Pluto Finance adds to its growing team

Pluto Finance has further expanded its London-based team with the appointment of Guy Norman as Lending Director.

Guy joins the specialist development and bridge lender from RedOak Property where he was Director with a principal role in purpose-built student accommodation (PBSA) and residential projects. Prior to this, Guy was part of Knight Frank’s debt advisory teams and a member of the Real Estate Origination Department at Lloyds Bank.

Guy says: “I am delighted to have joined Pluto Finance who have strong institutional backing, including a new partnership with the UK’s largest private pension fund (USS). This is an exciting time to join as we are launching two new competitive lending products; one focusing on build to rent (BTR) developments and one for stabilised income producing residential properties. I will also be expanding our funding to PBSA developers given my experience in this market”.

Justin Faiz, Partner of Pluto Finance, comments: “A big welcome to Guy, our latest, significant hire in our expansion programme as we accelerate our development, bridging and investment lending over the next 12 months.”

Pluto Finance is backed by some of the world’s largest institutional investors and is currently funding the development of over 2,000 new homes in the UK.

OFFICE / HOME WORKING BALANCE SEES A SHIFT IN THE SOUTH EAST OFFICE MARKET

2021 proved to be another tough year for the office sector in many locations across the South East, according to SHW in its latest Office Focus report. However, as many firms moved towards a return to office working, demand in certain locations - and the resultant transactions – saw an increase.

Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “It’s clear there is still a need for office space to encourage more staff interaction and to boost motivation and wellbeing, however most companies are now embracing some form of home working, allowing for a better work-life balance for staff and, also, reducing overall occupational costs whilst maintaining productivity. We are seeing that most companies want staff to return to the office to some degree, with between 20-60% homeworking being the norm going forward.”

In London in 2021, SHW reported average Grade A office rents of: £32.50 per sq ft in Kingston; £53.50 in Richmond; £55 in Putney; £57.50 in Battersea and Wimbledon; £75 in the City & Southbank and £117.50 in the West End, with 9.3 million sq ft of take up in the City and Southbank and 6.93 million sq ft in the West End. Vacancy rates are currently at 7.1% in the City and 7.8% in the West End.

In Bromley, though quoting rents reached £37.50 per sq ft, levels remained static at £30 per sq ft with take up doubling from 11,000 in 2020 to 22,000 in 2021. Take up has fluctuated over the past five years here, reaching 40,000 sq ft in 2018 and dropping down to zero in 2019. Vacancy rates remains low at 5.4%, but with a total 205,000 sq ft of logged demand in 2021 and a current availability of 71,621 sq ft, we may see rents moving upwards.

Croydon saw a slightly higher (highest) quoting rent of £38.50 in 2021, with rents again remaining static at £34 per sq ft. Take up more than doubled to 95,300 sq ft. Vacancy is at 13.06%, but with availability at 470,000 sq ft and total demand in 2021 logged at 2.3 million, we will likely see some competition for space in 2022.

In Epsom and leatherhead, rental levels dropped slightly from £28 per sq ft in 2020 to £27.50 in 2021, with a total take up of 66,500 sq ft. Availability is currently at 262,000, with demand at a total of 150,00 sq ft overall logged in 2021. While in Redhill & Reigate rents dropped further to £27.50 per sq ft from the previous year’s average of £31.50. Here take up almost halved to 65,500 sq ft and the total 195,000 sq ft of demand logged almost matches current availability of 190,000 sq ft.

Burgess Hill & Haywards Heath was another static location in terms of rental levels at £24 per sq ft, though take up was up nearly 400% to 23,500 sq ft. Total demand for 2021 was 175,00 sq ft, with a current availability of 51,000, giving potential for rental growth due to lack of stock. And in Gatwick & Crawley, again rents remained steady at £27.50 per sq ft, a slow increase from £26.50 in 2017. Take-up was also static at 57,500 sq ft. With a vacancy rate at 16.6%, availability at 630,000 now in 2022, and a total of 415,000 sq ft of logged demand across 2021, rents look unlikely to increase in 2022 however we do remain confident that 2022 will see a substantial increase in take-up.

Seeing a similar trend in Horsham and ‘Eastbourne, Hailsham & Polegate’, rents stayed the same at £20 per sq ft and £16 per sq ft respectively, with take up increasing and all locations suffering with extremely low options for occupiers to consider. And in Littlehampton, Bognor & Chichester, rents dropped slightly from £17 to £16 per sq ft, with the trend for zero take up from 2018 to 2020 broken with 10,000 sq ft let, albeit there have been a number of smaller transactions sub 5,000 sq ft which are not recorded in these statistics

Worthing & Lancing showed zero take-up in 2021 for the second year running. With demand outstripping availability and a 2% vacancy rate, investors need to look at providing the right stock for occupiers’ requirements as the market continues to be dominated with sub 5,000 sq ft transactions.

Last, but certainly not least, in Brighton & Hove, in 2021 we saw an improvement on take up levels as we head back towards pre-covid levels. The headline rent for Grade A remained static although this is due to the limited supply of new build stock. 30,000 sq ft of new build stock was delivered at the end of 2021 and a further 125,000 sq ft is to be delivered later this year. We are now quoting £37.50 per sq ft on the new build stock being delivered and we expect to achieve headline rent of £35+ psf in Q1 2022.

Vacancy has increased to 8.8% although it is important to note that the increase in availability has not be caused by a reaction to Covid and occupiers giving up space but instead due to ongoing development in the city. Once this space is absorbed by the market, Brighton & Hove will return to a position where there is a complete lack of availability to satisfy the ongoing demand for Grade A space. Especially with the total logged demand for 2021 being circa 530,000 sq ft.

Tim concludes: ““The future of the office is far from dead as Zoom and Teams are no substitute for physical social interaction, but with companies requiring less office space per head employed, firms are looking at ‘flight to quality’ in order to provide the best accommodation affordable for their staff. As a result, we are optimistic that there will be a healthy level of take up during 2022 as companies look to reduce space occupied and upgrade their office space.

“Despite the increase in working from home, long-sighted investors seeing the advantage of office occupation and the versatility of the buildings re still keen to acquire assets in this sector.”

ANOTHER RECORD YEAR FOR THE SOUTH EAST INDUSTRIAL MARKET

Continued strong demand and lack of stock across the industrial market made for another record year in the South East, in 2021, according to SHW in its latest Industrial & Logistics Focus report.

Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “We have seen a very healthy number of enquires and lettings for all unit sizes across the South East, with the areas showing lower take-up attributed to lack of stock rather than lack of demand.”

“This strong demand continues to be linked to logistics / B8 rather than B1 light industrial / B2 manufacturing, reflecting the continued appetite for online retailing and the subsequent last mile logistics. As a result, rents are continuing to rise across the board, and we predict this will largely continue throughout 2022. For occupiers, these rent hikes of 10-20% in some areas have forced some companies to relocate to more affordable locations.”

In Croydon and the surrounding areas, quoting rents reached £20 per sq ft, with the highest rent achieved at £17.50, up from £16 in 2020 and £13 in 2017. Stock availability here has kept pace with 1.1million reported in 2021 (compared with 674,500 in 2020) leading to only a slight increase in take up from 424,000 sq ft in 2020 to 430,000 sq ft in 2021. Going into 2022 there remains a relatively healthy supply of stock, but with 1.43m sq ft of logged demand in Q4 2021 alone (5.18m in total for 2021) and vacancy rates at 5.4%, rents should continue to increase.

In Sutton, Epsom, Chessington and Leatherhead, take-up increased from 80,000 sq ft in 2020 to 102,000 sq ft in 2021, with rents remaining level at £15 per sq ft. A low vacancy rate of 3.7%, 257,000 sq ft of availability coming into 2022 and 350,000 sq ft of logged demand in Q4 2021 (a total of 1.3m for 2021) we could see rents rising this year

Redhill, Reigate and Salfords saw a huge leap in take up from 31,000 sq ft in 2020 to 195,300 sq ft in 2021. Rents here increased from £13.50 in 2020 to £13.95 showing steady increase year on year from 2017 (£12 per sq ft). Logged demand remained high at the end of the year, with a total 1.57m sq ft logged in 2021.

Similarly, in Horsham, rents are showing an increase from £11 per sq ft in 2020 to £11.50 in 2021, up from £9.50 in 2017. Here we have seen another large jump in take up from 18,500 sq ft in 2020 to 76,000 sq ft in 2021. Vacancy rate remains low at 3.7% and, with a huge demand of 660,000 sq ft in Q4 2021 (1.8m sq ft for the whole of 2021) and availability at 74,000 sq ft, rents should increase further in 2022 to around £13.00 per sq ft.

On the Sussex Coast, rents continue their upward trajectory in Brighton and Hove. At the start of 2022, £18.50 per sq ft has just been agreed in Hove, whilst the trade parks are at an even higher level. Availability has halved from 166,500 sq ft to 84,000 sq ft at the end of 2021 due to the increased take up to 87,500 sq ft in 2021. Take up could be even greater with more availability of stock as logged demand far outweighs the currently available stock levels.

Rental levels remained static in Bognor and Chichester at £11.25 per sq ft. A low level of take up was recorded at just 13,000 down from 82,383 sq ft in 2020 mainly due to low good quality stock. With just a 1.9% vacancy rate, 97,600 sq ft of availability currently and a massive 600,000 of logged demand in Q4 (1.68m sq ft in 2021) we will likely see rents rise in 2022.

In Eastbourne and the surrounding areas, rents jumped from £10 per sq ft in 2020 to £12, almost matching the highest quoting rent of £12.50 per sq ft. Take up also jumped almost 400% from 2020 levels to 288,000 sq ft in 2021. With 270,000 sq ft of logged demand in Q4 2021 (1.5m sq ft for 2021) and availability at 198,000 sq ft, we still predict rental increases due to the shortage of good quality stock.

In Hastings, St Leonards and Bexhill, take up increased over 450%, with rents remaining level at £8 per sq ft. Availability has increased at the start of 2022. In contrast, in Lewes, Newhaven and Peacehaven whilst rental levels remained at £11 per sq ft, £8.00 per sq ft and £9.25 per sq ft respectively, take up halved from 75,000 to 35,500 sq ft again due to severe shortages of decent quality stock. Vacancy remains very low at 1.7%, availability has increased to 85,000 sq ft at the beginning of 2022. With demand at 100,000 sq ft in Q4 (560,000 sq ft in total for 2021), we see rents reaching £13 per sq ft.

Similarly, with a very low vacancy rate of 0.4%, take up was down by 72% to 5,500 sq ft in 2021 and rental levels remained at £10 per sq ft in Rustington and Littlehampton, with 26,500 sq ft of current availability and 345,000 of logged demand in 2021.

In Worthing, while take up was down from 117,371 sq ft in 2020 to 42,000 sq ft in 2021, rents increased significantly from £9.25 to £11 per sq ft mostly down to lack of stock levels. Vacancy is at 11.7%, and availability at 322,000 sq ft, primarily down to a single building available of 260,000 sq ft, whilst demand in Q4 2021 was recorded at 530,000 sq ft (1.2m sq ft for 2021). Shoreham and Lancing also saw a rental increase to £9.50 per sq ft from £8.25 in 2020. Take up was up slightly from 43,792 to 54,500 sq ft, availability is currently recorded at 56,500 and a vacancy rate of 1.7%, however due to the low level of stock we see rents reaching £13.50 per sq ft.

As we start 2022, the vacancy rate in Burgess Hill and Haywards Heath is just 2.5%. Availability has halved from 102,000 sq ft in 2021 to a current 50,000 sq ft, down to another large increase in take up to 134,000 sq ft, compared with just 18,000 sq ft in 2020. Rental levels have reflected this low availability and high demand at 440,000 sq ft in Q4 2021 (2m sq ft for 2021) with an increase to £12.95 per sq ft from £11 in 2020. As such, we see rents rising to at least £13.50 per sq ft in 2022.

Though rents remained level in Crawley and Gatwick at £13.75 per sq ft in 2021, take up increased again to 512,000 sq ft up from 364,500 in 2020. Demand remains high at 1.43m sq ft of logged demand in Q4 2021 (4.93m sq ft for 2021), with availability currently at 540,000 sq ft and a vacancy rate of 4.5%. We predict we will see rents in excess of £15.50 in 2022.

Tim adds: “Vacancy levels for much of the South East remain low, with a demand for new industrial and logistics units, a number of developers have pushed the button on speculative new build schemes, despite a 20-30% increase in build costs, to capitalise on the strong demand and rental growth.”

There’s a bright future ahead for Croydon – Q&A with Richard Plant, SHW’s Partner and Chair of Develop Croydon

Choosing where to put down roots can be a daunting task. Whether you’re looking for somewhere short-term with long-term potential or searching for your forever home, there’s a lot to think about. But where does the bustling borough of Croydon factor in your plans?  Leon House caught up with Richard Plant, Partner at SHW Property and Chair of Develop Croydon, to find out what’s in store for the area and why it is the perfect place to invest and call home…

As one of the fastest growing boroughs of London, why do you think Croydon has become an up and coming area?

“Fundamentally, Croydon has the best connectivity in terms of transport. You have every type here – the Overground, trams, trains and buses – where else can you find all this together in South London? We also have two large stations that enhance our links to the rest of the south east and offer quick travel times. You can be in London in less than 15 minutes or ready to fly out of Gatwick in 14. Croydon is unrivalled when it comes to public transport.

“We’re also one of the greenest boroughs, with numerous parks and woodlands on your doorstep and the countryside just a short trip away. And there’s no better place to see the half green / half city effect than from the rooftop sky garden at Leon House.”

You mentioned Croydon being a commutable location, what transport improvements are being made or planned?

“There are a few things being planned that will help to provide a smoother transport experience. These include Network Rail’s plans to upgrade the Brighton main line, which will unblock the bottleneck at East Croydon station and create two new platforms. There are also some very early schematic plans for a refurbishment of East Croydon station. If this comes to fruition, it will massively help to improve the bus and tram areas of the station.”

What key projects will be taking place in 2022?

“There are a lot of projects underway at the moment. In Central Croydon we have the new campus for London South Bank University, which has opened in the converted Grade II listed Electric House building into new accommodation. This will be a brilliant facility and bring a lot of life to the town centre. And over in West Croydon, Surrey Street Market is becoming an area of exciting new food and drink outlets, like the Art and Craft Bar and Mr Fox.”

With various commercial developments underway, what type of businesses are moving to the borough? Is there any particular industry that has shown more interest?

“Traditionally, Croydon has been home to a lot of government buildings but we are also known for having an insurance focus, with Direct Line originally starting in Croydon and the likes of LV, Allianz Insurance, AIG and Zurich having head offices here. Recently, we have also seen a rise in education with London South Bank University’s new campus in the town centre and the University of Roehampton has partnered with Croydon College to offer more courses in Croydon.

“We’re also seeing a few new restaurant chains popping up, such as Wendy’s Hamburgers taking over the old Barclays bank building as well as a new Taco Bell now open. Hopefully there’ll be plenty more like this in the years to come.”

Speaking of new restaurants, is there a focus on investing in the leisure and food & beverage industries within the borough?

“Yes, because we’re seeing more people coming back into the town centre, it has made it possible to put the focus back on the food and beverage industry. We’re hoping to bring pubs back into the centre and open up a variety of new bars and restaurants soon.”

With the closure of many key high street stores, what plans are in place to regenerate the retail areas of the town?

“The ‘changing face of retail’ was something we all knew was coming before the pandemic, due to the rise in online shopping. However, the time frame we were looking at originally has definitely sped up. What may have been five, ten years down the line, has now changed in just two. Currently, the likes of Westfield and Hammerson are internally reorganising to make new plans to help regenerate the shopping centres and interim plans are being put in place to re-let empty units for other uses.”

For anyone thinking about buying, why is now the time to invest in property in Croydon?

“Croydon represents very good value, especially compared to anywhere else in South London, due to its accessibility. Prices consolidated over the last five years because there wasn’t that much stock available but more is now under construction. The demographic has also changed over the years and we’re now seeing more young people moving into the area. They start with somewhere small at first but as they grow, get married and start a family, they typically look to move to somewhere bigger.

“This is where places like Leon House, that provides one of the best finishes of all residential schemes, is key. Its good, properly-sized apartments are very well laid out, with a bedroom either side of the living area, which really maximises the space available. It’s the best conversion scheme in Croydon. And if you buy the best now, you can capitalise on it later when the demand is high.”

What are the top five reasons you’d give to someone thinking about moving to Croydon?

“1. Transport is top

2. The green space – there are so many parks and you can be in the countryside within minutes.

3. The amount of independent pubs, bars and restaurants we have here – there are so many unique and interesting places to try.

4. Croydon’s strong sense of community spirit. Once you become a ‘Croydoner’, you become very proud and protective of the town.

5. Finally, our diversity. Croydon is a completely mixed community with so many different cultures all in one place.”

What upcoming investment or development are you most excited about or is there any area in particular that you’d like to see investment in?

“This is a tough one as there is so much going on! I’m really pleased to see the link bridge at East Croydon station being completed and finally making it accessible from both sides. Also, there are a few new public squares being planned, which will be filled with bars and restaurants, so it will be great to see them come to life.

“The new entertainment space that is being planned on Surrey Street, near to Matthews Yard, will also be brilliant. I’m sure it will be very popular and I think an independent music offering will work really well.”

Finally, what does the future of Croydon look like?

“Very bright! It’s obvious from the amount of construction and cranes in the town. It’s a forest of lights at night and once these schemes are full of people, it will really help to support the borough’s economy. The new post-covid world also suits Croydon, with our great transport links making it easier for people to embrace the new flexible working approach, splitting their time between the office and home. The future is looking hugely positive and the more people that move into the town will help to revive it.”

SHW secures letting of Martlets Trading Estate, Goring-on-Sea

IPIF, advised by SHW, has let Unit 17, Martlets Trading Estate, in Goring-on-Sea.

Unit 17 comprises of 1,515 sq ft and is situated in a prime location. The Martlets Trading Estate is approximately 2 miles to the west of Worthing town centre via the A259 which provides access to the main A27 (approximately 2 miles to the north west) via Titnore Lane.

IPIF have expressed their great appreciation to SHW and Duncan Marsh for his tremendous work on this letting.

Duncan Marsh, Partner at SHW, comments “Vacancy levels throughout the West Sussex Coastal Strip and in particular the Worthing area remain low, low vacancy levels coupled with continued good demand means rents and prices will continue to grow throughout 2022.” 

SHW’s Jack Orr nominated for UCEM Built Environment Apprenticeship Award

Jack Orr, Property Administrator at SHW, has been nominated for the UCEM Built Environment Apprenticeship Award.

During National Apprenticeship Week, UCEM wants to celebrate all of the employers, apprentices and UCEM staff members that put in so much hard work to improve the built environment through apprenticeships.

Nominated for Apprentice of the Year, this category is for any current apprentice who has shown academic excellence in their degree, contributed to a significant project at work or has made an outstanding contribution during their apprenticeship.

Jack Orr comments: "I’m delighted to be nominated following a lot of hard work and dedication from all the SHW team in what has been a challenging year for all."

Vengrove Closes Senior Debt Facility and Acquires Further Assets for VREIP

Vengrove has completed the acquisition of two additional logistics assets for VRE Industrial Partners (VREIP), its UK value-add industrial and logistics strategy, in separate off-market transactions.

The properties comprise a 130,000 sq ft distribution unit in Sheffield let to Kuehne+Nagel, which was acquired with a term certain of two years, and a 33,000 sq ft last mile unit in Manchester, within the M60, with 3.5 years to expiry. Both assets have reversionary income profiles.

Concurrently, VREIP has closed a senior debt facility with ICG Real Estate, financing these assets alongside the other seed industrial properties, as well as providing a financing facility for future acquisition tranches.

VREIP is aiming to assemble an initial portfolio of £150m.

Will Hunting, Director & Head of Investment at Vengrove, commented:

“We are really pleased to have acquired the next two assets for VREIP. These acquisitions are in line with the fund’s strategy of purchasing well-located assets with strong fundamentals that are immediately accretive to the portfolio. We are also very happy to continue our longstanding relationship with ICG Real Estate on the financing side and look forward to working on further tranches with them as the portfolio grows.”

Louise Dooly, Managing Director at ICG Real Estate, said:

“We are delighted to have concluded this financing with VREIP as we continue to strengthen our relationship with Vengrove. The industrial sector remains highly sought after and this portfolio provides ICG’s investors with an opportunity to access the sector at an attractive entry point and support a proven manager with delivery of its value-add business plans.”

Conduit Real Estate advised Vengrove on the senior debt facility and Kimmre acted for Vengrove with regards to the acquisition of the Sheffield asset.

Bridge Industrial Announces Over $6.5 Billion in Transactions in 2021

Leading industrial real estate operator and investment manager executed over 23.5 million square feet of deals while expanding its capital relationships and strategic capabilities

Bridge Industrial (“Bridge”), the privately-owned, vertically integrated real estate operating company and investment manager, announced today that it has completed over $6.5 billion in transactions across 23.5 million square feet in 2021. Bridge acquired 25 new properties totaling 17.5 million square feet, valued at $4.9 billion, and also executed nine sales or refinances on projects totaling six million square feet and $1.6 billion in value.

The activity comes as Bridge continues to expand its strategic capabilities and overall reach within the industrial and investment arenas.

“The past year has yielded tremendous results for the industrial sector across the globe — similarly, 2021 was a busy year at Bridge as we continued to expand and diversify our business,” said Steve Poulos, CEO and Founder of Bridge. “Our increased transaction activity has necessitated an increase in our overall capital markets pursuits, and we have been fortunate to attract new strategic partners as we continue to leverage our international, vertically-integrated operating footprint. We are incredibly proud of the success we’ve experienced to date, and look forward to making 2022 another great year.”

Bridge has continuously proven itself as a leader in the industrial sector, first as an industrial development/acquisition firm and then in 2020 adding an investment management focus. The investment management efforts, led by Sean Zasche, CFO, raised over $4 billion of equity in 2021 to deploy across the firm’s strategies.  

In December, Bridge also officially launched a new strategic venture focused on value-add acquisitions with the purchase of a 336,852-square foot industrial campus in Pompano Beach, Florida.

Bridge also expanded its presence in several regional markets amidst a successful transition to investment management – this includes the relocation of the firm’s corporate headquarters in downtown Chicago; the expansion of the firm’s London office; and expansion of the firm’s California office to San Francisco/Bay Area.

“The hard work carried out by the entire team at Bridge in 2021 was nothing short of extraordinary, as our firm experienced its most active year to date,” said Steve Groetsema, COO of Bridge. “We also welcomed 40 new employees to Bridge throughout 2021 to supplement this rapid growth and are continuously looking for more of the real estate industry’s top talent.”

“Our platform has gained incredible momentum over the last few years, and our already robust development pipeline indicates that it is likely to continue in 2022,” said Tony Pricco, Chief Investment Officer at Bridge. “As we acquire more properties and strengthen our long-term ownership and investment management strategies, we are in better position than ever to generate market leading returns for our expanding list of partners.”

Bridge’s current transaction and groundbreaking pipeline for 2022 includes 31 potential acquisitions totaling 11.9 million square feet with a projected value of $4.2 billion.

Bridge Industrial Makes its Fifth and Largest UK Site Acquisition for Development Acquired in Weybridge

Bridge Industrial (“Bridge”), the US-based industrial real estate operating company and investment manager, has announced its fifth site acquisition within the M25, securing an 8.5-acre business park in Weybridge.

The freehold interest in Weybridge Business Park has been purchased from Abrdn, with vacant possession, for Bridge’s latest industrial development. Currently housing six separate office buildings, the site will be redeveloped to provide approximately 190,000 sq ft of purpose-built industrial facilities across three separate units.

Positioned just off Weybridge Road, in an established industrial and trade counter location, the site provides easy access to the M25 and M3, serving London and the South East.

Paul Hanley, Bridge’s London Partner, comments: “We are excited to announce our largest site acquisition to date and our fifth within one year. We are already well underway with our plans to develop the site in keeping with our strategy of providing high-quality, purpose-built infill industrial assets, serving the last mile sector, and expect to submit planning by early April this year which would enable us to start on site in Q1 2023.”

Bridge was represented by Montagu Evans in the transaction. Savills advised Abrdn.

Bridge Industrial launched its UK operations in November 2020. In May 2021, Bridge announced its first acquisition in North West London, Bridge Point Southall, followed by two further acquisitions in Barking and Uxbridge in July and a further site in Croydon in September. Bridge is actively pursuing land and development opportunities throughout Greater London, the South East, and the West Midlands.

Is the process of ripping out a warehouse fit-out at end of a tenancy really sustainable?

Is the process of ripping out a warehouse fit-out at end of a tenancy, to meet landlord requirements, really sustainable?

With COP 26, The Royal Family, David Attenborough, and Greta Thunberg bringing sustainability increasingly higher up on our agenda this year, we need to look at the whole lifecycle of a building and its tenancy in our country’s mission to move to carbon net zero. One part of this process is dilapidations. Timothy Grierson, Head of Dilapidations at Delva Patman Redler take’s logistics and industrial buildings as an example.

The Many Uses of Warehouses

Warehouses are wonderfully interesting buildings to work within and conduct surveys of. The reason for this is the plethora of different activities that occur within them. Logistics, food storage, automotive supply and repair works, machining, dark kitchens and last mile service points all have differing and often exacting requirements.  What may be suitable for one of these activities, in terms of the layout and alternation of a warehouse, commonly does not suit another.

The location of the warehouse, it’s condition and that of its surroundings is relevant. A good agent will consider how best to pitch a unit or industrial estate. Generally speaking, factors that will impact the appeal of a unit are; it’s connection to transport hubs or key markets, the costs involved in occupying the space. Another key factor is the feel of the estate, landlords that own multiple units on one estate have more of an opportunity to influence this through improving the aesthetics of the buildings, clearing away unsightly chattels, redecorating tired cladding, improving signage and the like through to more costly measures such as resurfacing access roads.

Common Necessities

That said, there are common features that we tend to observe within warehouse units, from the classic ancillary office space, WC’s, an accessible WC and potentially a shower, to the surprisingly less standard, but always required in one form or another, kitchenette area.  Whilst most warehouses ultimately require this space, we commonly see it as being an item that is chopped and changed as per the requirements of the specific occupier.  Sometimes it is standardised across an estate and a landlord’s fixture and also, often, it is not.  Mezzanines too are cyclically altered, regularly being installed, and then removed from warehouses.

Generalised Party Thoughts at Lease Expiry

At the end of the term, tenants commonly feel that they have added great amounts of value to the base build of the warehouse through their alterations. Whereas the landlord often sees the tenant’s alterations as being specific to their enjoyment of the space and their individual requirement. Landlords then typically desire that the arrangement be put back into its original configuration and certainly into repair, subject to the specifics and requirements of the various legal documents that are likely to be in place.

To Refurbish or Not: An Example

Is it best to leave an existing fitout in place? Case by case review is key. An example that springs to mind is where a dilapidations claim was left open, as evidence of the landlord’s loss was required by the tenant prior to their being a desire to settle the position. It ultimately wasn’t possible to let the space with its existing layout even with a contribution offer relating to the condition of the unit at a good market rate. The landlord completed the dilapidations works and redecorated other units at the same time on the estate to improve the feel of the estate. Within a few months of completing the works the warehouse was let at a favourable rate.

In its altered condition the warehouse had a tired mezzanine, kitchenette and some additional service areas, and it wasn’t in good decorative order. The alterations were removed and the space decorated. The new tenant promptly installed a new mezzanine that was only slightly different to that which was historically present, so is this sustainable?

Well in that case, the building’s shell and structure and floor and base fit-out were retained, so a large amount of the embodied energy would be in those elements. Also, there is a wide range of variation between differing types of mezzanines, load bearing capacity, layout, height of installation etc. Whilst the interior had some wastage, a percentage of this waste when contrasted to the re-use of the building would be a relatively small percentage.  Items do get tired through usage, say over a ten-year period and a degree of restoration is necessary.

If the materials used in the fit-out are sustainable, recyclable or reusable this would help diminish the impact of the cyclical ebbing and flowing of lessees into the landlord’s demised area.

Condition

An attribute linked with fitout is condition, often at the end of a 10-year period, many warehouses have received a large amount of heavy wear, varying dependant on usage type. Forklift trucks and the like are not kind to the materials around them, where the usual bumps and scrapes occur, materials can easily get to the point that refurbishing an element becomes more of a time intensive endeavour than recycling and replacing.

Solutions

Warehouses generally are versatile, and this flexibility ensures that an asset stays marketable and useful. Demolition of a structure is likely to be an unsustainable exercise when contrasted to well considered refurbishment. Whilst there is undoubtably wastage that occurs resultant of the fluctuating usage forms of a site, having a good team carefully considering the dilapidations process and reletting exercise extends the usefulness of a building.

When considering sustainability, we can all play a role. Naturally each specialist knows how best to assist, however from a building surveyors’ perspective I see some of the opportunities for each profession to contribute as being:

• The Landlord or their Investment Team: Championing sustainability as a beneficial characteristic amongst the usual suite of considerations.

• The Tenant: Placing a value on the energy efficiency of the site and ensuring that their fitout’s consider energy efficiency and use recyclable materials.

• Agents: Ensuring that the vision for the landlord’s asset is marketable and considers all options, a recently refurbished asset that no longer meets the requirements of the locality could be a wasted endeavour.

• Solicitors: The contents of new leases and licence to alter could impact the viability of an asset to function in its existing form. Consideration of green clauses in conjunction with the usual considerations such as, demise extent, repair, redecoration and yielding up clauses are key. Also ensuring that reinstatement clauses within any licence to alter reflect what is best for the asset when considered against the wider teams’ long-term plans for the asset.

• Energy Assessor: Assessments of sites to understand what is required in relation to ensuring that the Minimum Energy Efficiency Standard regulations for Commercial Properties are complied with well in advance of 1st of April 2023 deadline. Their role and that of the BREEAM Assessor could easily form a whole separate article.

• BREEAM Assessor: A third party sustainability assessment procedure for new and in use assets which can also be utilised at refurbishment stages.

• Architect: Consideration of refurbishment plans.

• Mechanical Electrical and Plumbing Consultants: Consideration of what will be offered as part of the base build and what could be reused or reconsidered to improve the energy efficiency of the services within the asset.

• The Building Surveyor: Ensuring that all parts of the process are considered at or in advance of lease end so that the building can be represented in the fashion required by the client and their advisors.

• The Contractor: Crucially they maintain and represent an asset to the client’s instructions. Having a plan to ensure that waste is recycled and diverted from landfill is useful. Also ensuring that the materials specified are sustainable and installed. Should unsustainable materials be specified, recommendations on how to improve the scheme could be provided at tender return stage to the specifier.

SHW Worthing welcomes popular bakery to town

On behalf of private clients, SHW are delighted to announce the letting of 57-59 Brighton Road to Brighton based The Flour Pot Bakery.

“The Flour Pot have wanted to occupy a space in the centre of Worthing for some time now”, commented Agency Surveyor at SHW Peter who also added “Its been a pleasure to work with them and to achieve a strong letting on a long term basis for our client”

SHW secures letting to Reed in Partnership at Norfolk House, Croydon.

On behalf of Landlord, Kennedy Wilson Europe, SHW has secured a letting to Reed in Partnership at Norfolk House, Croydon.

Part of the Reed Group, Reed in Partnership has taken the whole 2nd floor of 10,662 sq ft. Following SHW’s recent letting of the former Barclays unit to Wendy’s on the ground floor of Norfolk House.

Thomas Tarn, Surveyor at SHW and agent acting on the Norfolk House offices, says: “We are pleased to welcome Reed in Partnership to Norfolk House and secure this large letting for our clients in a challenging market with significant uncertainty around Covid. We now have just 4,130 sq ft of Cat A+ space available on the 3rd floor, providing occupiers an ‘easy in’ option with kitchen and meeting spaces already fitted and are pleased to report a good level of interest in this space.”

SHW and DTRE advised Kennedy Wilson Europe. Reed in Partnership were not represented.

Pluto Finance closes £158m of funding in the last six weeks

Pluto Finance has announced a total of £158 million of funding over the last six-weeks.

Completing a total of £61m of stretched development loans across Brent, Essex and East Sussex, Pluto’s Stretched Development funding is now back to a maximum of 90% LTC / 75% LTV.

A further £22m of Senior Development funding was agreed for 98 flats and 35,000 sq ft of retail space in Hertfordshire.  Pluto’s Senior funding rates are competitive with the high street with margin’s beginning with 3%.

Finally, £75m of bridge loans closed across seven facilities in the last six weeks, ranging from loan sizes of £2.5m to £21m, all of which were facilitated at short notice.  These bridge loans have assisted a range of borrower requirements, from land with planning, requiring short term loans until assets are sold or planning is enhanced, to Development Exit Bridge loans required until either units are sold or refinanced to longer-term debt. 

Mario Ioannides, Associate Partner at Pluto Finance comments: “Our pipeline for the rest of the financial year is strong and we are on target to exceed our business plan targets.  What we have achieved in the last 6 weeks is very pleasing during a time of moving into new offices to house our growing team of finance experts.  

“We are now back to facilitating 90% LTC development loans and our bridge loan products are competitive both in pricing and structuring.  We also now have even more streamlined processes and structuring for sub £10m development loans and sub £3m bridge loans.”

Link 23, Handcross, now fully let

SHW, on behalf of Mileway, has let the last remaining units at Link 23, on Nursery Lane in Handcross, to Maker & Son and Pets Corner, enabling both occupiers’ expansion needs.

High-end furniture company Maker & Son has taken a new lease on Unit 4, totalling 22,000 sq ft. Doubling in size within the estate in only two years, having expanded from the 11,000 sq ft Unit 2. With unit 2 then available, SHW agreed a new lease with Pets Corner further expanding on the estate where the carbon neutral pet retailer already has over 50,000 sq ft.

Tim Hardwicke, Partner at SHW, comments: “It’s great to see two local companies expanding, demonstrating the attractiveness of the location and we are delighted to be able to facilitate their expansion.”

Logicor's Wellingborough170 brought to the market

Logicor, a leading European owner and manager of logistics real estate, has launched its 170,598 sq ft Wellingborough distribution and production facility to the occupier market, appointing Burbage Realty and DTRE as letting agents.

Wellingborough170 is located on Park Farm Industrial Estate to the West of Wellingborough, a strategic logistics location in the East Midlands between London and Birmingham. Positioned in an established industrial and logistics park, nearby occupiers include TNT, XPO Logistics, DHL and Co-Op.

Set on a 22-acre site, Wellingborough170 offers a 110m yard depth with substantial staff car parking and HGV parking space. The unit, which will be fully refurbished, has six level access loading doors and 10 dock loading doors, with a covered loading bay. 

Jack Garrett, Senior Asset Manager - UK, Logicor comments: “Increasing numbers of occupiers are being attracted to the connectivity credentials offered by this location. It benefits from access to the M1, A14 and East Coast Ports and with the strong population growth in the area, access to a large and skilled labour pool. We have already received interest in Wellingborough170 which will be fully refurbished and available in Q2 2022 and are confident that it will quickly become a thriving logistics hub.”

TWO NEW OCCUPIERS MAKE A MOVE TO LOGICOR’S PADDOCK WOOD DISTRIBUTION CENTRE

Dance floor manufacturer and supplier, British Harlequin plc, and a global logistics leader have moved into units at Paddock Wood, the distribution centre in Tonbridge owned and operated by Logicor, a leading European owner and manager of logistics real estate.

The two companies have taken a combined 72,000 sq ft of space: the logistics company occupying units S, T and W, totalling 55,000 sq ft, and British Harlequin plc, trading as Harlequin Floors, moving into units J and L, totalling 17,000 sq ft. This leaves just 12,000 sq ft of remaining warehouse space available to rent at the location.

Paddock Wood is located 45 miles south east of Central London, 10 miles south west of Maidstone and 8 miles north east of Tunbridge Wells. The distribution centre is situated on the east side of Maidstone Road, just off the A228, leading to the M20/M26, with Paddock Wood railway station a short distance away.

James Carney, Senior Asset Manager, UK at Logicor, comments: “The acquisition of Unit B at the end of last year now means we own the whole Paddock Wood Distribution Centre site and has allowed us to work closely and flexibly with our existing and new customers to help local businesses grow and thrive. Acting quickly and efficiently to fit with our new customers’ timescales, we were able to secure the right space needed for both customers to expand in the area.”

Vacant units at Paddock Wood Distribution Centre were subject to extensive refurbishment works which included improvements such as LED lighting and air source heat pumps which improved the EPC rating of the units. Further improvement and refurbishment works are also planned across other units.

For more information, please visit https://logicor.eu/en/uk.

Bridge Industrial UK Celebrates its One Year Anniversary

Bridge Industrial (“Bridge”), the US-based industrial real estate operating company and investment manager, celebrates its one-year anniversary. Following the successful launch of Bridge’s first international office in the UK in November 2020, the firm was very active in 2021, closing on four site acquisitions, forming a build-to-core joint venture with PSP Investments targeting a portfolio value of £1 billion ($1.4 billion USD), growing the team from two to seven, and opening a new London office to accommodate its continued expansion.

The UK arm of Bridge was established with the appointment of industrial real estate specialist Paul Hanley as Partner, London to lead the team, alongside Bridge’s Vice President Chris Doloughty. The two were quickly joined by Stephen Vickers, appointed in January 2021 as Senior Vice President, Development, to lead the firm’s project delivery in the UK.

From inception, Bridge’s UK dedicated team set about its aggressive site acquisition and development plan with a build-to-core focus on last-mile logistics assets within high-barrier infill submarkets in Greater London and the Midlands region. With a strategy to implement value-add measures to create state-of-the-art industrial assets, Bridge is targeting market-leading sustainability credentials with its UK development.

Paul Hanley, comments: “As a forward thinking, entrepreneurial company already established in the seven uber core industrial markets in the US, we have been able to act quickly and decisively to secure the best opportunities in our market, securing our first four sites in just under one year.”

Bridge completed its first site acquisition in Southall in early May 2021, followed swiftly by two further acquisitions in Uxbridge and Barking in June, and its Croydon site acquisition in August 2021. These four projects, all within the M25, are currently in various stages of the planning process to commence the development of a current total of 240,000 sq ft of last mile logistics space in 2022, with more to follow.

Paul adds: “The securing of UK dedicated funding in May this year strengthened our position to target and acquire these four sites, and we are excited to be able announce further acquisitions in due course.”

To assist in the swift growth of its UK operations, Bridge made further expansions to its UK team in its first year, appointing Analyst Leigh Robinson in July, along with Office Manager and Executive Assistant Nadine Bryan. In October Aisling O’Kane joined the team as Head of Planning and William Martire De La Mare was appointed as Financial Controller. To accommodate its ongoing expansion, the UK team relocated to a new office on London’s Old Bond Street in October 2021 as they celebrated their one-year anniversary.

Paul concludes: “We are continuing with full steam into 2022, actively pursuing land and development opportunities throughout Greater London, the South East, and the West Midlands. We look forward to an exciting year ahead.”

Bridge is actively pursuing land and development opportunities throughout Greater London, the South East, and the West Midlands.

Vengrove Continue to Grow with Key Strategic Project Management Hire

With the ambition to expand on the existing development management advisory division of the business, Vengrove has secured Kara Thompson, previously Head of London Project Management at Gleeds. Kara will spearhead the project management consultancy offer to existing and new clients in addition to supporting the wider development activities across Vengrove’s current and future AUM.  

This milestone in Vengrove’s growth plan extends the development services offer to cover a range of consultancy services completely bespoke and tailored to the specific requirements of individual projects.

Andrew Mclean, Vengrove’s Partner & Head of Development, commented “Utilising the knowledge and experience within the existing business, coupled with Kara’s drive to meet the challenges that the industry faces with her ability to lead teams to excellence in delivery, this combination will only strengthen the Vengrove offer.”

Kara Thompson, Director & Head of Project Management, added “I feel privileged to be able to join Vengrove, a genuine forward-looking business with an exceptional team who are looking to influence positive change in the built environment and to be able to contribute to the growth ahead.”

Vengrove is currently on site with a number of high-profile developments including Film House, a 105,000 sq ft office development in Soho, on behalf of WeWork Capital Advisors, as well as EdCity which is a mixed-use scheme in White City which will deliver a selection of education facilities for all ages, as well as 96,000 sq ft of new office space and 132 affordable homes.

SHW adds to its graduate team

SHW has announced four new recruits to its growing graduate team.

Oliver Fallbrown and William Edwards have joined SHW’s agency team in Croydon, working alongside Partner, Richard Pyne and Director, Holly Purvis. Joseph Willcox and Harry Adair have joined the Professional teams covering the Central and Greater London teams, working closely with Director Gemma Quinn.  Joshua Aylott is now working in the retail agency team, based in Brighton. And, most recently, William Kerr has joined the London team in BCD, working alongside Associate Matt Davies.  This takes the graduate team to 20 members working across the firm’s eight regional offices.

Russell Markham, Managing Partner of SHW comments: “Our new graduates have all hit the ground running, working very closely with senior members of the team. As with our other graduates, all are working towards their APC, supported by a graduate lead with in-house training programmes in place and we are delighted with their progress.”

Luke Longley, a Senior Surveyor at SHW who joined as a graduate and has recently completed his APC, comments: “The SHW graduate programme provided me with the best building blocks to start my career in surveying. From day one I was working alongside experienced surveyors and was exposed to large complex instructions and interacting with important clients. I firmly believe that I would not have been able to gain the breadth and depth of experience at any other firm. Now being qualified, it is great to continue to grow with the firm and see new successful graduates go through the same route”.

Jasmine Dean-Millward, who started at SHW in a work experience placement and who has now joined the graduate scheme comments: “Having graduated in a very uncertain time, SHW has given me firm foundations and support to enrol me into the APC, both through working in my current team and providing me the opportunities to circulate in other divisions.”

Logicor Welcomes New Technical Manager to its UK Team

Logicor has appointed Oliver Hayes to its UK team as Technical Manager, working alongside Sam Towers who has been promoted to Technical Director. 

Logicor, a leading owner and manager of logistics real estate in Europe, has appointed Oliver Hayes to its UK team as Technical Manager, working alongside Sam Towers who has been promoted to Technical Director.

Oliver joins from JLL where he was an Associate Director in the Building Consultancy team. An experienced Chartered Building Surveyor, with a wealth of knowledge in commercial and industrial building surveying, Oliver spent over four years at JLL, following two years at Gerald Eve and four years working with Lambert Smith Hampton.

Joining Sam Towers, Oliver will strengthen the building services and project management function, working closely with the UK asset management team and Logicor’s customers across the company’s owned and managed industrial and logistics portfolio, which includes over 38 million sq ft, in prime locations across the UK.

Charlie Howard, Logicor’s Managing Director, UK, says: “As our UK portfolio continues to grow the technical role is more important than ever, and Oliver’s in-depth experience of the market will provide great support to the team’s existing work across the UK. Sam has been part of the UK team for almost three years now, working with our asset managers and our customers on our ongoing refurbishment programme and new schemes and I’m delighted to announce his well-deserved promotion.”