Construction for the logistics sector gathers pace

Eddie Stobart Logistics, Warrington

Recent major project announcements and an upbeat trading statement from the UK’s largest industrial developer suggests construction activity in the logistics sector has gathered pace in the opening months of this year.

Manufacturers are understandably nervous about Brexit but if anything, the recent stockpiling by firms has highlighted the need for more high-quality logistics space. Glenigan Construction market analysis shows that the value of warehousing and logistics projects starting on site in the first quarter was up 22% on the period a year earlier.

Meanwhile a recent report from JLL, the UK Big Box and Logistics market, said appetite in the investment market for logistics space remains strong and is forecast to continue to outperform the retail and office sectors over the next five years.  It points to the growth of online sales as a driver of demand for logistics space this year and predicts a further rise in the supply of Grade A ‘big box’ units.

Promising picture

Segro - the industrial space developer which is now Britain’s largest property group by stock market value - recently painted a promising picture of its core market as it benefits from the growth of e-commerce and growing urbanisation.

In the first quarter alone, Segro completed 100,000 sq m of new industrial space and it currently has 44 projects under construction. In all, the group now has some 1 million sq m of space either under development or with approval.

Having recently raised £451 million in new equity, this year the group expects to invest a total of £400 million on development capital expenditure and a further £200 million on land acquisitions. One of the group’s key projects where work has recently started is the £11 million Vantage Logistics Centre at Segro Park Heathrow, where McLaughlin & Harvey is the main contractor (Glenigan Project ID: 17241505).

Healthy pipeline

Investment plans at the major industrial/logistics groups suggest the construction pipeline in the sector will remain healthy. In Warrington in the North West, Eddie Stobart Logistics has submitted detailed plans for a new £73 million distribution centre building where work is set to start at the end of this year and continue for 20 months. Ramboll is a key consultant on the project which is at the pre-tender stage (Glenigan Project ID: 17144565).

Meanwhile, Peel Logistics is progressing plans for a £64.6 million scheme of two warehouse units involving nearly 80,000 sq m of industrial space at its Gateway 45 development at Leeds. Construction work set to start in late summer 2020 and continue for six months (Glenigan Project ID: 17014889).

Another major player in the sector, Tritax Big Box, is due to start work next summer on Logistics Centre Littlebrook, a £42 million storage and distribution centre at Littlebrook power station where Bericote Properties is the project manager.

Further south in Yorkshire, Amazon has submitted plans and is inviting tenders on a new £5 million logistics facility in Doncaster, where work is set to start later this year and continue for 20 months (Glenigan Project ID: 18389562).