Industrial & Logistics Insights
Edition 2 • Spring 2025
How is 2025 shaping up?
Rob Champion, Partner and Head of Industrial & Logistics at leading property consultancy Fisher German, believes the need for flexibility is more important than ever for businesses to not only survive, but thrive.
2024 was a challenging year in most sectors with investment decisions postponed due to the General Election and the Autumn Budget in October, and it is understandable that there is still a degree of uncertainty among industrial and logistics businesses.
As we move into the second half of Q1 2025, the economic outlook remains uncertain, influenced by both domestic and global factors. The impact of the changes to National Insurance and National Minimum Wage to employers in April and the actions of President Trump since taking office, are contributing to this uncertainty.
Poor retail figures over Christmas and declining sales in January contributed to the Bank of England’s concerns about stagflation although the ONS has since reported 0.4% growth in December which was unexpected given the wider doom and gloom. Financial experts anticipate a further cut to interest rates following January’s reduction, though further reductions may be limited if inflation persists.
There is, however, a silver lining: Chancellor Rachel Reeves has pledged to support major infrastructure projects to enable growth, alongside changes to the National Planning Policy Framework. This indicates a genuine governmental ambition to lay the groundwork for the delivery of housing, employment and key infrastructure development. These positive ambitions have been complemented by a busy first 2 months of the year where an array of meaningful requirements have hit the market and key transactions, negotiated in the second half of 2024, have been exchanged or completed.
The sale of a 140,000 sq ft multi let industrial investment on behalf of a Worcestershire-based property company to Marchmont Investment Management underlines the ongoing appetite for quality last mile and local business assets. The estate, with a rent roll in excess of £1m per annum, will form part of a new JV with Invesco known as Space Industrial. Furthermore, our clients Clowes Developments have secured the pre-sale of a new bespoke 72,000 sq ft building to CLEAN Linen and Workwear on the highly successful Fairham Business Park, Nottingham. The latter transaction represents a key investment from an innovative company seeking to meet the highest efficiency and sustainability standards. The new facility will incorporate the latest automation and laundry technology advancements whilst also delivering 250 new jobs to the area.
Occupiers will continue to seek supply chain resilience, including the onshoring of manufacturing and maintaining adequate inventory. Strategic locations will continue to be key with sites providing access to road, rail and ports (inland and coastal) seeing the highest demand. Power, however, remains a critical issue especially with growing levels of automation, the implementation of AI, and robotics. We anticipate a rise in smart warehouses and their adaptation to accommodate autonomous delivery in the coming years. Those sites that can deliver power will prove to be highly valuable particularly where this benefit is complemented by the other locational benefits.
We must be mindful however that there has been rising levels of vacancy within existing stock over the past 12-18 months suggesting the potential for some turbulence particularly when higher operating costs start to take effect from April. Proactive asset management is essential; landlords must
recognise the increasing competition and ensure their buildings are fit for purpose in a more competitive marketplace. Investment in asset improvements, modern, intelligent interior design and sustainability credentials will give competitive advantages as the supply and demand balance shifts.
There will also be a continued focus on regulation as occupiers strive for higher environmental standards and information security, particularly in future-oriented buildings. All these factors mean the market’s evolution requires greater flexibility in building design for adaptation and flexible leasing arrangements. We may see a greater number of campus style developments like Frasers at Ansty (Coventry), Nike at Corby and DSV at Mercia Park, Leicestershire where focal points of innovation and investment are supported and encouraged as part of the growth agenda.
While there is much positivity within the industrial and logistics sector for 2025, it must be balanced against the changing dynamics of the market, continued economic uncertainty and likely further influence from decisions made in the States (in particular). A focus on UK growth, support from central government and greater liquidity should see exciting times ahead as we move on through this year and we have some significant projects in our pipeline which look set to emerge and thrive.
Rob Champion Head of Industrial & Logistics
After a challenging 2024, the industrial and logistics market is embracing the mantra of ‘survive to 25’. As we move through the first quarter how is 2025 shaping up?
Recent deals done
Let on a 10 year term. Golden Triangle distribution unit, 130,726 sq ft.
Let on a 10 year term. Fully refurbished high spec unit, 41,150 sq ft.
Sold for £3.1 million, retained by purchaser to let both buildings. 46,000 sq ft & 11,000 sq ft.
Pre-sale to ABB with building under construction, 102,257 sq ft.
Industrial Open Storage
Since 2021, there has been an increasing demand for industrial open storage (IOS) land, creating a sub-sector with rapidly rising values, especially in the North West. David Newman, a Partner in the Commercial Transactional Team at Fisher German’s Manchester office, highlights the growing diversity of investors drawn to these opportunities.
Until recently, industrial open storage (IOS) sites were largely acquired by private investors and owner occupiers as typically the designated planning permission and the required infrastructure was in place for storing materials and equipment.
However, the market is now seeing a broader range of purchasers, including institutional investors who had not previously considered IOS as an attractive proposition for their investment portfolios. Many are now drawn to the diversity it adds to their portfolios as a different asset class and the fact that longer and more formal lease structures can be agreed offering longer-term income.
The traditional demand driven from the construction industry for the storage of materials, plant and equipment is now expanding to support supply chain distribution networks for HGV and van parking, as well as a drive towards electric vehicle charging facilities and battery storage.
Fisher German’s commercial agency team has been extremely active in this market, seeing values for small sites ranging from £550k to £700k per acre. We have assisted clients with several disposals including former CEMEX sites:
• A 0.52-acre site on land at Cowling Brow in Chorley comprising a securely fenced and
cleared concrete hardstanding with the plant and fixtures removed
• A 0.49-acre site in Morecambe that was decommissioned and comprised a securely fenced concrete hardstanding
• A 1.05-acre site located at East Prescott Road in Skelmersdale near J5 of the M58, again comprising a decommissioned plant providing a securely fenced concrete hardstanding.
This increased demand is expected to continue, and despite the economic uncertainty, further increases in rental and capital value are anticipated, albeit at a more modest rate.
Steve Brittle Transactional – North West
0161 214 4665
steve.brittle@fishergerman.co.uk
David Newman Transactional – North West
0161 214 4664
david.newman@fishergerman.co.uk
DC2 Prologis Park, Wellingborough
Yorks Park, Dudley
Ogden Road, Doncaster
Road Five, Winsford Industrial Estate, Cheshire
Brand new warehouse unit let on 10-year term, 11,669 sq ft.
Plot A2, Fairham Business Park, Nottingham
Haydock Industrial Estate, Merseyside
Let on 10-year term. Brand new high spec unit of 80,000 sq ft
Navigating tenant fit out:
Common
issues
and
pitfalls in leasing new buildings
When an occupier acquires a new building, the fit-out phase becomes a critical challenge. This phase often starts many months before the lease is finalised, involving the development of design concepts and extensive consultation with the landlord’s team. We spoke to John Owen, Joint Head of Building Consultancy, to learn more about the level of collaboration and planning required during this period and how it can significantly impact both the timeline and costs associated with the fit-out.
The complexity of a tenant’s fit-out can vary widely, requiring different levels of technical input. Simple projects, such as installing racking systems or making minor office alterations, are usually straightforward and can be quickly approved by the landlord’s technical team. However, more complex projects, such as installing large bespoke manufacturing equipment, making structural alterations, or creating additional office space within a warehouse, demand specialist consultant input and careful management. These complex requirements often lead to longer timelines to obtain the necessary approvals, such as Licences for Alteration and statutory approvals.
Common pitfalls in the fit-out process include underestimating the time required for the approval process and the potential complexities of the work involved. For instance, failing to appoint specialist consultants can result in delays
and increased costs. Additionally, inadequate communication with the landlord’s team can result in misunderstandings and associated delays. Another common issue is the lack of a strategic approach at the outset, which can lead to an oversight of critical details that in turn could impact business continuity for an occupier.
Project management plays a crucial role in navigating these challenges. Effective project management ensures that all aspects of the fit-out are planned, risk assessed and executed efficiently. This includes coordinating with the landlord’s team, managing timelines, and ensuring that all necessary approvals are obtained in a timely manner. A dedicated project manager can assist in identifying potential risks and develop mitigation strategies, ensuring that the fit-out process supports the occupier’s business continuity and growth.
Acquiring new premises necessitates a strategic approach, which should extend to the fit-out phase and the professional team involved. Adequate representation is crucial for liaising and negotiating with the landlord’s technical team. This requires the early appointment of a professional team to manage the process efficiently. By appointing a professional team from the outset, occupiers can review bespoke corporate requirements, we can advise on the necessary specialist consultant input, provide a high-level program for the business to review, and
advise on associated risks. A comprehensive approach is critical for business continuity, but this is sometimes overlooked when managed internally by an occupier team.
In conclusion, the fit-out phase for a new premises can be a complex and critical process that requires careful planning and management. By understanding the complexities and pitfalls we can ensure a smoother transition and successful fit-out, ultimately supporting business continuity and growth.
John Owen Building Consultancy
020 7747 8831
john.owen@fishergerman.co.uk
Improvement Relief for business rates supports businesses to invest in their property portfolios
On 1 April 2024, the Government introduced a new Improvement Relief for business rates, designed to encourage ratepayers to invest in their properties. Improvement Relief will support businesses wishing to invest in their property. It will ensure that no ratepayer will face higher business rates bills for 12 months because of qualifying improvements to a property they occupy. We caught up with Barry Newbury-Neale, A Senior Associate in our business rates team to learn why she feels this will remove a significant barrier to investment in property enhancements
For the first time since before the pandemic, the multiplier used to calculate the bills will increase, albeit only for properties with a Rateable Value (RV) over £51,000.
The Improvement Relief means that any qualifying works completed between 1 April 2024 and 31 March 2028 on or after 1 April 2024, will not increase rates bills for businesses until 12 months after the works have been completed.
The policy objective of the relief is to help occupiers make improvements to their existing premises and is subject to several conditions. The qualifying works condition
included any extensions to buildings, improvements to the physical state of the property and any new plant and machinery.
The occupation condition dictates that the same ratepayer has been in occupation on each day since the qualifying works commenced. This ensures the support is not diverted to landlords, developers or businesses which have merely inherited the improvements from a previous occupier.
Introducing Improvement Relief In April
2024 gives businesses another incentive to consider refurbishing asset portfolios. Improvement Relief is being implemented to ease the burden on ratepayers and provide a supportive environment for business growth.
It has been specifically designed to assist ratepayers who invest in improvements to their properties to enhance their business operations. Businesses can reap the benefits of their improvements without immediate financial strain.
Planning policy change sparks opportunity for the delivery of high impact development
While the new National Planning Policy Framework (NPPF) is hitting the headlines for its ambitious housing targets, Angela Brooks, a planning Partner at Fisher German, says that it also provides significant opportunities in relation to employment land.
The new NPPF and associated publications include extensive guidance around housing targets, which was always going to be expected.
However, it’s encouraging to see that it also addresses employment land and commercial development, reflecting Labour’s focus on driving economic growth and their commitment to improving the prosperity of the country.
The framework emphasises that planning policies should ‘pay particular regard to facilitating development to meet the needs of a modern economy, including by identifying suitable locations for uses such as laboratories, gigafactories, data centres, digital infrastructure, freight, and logistics’.
This is the first time that the modern economy has been explicitly mentioned in the NPPF, which is a notable development.
It suggests a stronger emphasis on facilitating the digital economy, aligning with the government’s expansion goals.
While the Government haven’t set specific targets for employment land like it has for housing, local authorities will still identify their own targets. Many are updating their Local Plans and conducting call for sites exercises to identify available land. Landowners are encouraged to put forward their sites to help local authorities understand what’s available, creating opportunities to promote land for commercial uses. Now more than ever, there is scope to promote land for commercial uses.
For logistics, sites near major road junctions will be prioritised, while locations for gigafactories and data centres may vary.
Sites designated for development through Local Plans are significantly more likely to
achieve planning permission, speeding up the development process or making them more appealing to prospective buyers. We can assist clients in promoting land for commercial uses through the call for sites process and provide guidance during Local Plan consultations.
Housing and employment land are very closely linked, and with the government aiming to build an additional 1.5 million homes over the next five years, there are significant opportunities for commercial land to be brought forward.
