logistics North (375,000 sq ft), Unit 4 Mountpark Omega (183,669 sq ft) and L107
Liberty Park in Widnes (108,901 sq ft).
For more information
please contact: Tenant interest remains strong and several units are either under offer or seeing
strong level of enquiries. An example of this is Haydock525 (525,600 sq ft), the SAMPA AUTOMOTIVE GROUP
speculative warehouse in Haydock, which at the time of writing (January 2020) saw Tenant acquisition
AGENCY Kellogg’s agreeing a 20-year lease. Moreover, we understand that just shy of 902,000 Trafford Park, Manchester
sq ft of new space is under offer across six units.
John Sullivan
+44 7702 908 353
Industrial rental levels saw a positive 1.2% annual growth to Q4 2019, according to Key occupational transactions
MSCI Quarterly Digest. In terms of prime rents, growth rates for large distribution
john.sullivan2@colliers.com
warehouses have stabilised this year, with smaller units reaching new highs in
Warrington and Manchester (£6.50 psf to £6.75 psf) and Lancashire and Liverpool Address/Site Size (sq ft) Tenant Landlord Notes
(£5.75 psf to £6.00 psf).
Nathan Khanverdi
+44 7594 091 365 Crewe 240, Panattoni North West 12-year lease
nathan.khanverdi@colliers.com 237,734 Panattoni
Park, Crewe Farmers Group Spec unit £5.75 psf
Investment Unit 2 Mountpark
Omega, Warrington
137,865 The Delivery Group Mountpark
20-year lease
Spec unit £6.50 psf
Investment
Investment volumes in the North West reached circa £470 million in 2019, a reduction Unit 4 Icon, 20-year lease
James Preston 102,500 Alpha LSG Stoford
of 20% year-on-year as the wider ‘Brexit’ environment acted as a drag on investment. Alpha Park, Manchester Spec unit £6.75 psf
+44 7740 542 207
james.preston@colliers.com Nevertheless, for the right investment opportunity, well-let and in the right location,
investor interest remained high. A key example of this is represented by Alpha
SUPPLY CHAIN
Capital’s acquisition of a prime distribution warehouse at Airport City Manchester, let
to Alpha LSG Ltd on a 20-year lease which was sold by Stoford Developments for £15
Key investment transactions
million at a NIY of 4.25%. Moreover, Warrington Borough Council acquired Movianto’s
Chris Evans 377,000 sq ft unit in Haydock, let for 10 years with RPI uplifts, for £45.3 million, at a Sale price - £m
+44 77 99 58 72 30 Address/Site Buyer Seller WALT (WAULT) Notes
NIY of 4.8%, ahead of quoting at 5.0%. NIY (%)
chris.evans@colliers.com
Distribution
Warrington Bough 15 yrs
Penny Lane, Haydock £45.30m (4.82%) Moorfield warehouse let to
Council (10 yrs)
Movianto UK Ltd
Distribution
Stoford 20 yrs
Airport City, Manchester £15.02m (4.25%) Alpha Capital warehouse let to
Development (15 yrs)
Alpha LSG Ltd
Parkway Trading Estate, 11 unit multi-let
£10.61m (5.19%) Threadneedle CBRE GI 5.3 yrs
Manchester industrial estate
16 17
YORKSHIRE & TRACK RECORD
HIGHLIGHTS
THE NORTH EAST
Occupier market
As a result of ‘Brexit’ uncertainties, 2019 industrial demand in the Yorkshire market
failed to match the strong take-up activity witnessed in 2018, with 2019 provisional
figures reaching 2m sq ft, down 57% year-on-year. Nevertheless, off the back of
increased online consumer spending and a low national unemployment rate of 3.8%, VERDION
well-located sites in proximity of motorways and good power provisions are attracting Leasehold disposal
occupier and investor interest, with the take-up stagnation in 2019 expected to bounce iPort – IP9, Doncaster
back in 2020.
Some of the most notable occupational deals of 2019 included: Amazon signing a
pre-let for a 731,000 sq ft fulfilment centre at Verdion’s nationally significant rail
linked scheme iPort in Doncaster and Puma agreeing a 10-year term certain lease on
SuperG, a 258,000 sq ft speculatively built warehouse at Glasshoughton, Wakefield in
advance of practical completion of the building.
Furthermore, London Metric forward funded a 232,000 sq ft, design and build
warehouse at Goole 36 for Croda, which agreed a pre-let for a 20-year lease. In
addition, Peel Logistics Property speculatively built 134,000 sq ft at Bessemer Park in
For more information Sheffield which it let prior to practical completion to the manufacturer ITM Power.
please contact:
The North East market was characterised by more subdued activity in 2019 compared SAINSBURY’S
to the record year of 2018, with the largest notable transaction occurring when Freehold disposal
AGENCY Colliers brokered the freehold disposal of the 370,000 sq ft Coty Manufacturing plant Maverick31 Wakefield Europort, Wakefield
to the food manufacturer VBites.
Robert Whatmuff
As developers and investors focus on the prospects of this in-demand sector, land
+44 7703 393 145
robert.whatmuff@colliers.com values in the Yorkshire market have offered relatively good value. As a result, these Key occupational transactions
have soared to an average of £458,000 per acre, up from £313,000 per acre in 2018,
with prime logistics land values reaching well in the region of £650,000 per acre
Simon Hill in 2019. Address/Site Size (sq ft) Tenant Landlord Notes
+44 7736 480 041
simon.hill@colliers.com Capitalising on growing online sales, we anticipate improved logistics take-up in 2020
and, with further Grade A stock pipelined for delivery, we expect market headline rents Design and Build
iPort Verdion Doncaster 731,000 Amazon Verdion
Confidential terms
for logistics warehouse space in excess of £6.00 psf.
Callum Robinson Super G, Whistler Barwood Capital / 15-year lease
258,000 Puma
+44 7713 697 303 Drive, Castleford Tungsten Spec unit £5.75 psf
callum.robinson@colliers.com
Investment Unit 2, PLP Bessemer
134,000 ITM Power
Peel Logistics Property Spec unit £5.95 psf
Park, Sheffield (PLP) Confidential term
Investment
The Yorkshire market witnessed a record-breaking performance in 2019 as £615
Ben Hall million total turnover was recorded, up 8.6% year-on-year.
+44 7855 814 516
ben.hall@colliers.com The largest transaction resulted when Muse Developments completed a forward-
Key investment transactions
funding deal for around £60 million with Aberdeen Standard Investments for a
361,000 sq ft distribution warehouse pre-let to Amazon at Logic Leeds. Furthermore, Sale price - £m
Address/Site Buyer Seller WALT (WAULT) Notes
investor interest in taking development risk has acted as a boost to this regional NIY (%)
market with several speculative projects being undertaken. Amongst some of the Distribution
most notable ones, Panattoni will be speculatively building a 512,000 sq ft distribution Super G, Whistler Equites Property Barwood 15 yrs
£30.67m (4.60%) warehouse let
warehouse called Wakefield 515 at Crosspoint 33. Drive, Castleford Fund Capital (10 yrs)
to Puma
If we look at achieved yields, Equites Property Fund’s acquisition of the newly built Elmsall Drive, South Elite Partners Distribution
warehouse Super G in Glasshoughton is notable as the 258,000 sq ft national £32.78m (6.20%) London Metric 5.00 yrs
Elmsall, Doncaster Capital warehouse let to Next
distribution centre, let to Puma on a 15-year lease, which was sold for £30.67 million,
at a NIY of 4.6%. Aycliffe Industrial Park, Hansteen Holdings 3.30 yrs 53 unit multi-let
£12m (8.50%) M&G
Newton Aycliffe PLC (2.30 yrs) industrial estate
18 19TRACK RECORD
SCOTLAND HIGHLIGHTS
Occupier market
Industrial take-up in Scotland for all sizes reached 5.2m sq ft in 2019, which reflected
a slight reduction of 3.2% on last year’s activity of 5.4m sq ft. That said, this was
down 10.2% when compared to the five year average. In our view, the lack of available
stock has been a key determinant to this slower performance. As a result, we CEDARWOOD ASSET MANAGEMENT
understand that there are several unsatisfied requirements due to a dearth of Leasehold disposal
suitable buildings. 6 Grayshill Road, Westfield, Cumbernauld
Amongst some of the largest deals, Saica UK paid circa £8 million for the former
Lidl RDC at Deans Industrial Estate in Livingston (291,710 sq ft); Malcolm Logistics
purchased, for its own occupation, a 240,966 sq ft, second-hand warehouse, at 16
Blackburn Road in Bathgate for £4.6m. Another notable deal occurred when the
developer, Canmoor, agreed a 120,000 sq ft pre-let for a purpose-built warehouse at
Westway Park, near Glasgow airport to the wholesaler JW Filshill. This is the largest
pre-let in Scotland in over five years.
With regards to activity for distribution warehouses below 100,000 sq ft, Hermes
agreed a 15-year lease at the 95,000 sq ft unit Colossus 2 at Eurocentral, at a rent
For more information of £5.65 psf. Pitreavie Group took 55,000 sq ft at 6 Grayshill Road in Cumbernauld
please contact: and Network Rail committed to a 10-year lease for the 49,900 sq ft unit at 606 Clyde
CANMOOR
Gateway East Business Park in Glasgow at a rent of £7.50 psf.
Pre-let
AGENCY On the supply side, the availability rate for the wider Scottish market now stands at Westway Park, Renfrew
7.1%, a significant reduction from the record 11.9% witnessed in 2012. There has been
Iain Davidson
+44 7795 010 118
very limited speculative activity in Scotland, with no new stock greater than 100,000
sq ft having been built speculatively for almost 10 years and this looks unlikely to
Key occupational transactions
iain.davidson@colliers.com
change in the medium term.
Looking forward, we expect average rents to grow at a moderate pace in 2020, Address/Site Size (sq ft) Tenant Landlord Notes
Colin McManus underpinned by tight availability and a pick-up in occupier activity.
+44 7795 613 227 Ex Lidl RDC Deans
colin.mcmanus@colliers.com
Industrial Estate, 291,710 sq ft Saica UK Lidl Circa £8m sale
Livingston
Investment Colossus 2, Eurocentral 95,000 sq ft Hermes Kennedy Wilson
15-year lease, break at 10
Lewis Pentland £5.65 psf
+44 7748 704 734
lewis.pentland@colliers.com Unit 606, Clyde
At £58 million, Q4 quarterly investment volumes were little-changed from the £54 10-year lease
million transacted in Q3. However, annual volumes fell by over 50% from £332 million Gateway East Business 49,000 sq ft Network Rail Aberdeen Standard
£7.50 psf
Park, Glasgow
Investment in 2018 to £155 million in 2019 and were below the 10-year average (£214 million)
for the first time in three years. Hines Global Income Trust bought a distribution
Patrick Ford
+44 7811 150 378
warehouse on Edinburgh’s Sighthill Industrial Estate for £25.4 million at a 5.3%
NIY. The 215,000 sq ft asset is let to Royal Mail. Elsewhere, Standard Life acquired
Key investment transactions
patrick.ford@colliers.com a 68,000 sq ft industrial unit at Aberdeen’s Badentoy North for £13.55 million at a
6.9% NIY. The property is let to oilfield services company Schlumberger Limited for a Sale price - £m
Address/Site Buyer Seller Notes
further eight years to break and 10 years to lease expiry. NIY (%)
Elliot Cassels
+44 7968 196 212
Eight industrial assets
David Samuel Cedarwood Asset
elliot.cassels@colliers.com The Malt Portfolio £27.00m (7.9%) totalling 409,000 sq ft
Properties Management
38 tenancies (95.40% occupied)
Sighthill Industrial Estate, Hines Global Railways Pension
£25.00m Warehouse let to Royal Mail
Edinburgh Income Trust Trustees
Warehouse let to
Schlumberger Limited
Badentoy North, Aberdeen £13.55m (6.9%) Standard Life PIT Undisclosed
Initial yield of 6.9%, rising to 7.9%
in February 2020
20 21NORTHERN TRACK RECORD
HIGHLIGHTS
IRELAND
Occupier market
Demand for industrial space remains concentrated around the Greater Belfast area
(30-mile radius) and established provincial industrial parks, which benefit from
immediate accessibility to the motorway network. The market is very much deterred
from opportunities that do not exhibit this key characteristic.
Amongst some of the market drivers, although not to the same extent witnessed in
core English locations, third-party logistics operators managing contract-led solutions
for a variety of business users, from ecommerce to international manufacturing
companies are the main source of demand. The largest deal of the year occurred
when TST Logistics took 129,000 sq ft of warehouse space at Silverwood Business
Park in Ballymena from Silverwood Business Park Ltd.
Northern Ireland has been at the centre of last year’s ‘Brexit’ negotiations and this
heightened uncertainty has impacted negatively on take-up activity. However, as
more clarity emerges over trade negotiations between the UK and the European
Commission, 2020 should see a pick-up in activity and the emergence of more
significant pre-letting deals. In this regard, there are requirements from a number of
For more information 3PLs which, if satisfied, will provide a welcome boost to market demand.
please contact:
Industrial market rents have not seen significant rental growth and prime rents for
small distribution warehouses around 10,000 sq ft, located in immediate proximity
AGENCY & Investment to motorway junctions, are in region of £5.50 and £6.25 psf. Secondary and tertiary
warehousing and former manufacturing space across Greater Belfast, with eaves
Ian Duddy heights of 6 metres plus, are achieving £3.75-£4.50 psf, dependent upon location,
+44 7730 502 897 configuration and specification.
ian.duddy@colliers.com
SILVERWOOD BUSINESS PARK
Former Michelin Factory, 190 Raceview Road, Ballymena
Investment
There is a limited supply of institutional grade industrial product in Northern Ireland
and a corresponding lack of transactional activity. This is despite a demonstrable Key occupational transactions
appetite from a range of family trusts, property companies and opportunity led funds
for a combination of individual properties, multi-let estates and build-to-suit assets.
Address/Site Size (sq ft) Tenant Landlord
The only major industrial sale of note was a build-to-suit property of 85,000 sq ft in
Armagh, leased to Bunzl plc, which traded at a price of £6.3 million, reflecting a NIY
of 7.28%. Other assets sold during 2019 were typically small individual buildings or Silverwood Business Park,
129,000 TST Logistics Silverwood Business Park Limited
industrial blocks with short-term certain income profiles reflecting double digit returns 190 Raceview Road, Ballymena
and capital values at or below actual build costs.
Silverwood Business Park,
26,500 Stericycle Silverwood Business Park Limited
190 Raceview Road, Ballymena
Silverwood Business Park,
6,000 Alexander Dennis Silverwood Business Park Limited
190 Raceview Road, Ballymena
22 23CAPITAL MARKETS
Investor landscape Industrial yields
The investment landscape in the UK has asset management opportunities and the lack Whilst the pace of investment activity lost and international buyers alike. As a result,
remained very fluid with demand coming from of development land, in some markets, have momentum in 2019, pricing has remained prime yields are now at around 4.4%, whilst
a wide range of investors. Overseas buyers all contributed to the attractiveness of this stable and strongly covenanted, RPI linked, secondary yields have moved out by 15/25
were increasingly active towards the latter asset class. long-let assets continue to be highly basis points (bps) as investors re-position
part of the year, whilst UK institutions took a attractive to annuity funds, core investors their portfolio for prime opportunities.
In addition, global multi-asset investors have
pause, following a very acquisitive period in
continued to increase their allocation into the
2017-2018.
industrial sector to gain indirect exposure to
Prime and secondary industrial yields
The long-term upside potentials that the household spending and the positive structural
industrial sector has on offer is just one of change, underpinned by increasing online Yield gap (bps) Prime yield Secondary yield
the key factors which have been driving spending. We expect this trend to strengthen
11.0% 800
the performance of industrial assets. More in 2020 as occupier activity remains strong.
10.0% 700
importantly, increased online spending, strong
occupier demand, reversionary potentials with 9.0%
600
Industrial yields
Yield gap (bps)
500
8.0%
400
Volumes and returns 7.0%
300
6.0% 200
According to PropertyData, provisional continuing to take development risks to secure 5.0% 100
investment volumes for the wider industrial an edge on the market, but these types of 4.0% 0
sector reached £7.6 billion in 2019, down 14% transactions are now coming from a smaller
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2016 Q1
2013 Q1
2013 Q2
2013 Q3
2013 Q4
2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
2015 Q2
2015 Q3
2015 Q4
2016 Q2
2016 Q3
2016 Q4
2017 Q1
2017 Q2
2017 Q3
2017 Q4
2018 Q1
2018 Q2
2018 Q3
2018 Q4
2019 Q1
2019 Q2
2019 Q3
2019 Q4
on last year’s second highest performance range of buyers.
on record, and in line with the five-year
Total returns for the 12-month period to Source: Colliers International, MSCI
annual average. However, we expect these
the end of Q4 2019 reached 6.9%, driven
figures to be slightly revised upwards as more
by a 2.4% capital growth and a 2.9% rental
transactions are confirmed.
This partial slowdown has allowed some
growth. This is off the back of an astonishing
performance which saw the sector’s total
Outlook
overseas buyers to capitalise on some of returns topping 19.6% and 16.4% in 2017 and
the opportunities that arose due to lower 2018, respectively. This followed a 7.3% total Looking forward, investors will continue to most of this upside and the market will
competition from national funds. Investors are return recorded in 2016. search for yields in a low-rate environment, see more national portfolio transactions as
driving further capital growth for the sector international buyers look for ways to enter the
Industrial investment volumes (£m) in 2020. We expect London assets to capture UK industrial sector.
Q1 Q2 Q3 Q4 5yr avg (2014 -18)
12,000
Sale price - £m
Address/Site Buyer Seller WALT (WAULT) Notes
NIY (%)
10,000
£241m Thor Capital & Seven large distribution
Tudor Portfolio SEGRO 6.00 yrs
(3.90%) Morgan Stanley warehouses
Investment (£m)
8,000
Seven large distribution
£75.4m
6,000 Echelon Portfolio Warehouse REIT AVIVA 5.30 yrs warehouses and one
(6.68%)
multi-let estate
4,000 10 industrial estates
UK Urban Industrial c.£200m Barings Real
Starwood Capital Confidential located in core markets
Portfolio (sub-5.5%) Estate
in the UK
2,000
£38.35m 6.90 yrs Three South of England
Turbine Portfolio Savills IM CBRE GI
(4.35%) (3.40 yrs) multi-let estates
0
06
07
08
9
10
11
12
3
14
15
16
17
18
9
1
0
1
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: Property Data
24 25CAPITAL MARKETS
TRACK RECORD
BIG YELLOW CABOT PROPERTIES
Wyvern Industrial Estate, New Malden - £28,000,000 Units A & B, Logistics City, Basingstoke - £16,500,000
CABOT PROPERTIES PICTON CAPITAL
Pinnacle 15, Northampton – £19,050,000 DHL, Magna Park, Lutterworth - £16,900,000
COLLIERS CAPITAL INFRARED CAPITAL PARTNERS
Belron UK Ltd, Bardon Business Park, Coalville - £17,300,000 Lefa Business & Industrial Park, Sidcup – £19,000,000
26 27All information, analysis and recommendations made for clients by Colliers International are made in good faith and represent Colliers International’s professional judgement on the basis of information obtained from the client and elsewhere during the course of the assignment. However, since the achievement of recommendations, forecasts and valuations depends on factors outside Colliers International’s control, no statement made by Colliers International may be deemed in any circumstances to be a representation, undertaking or warranty, and Colliers International cannot accept any liability should such statements prove to be inaccurate or based on incorrect premises. In particular, and without limiting the generality of the foregoing, any projections, financial and otherwise, in this report are intended only to illustrate particular points of argument and do not constitute forecasts of actual performance. Colliers International is the licensed trading name of Colliers International Property Advisers UK LLP (a limited liability partnership registered in England and Wales with registered number OC385143) and its subsidiary companies, the full list of which can be found on www.colliers.com/ ukdisclaimer. Our registered office is at 50 George Street, London W1U 7GA. This publication is the copyrighted property of Colliers International and/or its licensor(s). © 2020. All rights reserved.
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