Road revolution welcome boost for region’s logistics sector
INVESTMENT in major road schemes will stimulate the industrial and logistics sector and could lead to rents increasing by 5%.
That’s according to a national report by commercial property consultancy Lambert Smith Hampton (LSH), which coincides with the Government’s announcement of its £15bn Road Investment Strategy which includes plans to develop a ‘smart motorway’ along the M62 between Leeds and Manchester and improved access to Liverpool docks.
Matthew Scrimshaw, head of LSH’s Yorkshire and Northeast region, said: “The proposed smart motorway along the entire length of the M62 from Manchester to Leeds, together with improvements to trans-Pennine capacity from Manchester to Sheffield will clearly help improve transport links within the region, notwithstanding the short/medium term disruption while it is constructed.
“The enhanced road network will inevitably give rise to growth in the commercial property sector, particularly in the Industrial and Logistics sector but the development of the road network needs to be just one part of a strategy to improve regional east/west transport links. It is vital that substantial improvements in passenger rail journey times between Leeds and Manchester are also achieved.”
The ‘Roads to Riches’ report found that the new A6 Manchester Airport relief road – planned for completion in 2017 at a cost of £290m – will unlock around 15 hectares of land for potential development offering benefits to existing industrial sites and offering major commercial development opportunities in areas such as Handforth and Hazel Grove.
The report looked at seven planned and proposed schemes across the UK that LSH believe will unlock hundreds of acres of development land and have the biggest impact on the logistics and industrial sector.
However, the authors argue there is a need to widen the scope of the road improvement works to tackle congestion and improve the efficiency of the UK’s logistics operations, as the government has recognised by indicating that the Chancellor will announce additional proposals during his Autumn Statement tomorrow.
LSH analysed around 50 infrastructure investment schemes proposed by the government over the past year under the umbrella plan ‘Investing in Britain’s Future’ and other initiatives.
Collectively, these projects could potentially unlock 250 hectares (26.9m sq ft) of development land for industrial and logistics use – over a quarter of annual take-up in the sector – support the leasing of existing schemes in the surrounding areas, encourage rental growth, and make some areas more acceptable to institutional investors.
John Sullivan, head of industrial agency in the north west, said: “This much-needed road scheme will remove the current capacity constraints, improve access to the airport and galvanise development opportunities right along the route.
“After a period of stagnation in industrial development in the region which has led to a significant supply shortage, the new relief road will drive more speculative development along the route, adding to a increasingly strong pipeline and almost certainly leading to a hardening of rents.”
Steve Williams, national head of the industrial and logistics team at LSH, said: “In a sector where time is critical to success and profit margins are wafer thin, there is a direct link between the provision of road infrastructure and demand for industrial premises, particularly distribution warehousing for retailers and third party logistics providers.
“The government has recognised that congestion and delays are a major problem, not just for road hauliers and logistics operators, but for businesses dependent on time-sensitive and cost-effective logistics. In a multi-channel world, where online retailers are promising next day or even same day delivery, there is a high demand for efficient logistics operations.
“The improvements being undertaken as part of the government’s infrastructure upgrade programme will provide a boost to the industrial and logistics market in several parts of the UK. New roads, junctions and improvements to existing roads will shave vital minutes off journey times and open up areas for viable development on sites that might previously have been discounted for operational reasons. In addition, making an area more attractive to occupiers will stimulate land prices, rents and capital values.
“However, more needs to done to tackle increased congestion and delays on the road network, and we look forward to the announcement of additional measures in the Autumn Statement.”
