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PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
PlaceEXPO Logistics 2020: Jon Sleeman, JLL
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PlaceEXPO Logistics 2020: Jon Sleeman, JLL

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Jon Sleeman, UK head of research at JLL, on the big shed market

Jon Sleeman, UK head of research at JLL, on the big shed market

Published in: Real Estate, Business
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  • 1. The UK and North West Big Box Distribution Market Jon Sleeman, International Festival for Business, Liverpool 12 June 2014
  • 2. Introduction • Occupational market – demand, supply and new development • Investment market – demand, yields, performance • Conclusions and outlook
  • 3. Occupier demand has been gathering momentum since last year Supported by improving economic growth and logistics drivers - 5 10 15 20 25 30 2007 2008 2009 2010 2011 2012 2013 Q1 2014 Millionssqft New Secondhand 5 year annual average Take-up of Grade A units of 100,000 sq ft and over
  • 4. Retailers accounted for half the floorspace taken up in the year to end- March 2014 50% 20% 13% 17% Retail Logistics Manufacturer Other Grade A distribution take-up over the 12 months to Q1 2014
  • 5. The Greater South East and Midlands accounted for 61% of space taken- up in the year to end-March 2014 22% 21% 18% 15% 10% 10% 4% Greater South East (South East, East & London) East Midlands West Midlands Yorkshire & Humberside South West & Wales North West Scotland Grade A logistics take-up over the 12 months to Q1 2014
  • 6. Recent deals - new units of 100,000 sq ft + taken up in Q1 2014 5 Rugby Gateway – 236,000 sq ft Kingswood 127, Lakeside Business Park, Cannock – 127,000 sq ft LPP Sheffield– 412,519 sq ft Magna Park Milton Keynes – 938,449 sq ft The Bridge, Dartford – 122,500 sq ft Titan, Heathrow – 115,000 sq ft Central Park, Bristol – 175,000 sq ft Prologis Park Ryton – 231,000 sq ft Birch Coppice, Tamworth – 168,900 sq ft Northfleet site, Kent – 450,000 sq ft
  • 7. Selective North West distribution deals Location Company Size (sq ft) Terms Comment Maximus, Winsford Industrial Estate, Winsford Tiger Trailers 105,000 Leasehold Grade A unit. Speke Boulevard Medlmmune 130,000 Leasehold Grade A unit. Manor Park, Runcorn Rehau 132,796 15-year lease, £4.95 per sq ft Grade A unit. The Cube, Preston Brook, Whitehouse Industrial Estate, Runcorn Clarcor 151,769 Freehold acquisition Grade A unit. Liverpool International Business Park, Speke Johnson Controls 150,000 15-year lease, with break option, £5.00 per sq ft Brand new built to suit facility developed by Marshall. Cutacre/Logistics North, Bolton Aldi 441,000 Land purchase New built to suit facility. One 175 Winsford Industrial Estate, Winsford Howard Tenens 175,000 5-year lease Speculatively developed unit. Northern Gateway, Knowsley Toyota Tsusho Assembly Systems 143,000 10-year lease Speculatively developed unit. 00 Month, 2014 6 2013-2014 Deals exclude Omega at Warrington
  • 8. There is a pipeline of active requirements for large distribution facilities • According to JLL market intelligence: - There are currently 73 named requirements in the UK totalling between 22 and 27 million sq ft (based on minimum and maximum size requirements). - There are currently 14 named requirements totalling between 4.4 and 4.9 million sq ft which are primarily focused on the North West region. • But the market is quite patchy – good demand in well-established strong locations, weaker demand elsewhere. Still quite slow moving. 00 Month, 2014 7 Current live requirements for distribution units of 100,000 sq ft and over
  • 9. The availability of new and good quality distribution space continues on a downward trend 0 5 10 15 20 25 30 H2 2007 H2 2008 H2 2009 H2 2010 H2 2011 H2 2012 H2 2013 Q1 2014 Millionssqft New floorspace Good quality secondhand floorspace
  • 10. The North West accounts for around a fifth of available space across GB 12% 14% 14% 12% 17% 21% 7% 3% Greater South East (South East, East & London) East Midlands West Midlands Yorkshire & Humberside South West/Wales North West Scotland North East End of Q1 2014
  • 11. The market is now seeing some speculative development • 5 units completed speculatively since the recession. • A further 9 are speculatively under construction at present. • 12 of these 14 are between 100,000 sq ft and 200,000 sq ft. • 1 is between 200,000 sq ft and 300,000 sq ft • And 1 is over 300,000 sq ft. 00 Month, 2014 10
  • 12. However, recent speculative development has been very modest compared with the pre-recession boom - 1 2 3 4 5 6 7 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 Q1 2014 Millionssqft 11
  • 13. Investor demand for UK industrial and distribution stock is strong 0 500 1,000 1,500 2,000 2,500 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 MillionsGBP
  • 14. Regionally, the Greater South East and Midlands have attracted the strongest investor interest 40% 14% 14% 10% 8% 7% 5% 1% 0.6% Greater South East (South East, East & London) West Midlands East Midlands Yorkshire & Humberside North West South West Scotland Wales North East 12 months to Q1 2014
  • 15. Strong investor demand, and limited supply, have led to yield compression 3.50 4.50 5.50 6.50 7.50 8.50 9.50 Prime London Distribution Prime South East Distribution Prime Regional Distribution Prime Distribution Yields: June 2014 London 5.00 - 5.25 South East 5.50 Regional 5.75
  • 16. Distribution warehouse investment performance forecasts, 2014-2018 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 2013 2014 2015 2016 2017 2018 2014-2018 %perannum Rental Growth Capital Growth Total Returns 15 JLL forecasts (May 2014) of IPD distribution warehouse segment Distribution warehouses, 10.0% pa , compared with all property average of 8.9% pa
  • 17. Conclusions and outlook • The occupational market is supported by an improving economic outlook plus the positive impact of logistics drivers. But occupier decision-making still quite protracted and market conditions are patchy. • The investment market is currently very ‘hot’ with strong demand and very little supply. Our forecasts indicate that distribution warehouses will outperform the all property average total return over the five years 2014-2018. • The Greater South East and Midlands are attracting the largest shares of occupier and investor demand. • The North West is an important distribution market. Demand has traditionally focused along the M6 ‘corridor’ but new transport infrastructure investment (Liverpool 2, the Mersey Gateway Project) will boost the Liverpool City Region.
  • 18. COPYRIGHT © JONES LANG LASALLE IP, INC. 2014 Jon Sleeman Tel: + 44 (0)207 087 5515 e-mail: jon.sleeman@eu.jll.com Thank you

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