Logistics demand soars ahead of Freeport launch

With Liverpool City Region Freeport set to launch demand for industrial and logistics space is soaring, according to new data. Tony McDonough reports

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Image of a 70,000 sq ft logistics park planned for Wirral Waters

 

Demand for industrial and logistics space is accelerating in the North West ahead of the launch of the Liverpool city region Freeport.

In June, LCR Freeport director John Lucy said interest in the Freeport from overseas investors had been “phenomenal”. Later this year he will join industry body Mersey Maritime on a trade mission to the US to capitalise on the interest.

In December 2021, LBN reported how the Freeport was pushing up industrial demand close to the Port of Liverpool. Commercial agency Keppie Massie said anticipation of the benefits of the Freeport had created a “hotspot” in the north of the city.

Now new figures from CBRE show take-up of logistics space across the North West reached a new high of 22.56m in the first half of 2022. This is 10% higher than the same period in 2021.

Take-up levels across the region were more than doubled from the first to the second quarter of the year. Build-to-suit deals within the region represented 43% of take-up this quarter across two larger deals. Another 43% of space taken in smaller speculative units across five deals.

H1 take-up for 2022 already exceeds the 10-year annual average for the region at 4m sq ft. And an additional 2.5m sq ft of space was under offer at the end of the second quarter.

North West prime rents remained steady for the quarter at £7.95 per sq ft. This is currently the most expensive of the northern regions.

During the pandemic the rise of online retailers accounted for a significant portion of the demand. However, CBRE is now reporting a wider mix of occupiers taking units. Third-party logistics accounted for the largest percentage of take-up at 27.6%. Manufacturing accounted for 15%, followed by online retail at 13.6%. 

In March 2021, Chancellor Rishi Sunak announced that Liverpool city region would be one of eight new English Freeport zones. Freeports are designated zones where normal tax and customs rules do not apply. They can be sea ports, airports and rail terminals.

Liverpool previously had a Freeport until 2012 but this new incarnation will be much more ambitious. Rather than just focused on the port itself it will encompass multiple locations across the city region and beyond.

They include the Port of Liverpool, which will be the primary customs site, and three tax and customs sites – Wirral Waters, the £100m Parkside Colliery logistics scheme, and the 3MG multi-modal terminal at Widnes.

Other Freeport locations include Liverpool John Lennon Airport, Borchard Lines container terminal, Port Garston, Port Weston and Port Salford.

New development is already under way at a number of sites in and around Liverpool city region. In April Peel L&P submitted plans for a £9m logistics park at Wirral Waters.

Paul Cook, a senior director at CBRE in the North West, said: “With H1 take-up for 2022 already exceeding the 10-year annual average for the region, we anticipate another exciting quarter.  A large amount of speculative space remains under construction, pointing to a significant increase in ready to occupy space towards the end of 2022.”

CBRE tracks all warehouses in excess of 100,000 sq ft in size and with an eaves height of more than 10 metres.

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