INVESTMENT in Derby is back on the menu for property companies, funds, developers and private investors, according to associate director at Innes England, Stuart Waite.
One of the greatest challenges facing the industrial and logistics market in Derby is a lack of good quality accommodation to satisfy occupier demand, due to limited development since the economic downturn as well as high take-up levels of good quality second-hand stock over the last 12 to 18 months. Whilst occupier confidence is improving, build costs and occupier expectations are proving stumbling blocks to development of buildings sub-100,000 sq ft, which is where the majority of demand lies.
We are now seeing an appetite for investment returning to the city due to the dynamics set out above and investors seeing opportunity given the make-up of the local economy, capitalising on its strong industrial heritage. Research from accountancy firm UHY Hacker Young suggests that Derby has the fastest growing economy in the UK, driven by the performance of its manufacturing and engineering sectors.
Not only that, but key employment-led schemes in the city are beginning to take shape. Derby Commercial Park has planning consent for up to two million sq ft and a joint venture between Anglesea and Goodman is set to deliver 323,000 sq ft of distribution space, which should be ready for occupation by the end of the year. There is appetite for speculative development elsewhere on the site.
Infinity Park is expected to deliver 1.5m sq ft of mixed commercial accommodation, targeting the hi-tech engineering sector. A new road is going in off the A50 and construction is underway on the schemes Enscite building, an innovation centre which will provide much needed space for advanced manufacturing companies and start-up businesses.
Subject to planning, at St Modwen’s 50-acre extension of Pride Park – Derby Triangle – the developer intends to invest in site infrastructure and enabling works in order to open up their site for development, which will provide a mixture of office, industrial and retail/roadside/leisure accommodation. Further afield, St Modwen is set to speculatively develop 87,000 sq ft at Burton Gateway, with a new spur road being laid to provide dedicated access into the site off the A38.
Developers have identified that the time is right to start positioning these sites in the market as deliverable solutions, consented, funded with infrastructure in place, to give occupiers comfort that buildings can be developed within tight timeframes, perhaps linked to a contract or lease event. To do this clearly significant investment is required.
In addition to these three significant schemes, we are also starting to see new opportunities coming to market for investors. For example, Sinfin Lane Industrial Park is currently on the market, which offers almost 500,000 sq ft of existing industrial accommodation and up to 12 acres of development land. I would fully expect any sale to result in the new owners investing in refurbishment and new development.
We are speaking with a number of investors and developers who see value in Derby and the East Midlands, investment is absolutely back on the menu here and the mood across the property market in the region is a positive one.