“We had the location, we just wanted to get the sizing right,” says Logicor’s UK managing director Charlie Howard, referring to the group’s flagship Daventry redevelopment scheme in the East Midlands.
Where a large single shed of a million square feet once stood, three new warehouses totalling 800,000 square feet are being built using recycled materials from the demolition of the previous structure, acquired by Logicor from a joint venture company managed and co-owned by Oxenwood Real Estate in 2021.
That building was income-producing and let to XPO Logistics who ran a contract with Amazon at the site, but Howard says Logicor’s plan was always to carry out at strategic redevelopment of the site between Coventry and Northampton. It feeds into the group’s focus on growing its market presence in the UK through development.
"The old warehouse was built in the 1960s and was one of the original big-box logistics units,” says Howard. “It was relatively low eaves, the configuration wasn't modern specification, so we saw it as great opportunity to bring it up to modern day standards and incorporate the ESG and biodiversity points.
"We've got a 135,000-square-footer, a 280,000-square-footer and a 385,000-square-footer. Our average size warehouse in the UK is about 300,000 square feet, so we are very well-versed and knowledgeable.”
The idea to build three new units, known collectively as Logicor Park Daventry, came out of a “detailed market analysis” looking at the supply and demand profile of the area. Logicor also sought local authority involvement from an early stage to establish what could be "achievable and deliverable" at the site, which sits in the UK's Golden Triangle logistics hot spot.
"What you build is important, where you build it is very important, and how you build it, and to what specification is really important. I think that's the point here – the specification had to be super, super right,” Howard adds.
The demolition of the old 951,000-square-foot unit began six months ago, with the site hosting a groundbreaking ceremony last week as steel beams for the three new units went up. The site’s two bigger warehouses will have 18 metres clear eaves, up to 55 metres yard depth, and up to 80 kiloNewtons per square foot floor loading.
The upgraded specifications are a sign of the times, with Howard explaining how occupiers are asking for taller buildings to house advanced technology. “We're seeing a lot of our customers incorporating automation, and robotisation, and the higher eaves height is needed.”
But he says the unique selling point of the large-scale redevelopment on Royal Oak Way North is its ESG play, and how the group has reused material from the old building to make the new sheds, maximising the site’s sustainability credentials.
Logicor project management director Matthew Storr says most of the materials from existing building, besides the steel and cladding which are recycled away from the site, are being processed and reused in the build. He describes materials reuse as a “fine art”, but worthwhile.
“The brick and the concrete get broken up and crushed down via a crusher machine, which then gets reused on site. We've worked really hard with the team to come up with a solution whereby we reuse all that material.
“None of it gets cast off-site, we roll and compact it, and then put it back in the ground as part of our development. It's kind of a nod to the circular economy. It's using what we've already got, rather than having to import more material or export excess."
The site is also targeting BREEAM Excellent and energy performance certificate A, while its building will have photovoltaic panels, electric vehicle charging points, LED lights and rainwater harvesting. All of the buildings will be constructed to high standards of insulation and air tightness to retain heat and reduce energy consumption.
Around 4,500 trees are being planted at the Daventry scheme, which will have a 2.2-acre native woodland. Storr says the net biodiversity gain is "ridiculously" large, adding the overall plan for the site was to provide “generous landscaping” for employees to enjoy.
“Some developers will try and max out a scheme, particularly in urban areas, and squeeze every inch out of the site and put in funny corners and all of these things. But here, we have gone for a less dense scheme, specifically to target these gains and make it a nice place to work and operate from.”
Across its operations, Logicor has set a target of reducing its carbon footprint by 36% by 2030, having published a 5-year environmenal, social and corporate governace roadmap in 2020. Along with redevelopments such as Daventry, the business has a track record of carrying out refurbishments to improve the ESG credentials of its properties, according to Howard.
He explains how the group decides what route to take with buildings. “From an environmental point of view, often refurbishment is better and there's a stronger case for that over development. In selective locations where the assets are beyond their life and we can't refurbish them to a higher standard, that is when we look at redevelopment.
"We're going to continue to do refurbishment on assets where we feel the specification, the asset, and the ability to incorporate the ESG initiatives is there. Where that's not there, we will look at selective redevelopments. We are also deploying some capital into new opportunities, which are going to have a development focus as well.”
Storr adds: “I think that is a bit of a differentiator with us, compared to lots of other developers, who are building very green, new sheds. We've refurbished many more million square feet than we have developed yet, and that will probably continue.”
Logicor's UK warehouses are let by big-name tenants, including food retailer Marks and Spencer which signed a 224,000-square-foot lease at its refurbished Dirft 224, north of Daventry town centre, in November 2022. The group also let its 170,598-square-foot Wellingborough distribution facility to GXO Logistics in October of the same year.
Howard says the group is targeting a variety of occupiers for Logicor Park Daventry, and is in discussions with retailers, third-party logistics firms and e-commerce businesses about the three units, which will be ready for occupation from the fourth quarter 2024. DTRE, JLL and Cushman & Wakefield are jointly appointed on the scheme, where Logicor is hoping to move on rents for the area.
He adds that the company works closely with customers to build the right kind of warehouses, with the correct specifications and amenity. It has three vacant big-box properties out of a total of 110 in the UK.
Howard says occupiers are preoccupied with workforce retention issues. Two outdoor gyms, shower facilities and cycle paths are part of Logicor’s plans to help future tenants keep their staff happy and motivated at the Daventry sheds, with the site set for around 1,000 workers across the three buildings once fully occupied.
Both agree that “there’s more to do” around improving warehouses for staff, but they insist that the office space at its flagship scheme could give some London workspaces a run for their money. Storr says: "We've turned the dial a bit of the spec of the warehouse, it's got all the smart technology in there that you would expect and are having really nice finishes, so it's going to be a little bit more than your normal warehouse office."
Howard adds: "We're a long-term holder, we are not trading it out, we're not flipping it onto the next owner, we're building it to keep and we're building it to hold for the long term. So we are spending a bit more on the fit out, and it's costing us more, but we think that's the right thing to do.”
Logicor Park Daventry is part of a wider drive from the group to grow its presence via redevelopments and selective acquisitions. Howard says the industrial developer has submitted around 2 million square feet of planning applications for sheds in the last 12 to 18 months, with the group awaiting a decision on a scheme in the North West next month. He adds there are a “good number more” in the pipeline that the group will be delivering over the next year or two.
Despite a drop off in big-box leasing deals during the early stages of this year, Avison Young analysis suggests that take-up of grade-A, big-box industrial units increased to 4.1 million square feet in Q3, jumping 45% on the second quarter. It added that occupiers remain keen on locations within the Golden Triangle.
Howard says Logicor is “well-placed” to navigate the current economic environment, with its higher than usual interest rates and inflation. He puts this down to the “scale” of the business, which operates multilet schemes up to 1 million square feet, and stable, long-term financing. The third is the strength and distribution of its property portfolio.
"You've got to build the right product, in the right location – and the supply levels that will come through at the end of next year and in early 2025, we believe, will be less. So the timing [of this development] is actually ideal.
"If we lease one, two or three of the assets to existing customers, then great. There's a strong chance we will because we've got such a big profile over 1,100 UK customers. But ultimately, it will come down to having the right assets in the right locations, and I think this one is ideal for that."