Pictured - United Kingdom Warehousing Association

42 Cover StoryNew deal forlogistics operatorsPrologis has announced the launch of a new build-to-suit five year lease initiative to meet the needs ofcustomers seeking modern distribution space to meet short-term contracts. This is the first time thathigh quality distribution centres have been available on this basis in the UK and the initial reaction fromthe market has been overwhelmingly positive. What has driven this initiative and what does it mean forlogistics operators?As the Government pointed out in TheLogistics Growth Review – ConnectingPeople with Goods (November 2011),logistics is ‘a hugely important part of theUK economy’. The sector directly employsover two million people and supports manyother businesses from corner shops tosupermarkets; from specialist manufacturersto e-commerce entrepreneurs. However,this thriving sector is facing a shortage ofmodern warehouse space.In the boom years leading up to 2008,industrial property developers could hardlybuild speculative warehouses fast enough tomeet demand. Wincanton, for example,snapped up a 700,000 square foot speculativefacility at Prologis Park Kettering as adirect import centre for Argos early in thebuild programme. Also in the EastMidlands, at Prologis Park Wellingborough,Kuehne & Nagel took 540,000 square footspeculative building as a national distributioncentre for the Whitbread supplyingCosta Coffee, Brewer’s Fayre and PremierInn Hotels.The events of October 2008, however,brought speculative development to anabrupt halt; but because developers had anoverhang of supply they were able to meetmarket demand for the next three years.Most of this new stock has now been letand the last two speculative facilities inPrologis’ portfolio built speculatively –123,000 square feet at Kettering and139,000 square feet at Pineham – haverecently been taken by Great Bear andDalepak respectively. However, althoughdemand is increasing, market conditionsare not yet right for the return of speculativedevelopment.August 2012www.ukwa.org.uk