Leased Warehouse Benchmark costs needed
Discussion
I've just turned this up, which seems ok in terms of lease guide, but nothing on overheads & operations.
Lambert Smith Hampton said:
Tesco is to sign the largest single warehouse letting of the year at Evans Property Group’s Fradley Park in Lichfield.
The retailer is set to take 850,000 sq ft (78,967 sq m) at the Leeds-based property company’s site on the A38 between Birmingham and Derby, which it will use to distribute products around the region.
North Rae Sanders, GVA Grimley and Kingston are the letting agents at Fradley Park; Lambert Smith Hampton is advising Tesco.
The prelet is subject to planning permission being granted for the property, which will include 50,000 sq ft (4,645 sq m) of ancillary offices, although ground works for the building have already commenced.
Tesco will pay around £4.50/sq ft (£48.44/sq m) on a 15-year lease. The rent is lower than the park’s quoted figure of £5.25/sq ft (£56.51/sq m) because of the unit’s vast size.
The warehouse deal marks the latest in the retailer’s expansion programme in the Midlands.
In April, it signed for 383,000 sq ft (35,582 sq m) at ProLogis’s Crossflow in Crewe, and in 2005 it took 750,000 sq ft (69,676 sq m) at Daventry International Rail Freight Terminal. Elsewhere it is taking 700,000 sq ft (65,032 sq m) of distribution space in Goole, East Yorkshire, and 800,000 sq ft (74,322 sq m) at Farnborough in Hampshire.
The last deal of a comparable size was a letting in two buildings to Next at the St Pauls Developments scheme in Brookfields near Rotherham, which was agreed at the end of last year.
Evans is not expected to sell the property, even though the sale of a large shed with Tesco as a tenant could fetch a sub-5% yield, because it favours retaining assets long term.
According to a valuation carried out in March, Evans controlled £657.5m of property across the main sectors. It is believed the development cost for the Fradley Park unit could be more than £60m.
Fradley Park is a 300 acre (122 ha) warehouse and office scheme with consent for 4m sq ft (371,609 sq m), of which 1.6m sq ft (148,644 sq m) has already been built.
4 Dec 2006
The retailer is set to take 850,000 sq ft (78,967 sq m) at the Leeds-based property company’s site on the A38 between Birmingham and Derby, which it will use to distribute products around the region.
North Rae Sanders, GVA Grimley and Kingston are the letting agents at Fradley Park; Lambert Smith Hampton is advising Tesco.
The prelet is subject to planning permission being granted for the property, which will include 50,000 sq ft (4,645 sq m) of ancillary offices, although ground works for the building have already commenced.
Tesco will pay around £4.50/sq ft (£48.44/sq m) on a 15-year lease. The rent is lower than the park’s quoted figure of £5.25/sq ft (£56.51/sq m) because of the unit’s vast size.
The warehouse deal marks the latest in the retailer’s expansion programme in the Midlands.
In April, it signed for 383,000 sq ft (35,582 sq m) at ProLogis’s Crossflow in Crewe, and in 2005 it took 750,000 sq ft (69,676 sq m) at Daventry International Rail Freight Terminal. Elsewhere it is taking 700,000 sq ft (65,032 sq m) of distribution space in Goole, East Yorkshire, and 800,000 sq ft (74,322 sq m) at Farnborough in Hampshire.
The last deal of a comparable size was a letting in two buildings to Next at the St Pauls Developments scheme in Brookfields near Rotherham, which was agreed at the end of last year.
Evans is not expected to sell the property, even though the sale of a large shed with Tesco as a tenant could fetch a sub-5% yield, because it favours retaining assets long term.
According to a valuation carried out in March, Evans controlled £657.5m of property across the main sectors. It is believed the development cost for the Fradley Park unit could be more than £60m.
Fradley Park is a 300 acre (122 ha) warehouse and office scheme with consent for 4m sq ft (371,609 sq m), of which 1.6m sq ft (148,644 sq m) has already been built.
4 Dec 2006
StuB said:
Lambert Smith Hampton
Are they the letting agent for the estate Tesco have taken space on? If so treat what they say with caution as they will be seeking to maximise the best deal for their client the landlord.
One thing I am always suspicious of is when deals are said to be confidential. Confidentiality clauses are only there for the landlord as they don;t want other (prospective) tenants knowing how cheap they are prepared to go.
Also if a letting agent states "Y paid £10 sq ft" ensure there weren't any incentives such as rent free period, capital contributions etc. After take 10,000 sq ft at £10 sq ft thats £100,000pa, but get 6 months rent free and with a 5 year review pattern you are now paying £9 sq ft but the landlord will still quote it as £10.
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