The fast-expanding recycling industry is providing a significant boost for the commercial property sector, a seminar in Birmingham has heard.
“The property sector is seeing a large amount of new and substantial enquiries from waste disposal companies,” said Kevin Mofid, associate director at BNP Paribas Real Estate.
Not surprising perhaps given that every day Britain throws away 1.6 million bananas, 5,500 chickens, 5.1 million potatoes, 1.3 million yoghurts, 220,000 loaves of bread, 660,000 eggs and 1.2 million sausages.
“The waste and recycling industry is big business,” he told a Logistics Market Update event held by the Investment Property Forum.
“Opportunities in the short term exist for buildings designed for logistics and distribution.
“By 2015, the industry will require up to 50 million sq ft, the equivalent of six and a half Magna Parks.
“Longer term opportunities exist for investors and developers with large land banks.
“The industry has many local authority contracts – in certain cases the local authority leases the property. There is potential for long and secure income.”
The ideal locations for many such operations were at or close to “traditional” logistics centres, he added.
But he also predicted some consolidation in the sector too.
He told the seminar, hosted by BNP Paribas, how both Biffa and Recycled Carbon Fibre had taken new sites in the Birminghamarea, 237,000 sq ft and 62,000 sq ft respectively.
Mr Mofid said there remained a substantial amount of industrial and logistics space available across the UK– a total of 137,100,000 sq ft.
The Midlands accounted for 17 per cent of that.
Take up fell in most regions in the last half of 2009 but then rebounded, almost doubling from Q1 to Q2 in the West Midlandsand elsewhere.
“The figures show that deals are still there to be done as retailers and manufacturers drive demand as they restructure their supply chains to gain greater efficiencies,” said Mr Mofid.
There was more competition in the market place; nevertheless, speculative development was unlikely to return before 2013.
The meeting heard that sustainable initiatives were to the fore and shared space was becoming more popular.
Multimodal options – rail, air and ports – were important and East Coast ports were more likely to dominate than South Coast ones.
The meeting was chaired by Jonathan Holland, senior fund manager, industrial and warehouses, for Legal and General Property and there was also a presentation by Simon Jenkins, first vice president at ProLogis UK.
Simon detailed the challenges facing developers both from the occupational sector and the difficulties that may ensue from the changes in the planning system.
Prologis has a supply of consented land for future developments, although this is being rapidly taken up. The real issue will come once large scale developments are proposed in areas close to green belt as the localism agenda may ensure planning permission is hard to achieve.
A further key topic was that the sustainable features previously seen as bespoke are now part of the base build in everything that Prologis now constructs.
This has resulted in operational savings for any occupiers of Prologis buildings.