Blinded by the lights?

MANY LANDLORDS and developers provide the fit-out basics, particularly in common areas like office space for the larger 100,000 ft2 plus warehouse properties and will put in ducting and plumbing to be connected but lighting, sprinklers, racking and so on is usually outside their remit.

With many 3PL contracts being five years or less taking nine or 18 months to fit out a building is clearly not going to work – aside from the Capex costs – so is it any wonder that secondhand space, already fitted out, is in such demand?

One example is luxury online furniture retailer Dusk.com, which snapped up its third warehouse in Yorkshire taking EQT Exeter’s fully fitted out 279,322 ft2 First Point warehouse in Doncaster, leaving virtually no void period between it moving in and former tenant online bathroom retailer Victoria Plum moving out. This meant the retailer was up and operational within weeks of occupation.

Developer Prologis also recently observed that one of the biggest challenges facing occupiers when moving into a new distribution centre is the time, and associated cost, designing and installing essential systems. This is why Prologis offers fit out services in addition to its facilities. The developer believes providing ready-to-operate warehouses saves customers up to nine months of design and installation time. So that they can focus on getting their operations up and running as quickly as possible. Prologis has a number of recent examples. It has secured DC327 at its Prologis RFI DIRFT III scheme for gXO and DC2 at Hams Hall for Fiege. The Enhanced Fit Out offered included LED lighting, L3 fire alarm systems and sprinkler systems as well as a frost protection system, using air source heat pumps.

Additionally, 3PL DFDS took DC7, a 246,685 ft2 warehouse at Prologis Park Kettering in the East Midlands. DFDS was looking for a quick solution after securing a contract and the building was fully fitted and operationally ready, with £2.3 million of installed infrastructure including racking with 30,8000 pallet positions.

In a recent conversation I had with Knight Frank logistics partner Charles Binks, he noted that developers, and most probably agents, underestimated the issue of fit out for occupiers.

“We are used to building buildings day in and day out but for many occupiers whose working week involves distribution or manufacturing they are not in the construction game and suddenly that is out of their comfort zone.”

Anecdotally, it is not uncommon for an occupier to go down the road into a second hand facility with fit out already in place even if the property is not ideal because the whole fit out piece is just frankly too much.

It seems a no brainer giving developers and more importantly landlords and investors more control of exactly what is happening in their buildings with Capex possibly amortised across the lease – another boon for occupiers. While it will not suit everyone it has certainly been proven popular already.

In 2026, watch this space….