ARTICLE

And the winner is...

13 February 2024

Each year a multitude of deals and developments stand out as exemplars of what is happening in the logistics property market – the art is in only choosing one… Liza Helps makes her choices.

DEAL OF THE YEAR – Sale of Radlett Aerodrome to SEGRO

While there is a plethora of developments vying for Development of The Year, for me, there is only one Deal of the Year and I have been writing about it for more than two decades.

That is the announcement of the £120 million sale of the former Radlett Aerodrome in Hertfordshire to SEGRO in June 2023 for the development of a Strategic Rail Freight Interchange supported by up to 3.6 million ft2 of modern, sustainable logistics warehousing, including ancillary office, light industrial, research and development space.

The deal demonstrates and typifies the persistence and dedication required – notwithstanding the cost – to secure the critical infrastructure that allows for the development of a seamless and resilient supply chain that assists the UK economy to meet net zero ambitions.

Nearly twenty years ago the Strategic Rail Authority - a non-departmental public body set up under the Transport Act 2000 to provide strategic direction for the railway industry and encourage modal shift - reported that the only way to secure that and reduce HGV miles on the UKs roads – and hence reduce carbon production - was to build a network of strategic rail freight interchanges nationally. These, the SRA said, would need 100-1,000 acres of land, near cities, key road networks and labour force – near to Britain’s major conurbations such as London, Birmingham and Manchester. Additionally, the development land would need to be flat with a site configuration that would permit full length 775m freight trains to be handled.

In addition it was understood that in order to get the private sector to invest in these capital intensive schemes – costing upwards of £100 million - then there would have to be substantial rail related warehouse development alongside.

It was acknowledged that very few sites would meet the stringent criteria and that in all probability such sites will impinge upon the Green Belt.

The SRA deemed that London would need four of these SRFIs and Radlett was identified as a contender. Initially, a 200-acre site was brought forward by Lafarge Tarmac which was quickly optioned by Helios Properties in 2002. By 2004 Helios and the then Slough Estates (SEGRO) joined forces and the first planning application was put forward in 2006 and refused leading to an appeal. The Planning Inspectorate held its first public inquiry in 2007 with a report to the Secretary of State, Hazel Blears, who dismissed the appeal in October 2008 because the site evaluation was inadequate and there was a failure to demonstrate a compelling case for building on the green belt.

A second application was put forward, with a second refusal and a further appeal and public inquiry in 2009. The planning inspector this time accepting the proposals but Secretary of State dismissing them to be challenged by the developer in the High Court.

The judge agreeing with the developer that the Secretary of State had not properly explained the reasons for disagreeing with the planning inspector’s recommendations.

Back to the Secretary of State it came and further written representations were required, any decision was delayed in the light of the new National Planning Policy Framework and even more representations were required. It was now 2012.

To say the objections and public outcry against the scheme was strong could be deemed an understatement. Local MPs and councillors became quite partisan in their vocal commitment against the development of the site which they delegated as sacrosanct Green Belt land calling the proposed development ‘monstrous’  ‘ludicrous and unnecessary’ bringing in ‘thousands and thousands of lorries’, potentially destroying air quality, communities and a way of life.

From the difficulties of this single scheme was borne the realisation that for infrastructure developments deemed nationally important there needed to be another way of securing planning.

Nowadays an SRFI would not be decided at local level, instead decisions are taken at governmental level as Nationally Significant Infrastructure Projects.

It took a decade from that first application for the site to secure approval with the then Secretary of State for Communities and Local Government Eric Pickles granting outline planning in 2014. Four years after that reserved matters were approved and finally last year the sale of the site was secured.

SEGRO bought the 1,035-acre aerodrome in the Upper Colne Valley, Hertfordshire from Hertfordshire County Council, Tarmac Plc and Gorhambury Estates Company bringing all three land holdings making up the site under one ownership.

I would like to say that is the end of the story but right now there is an outstanding judicial review brought by campaigners ‘Save St Albans: Fight The Freight’ which lodged a legal challenge against Hertfordshire Council selling its 300-acre plot to SEGRO. The campaigners believe that if they are successful then the sale of the land will be reversed and the development stopped.

A development such as this will make significant and long lasting benefits for the environment on a national scale far outweighing the environmental impact of the loss of green belt to the locality.

According to research for the Rail Delivery Group by Deloitte each tonne of freight transported by rail produces 76% less carbon emissions compared to road with a freight train carrying as much as 110 lorries. There will be a minimum of four trains per day once Radlett is fully operational.

In addition nearly 60% of the site will be given over to a 610-acre country park which will include a 10-mile network of footpaths and recreational features including a trim trail, outdoor gym, new children’s play areas, new bird watching hides and a Visitor Interpretation Centre. Over 4,000 trees and 132,000 saplings will be planted, while the local habitat will be enhanced by creating new ponds and nesting sites.

The scheme itself will be developed to the highest sustainability standards with net zero carbon in construction as well as being designed to allow the facilities to operate net zero carbon in operation as well. That is a lot of freight and a lot of carbon saved.

Development of the Year #1

Rhenus Campus, Nuneaton. A 1 million ft2 of highly sustainable logistics space in a campus style for Rhenus Logistics on a 64-acre site in Nuneaton in the West Midlands.

Developer: Baytree (owned by AXA IM) 

Architect: Chetwoods

Contractor: Glencar

Agents: Avison Young, CBRE and Savills.

The development incorporates two warehouses of 210,000ft2 and 771,000 ft2 with a pioneering three storey 30,000 ft2 office headquarters constructed entirely from cross-laminated timber (CLT) and Glulam - one of the first cases in the UK of timber being used in the build of a large-scale structure within an industrial and logistics setting by a logistics developer.

It has been developed to achieve significant reductions in whole life carbon, designed with reference to the UK Green Building Council (UKGBC) Framework Definition for Net Zero Carbon Buildings, ensuring that Rhenus can not only reduce its own carbon emissions but also potentially support its customers with reducing theirs. Renewable energy will be generated on-site, with solar panels.

The development also incorporates MUGA sports pitches, allotments, edible planting, wildflower grasslands, extensive networks of footpaths to encourage cardiovascular exercise and external break out areas for staff wellbeing. The site, which is bounded by the Coventry Canal, features landscaping with extensive native tree planting, and other works aimed at generating biodiversity such as log piles, locations for apiaries, bat and bird boxes, as well as an extensive balancing pond overlooked by a projecting terrace for staff relaxation.

Internally the facilities will benefit from the latest in robotics, AI and warehouse management systems to provide flexible solutions and control of the supply chain. When fully operational, the development will help Rhenus Warehousing Solutions UK achieve its goals of reducing direct carbon emissions. 

It has been awarded BREEAM ‘Outstanding’ certification.

Development of the Year #2

The Range, Gateway 14, Suffolk. A £200 million freehold turnkey distribution centre totalling 1.17 million ft2 for garden and leisure products retailer The Range at Mid Suffolk Council’s 2.36 million ft2 Gateway 14 business and industrial scheme in Stowmarket, Suffolk.

Developer: Jaynic

Agents: Savills and Avison Young

The first development of scale in a Freeport zone, which were announced in the 2021 Budget whereby qualifying businesses would benefit from tax incentives include 100% business rate relief for five years, enhanced capital allowances, leasehold stamp duty tax reliefs and three years employers’ national insurance relief. Freeport East was one of the initial eight Freeport Zones. Some 1,650 jobs will be created at the facility, which is one of three distribution centres for The Range in the UK.

Originally to be built to BREEAM Very Good the occupier insisted on pushing the ESG credentials and secured BREEAM Excellent on the development.

The development brings in public private collaboration as the scheme is owned by the local council which has brought its developer Jaynic to implement its plans which will include the co-location of an innovation centre as well as large-scale logistics.

Development of the Year #3

Stellantis, Ellesmere Port. A 690,000 ft2 build-to-suit NDC for Stellantis to manufacture and distribute electric vehicles the first all electric vehicle-only production facility in the UK.

Developer: Stoford

Fund: Frasers Logistics Trust

The building achieved BREEAM Outstanding and net zero carbon in operation. This was despite a need for remediation of an undocumented 7-acre 1970s asbestos land fill site within the development plot.

The deal was secured on a sale of the land and lease of the new building netting Stellantis the £33.8 million. Stellantis committed to the deal in early 2022 and it was finalised, brought to market and exchanged within 6 months. The development completed in December 2023.

Development of the Year #4

MPC 3, Corby. Speculative development of 586,353 ft2 warehouse at Magna Park Corby in the East Midlands.

Developer: GLP

Agents: M1 Agency and Savills

The decision to speculatively build the property followed the pre-let of the adjoining site to modular homes builder Top Hat at a time when there was a great deal of uncertainty not just in the construction market but at a time when interest rates started to rocket following the disastrous Truss mini-budget in September 2022. As an investor developer GLP has been able to build speculatively at a time when many funds and developers have had to slow or even stop speculative projects.

The property reached practical completion in November 2023 and instead of settling for BREEAM Excellent, GLP is looking to push the limits and secure BREEAM Outstanding on the facility acknowledging occupier interest and demand for environmentally higher accredited properties.

MPC 3 benefits from LED lighting, 15% roof lights, rainwater harvesting, and has been built to net zero carbon in construction and fitted out with recycled and recyclable materials including carpet tiles, organic paints, office partitions, ceiling tiles, responsible sourced timber, marmoleum floor coverings, recycled aggregates, dock levellers, shelters, and doors, in addition regional provenance vegetation in the landscaping as standard.

In order to give something back to the community, the 120 acres of Cowthick Plantation woodland next door to the 3 million ft plus schemes will include 6km of walking and nature trails which will be open to the public.

 
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