Property report: Industrial investment continues to build
It was once home to the business domain led by the late Blackburn Rovers owner Jack Walker – an empire built on steel.
Decades later the Walker Industrial Estate, which sits by Junction five of the M65, is owned by an overseas investor, bought in a high-profile deal at the end of last year hailed as a “significant vote of confidence” in the local economy.
The acquisition by a San Francisco-based investor is also being seen as more evidence of the growing demand for industrial space in Lancashire – and the growing eagerness of commercial property firms to invest in the county.
The Walker site was bought by 4th Industrial, backed by TPG Real Estate Partners of the United States, which currently has approximately $6.4bn of assets under management.
B8 Real Estate acted as agents for the buyer. Simon Wood, its head of investment, says there was tough competition for the industrial park, sold for an undisclosed sum.
He says: “Lancashire has a vibrant industrial base which is driving demand for space all along the M65 corridor from Chorley to Blackburn. We particularly liked the Walker estate because of its excellent layout and the opportunities to add value.
“This deal demonstrates the way in which major overseas investors are increasingly willing to look beyond the M6 corridor and make significant investments in industrial areas like Blackburn. As such, it represents a significant vote of confidence in the North’s economy.”
The 21.3-acre site was redeveloped by the Walker family following the sale of its business to British Steel for £330m in 1989. At that time, it was the largest amount ever fetched for a private company.
Today the Walker Industrial Estate is home to eight fully let units totalling 324,340 sq ft of space with a total annual rental income of £1.49m.
Tenants include Wincanton, Perspex International, Steel Dynamics, NeoNickel (Blackburn), Pentland Wholesale and Carlisle Interconnect Technologies.
It is not just big industrial sites that are attracting investor attention. An acquisitive property investment group added to its portfolio in February this year, after snapping up three new commercial properties in central Lancashire.
PJM Property Investments acquired Cuerden Green Mill in Lostock Hall and units at Charnley Fold Lane in Bamber Bridge, while one of its group companies, M M Acquisitions, bought Gaskell House in Rough Hey Road, Preston.
Cuerden Green Mill is a 32,000 sq ft industrial premises on Sherdley Road Industrial Estate. The currently vacant property is being refurbished before being re-let.
Its Bamber Bridge investment features a mix of commercial units. PJM plans to work with existing occupiers to reorganise and refurbish the site and attract new businesses.
And Gaskell House, sitting on an industrial estate on the outskirts of Preston, is a 56,000 sq ft property comprising a warehouse, large yard, and newly refurbished office facility. No figure has been given for the deals.
PJM director Patrick Murphy says: “The demand for good warehouse space is high. Our model is based on acquiring, adapting, and modernising commercial properties to make them attractive to new occupiers.
“All three of these properties will help us support the Lancashire economy by providing viable spaces for growing businesses in thriving locations.”
Manchester-based Property Alliance Group has also been active in Lancashire. In January, it acquired a 32,166 sq ft industrial unit in Blackpool for £1.3m.
Sitting next to Blackpool Retail Park and to the south of the town centre, off Squires Gate Lane, the property is a warehouse with offices. Alliance plans to spend £250,000 on its refurbishment. Ian Hunter, director at Property Alliance Group, says: “Forming part of the Blackpool Airport Enterprise Zone and around two miles from the M55, the unit is situated in a thriving area. We’re confident that its location coupled with the quality of our refurbishment will result in a swift letting. “This is our first acquisition in Blackpool and with the Enterprise Zone rapidly developing, we’re seeking opportunities for further investments in the year ahead.”
Growth across the industrial sector continues to intensify with availability of units failing to keep up with demand – a national trend mirrored in Lancashire.
Industry watchers say the wider North West market is characterised by a significant supply deficit and strong occupier demand, which has resulted in growing rents.
B8 Real Estate reported that 2021 saw 106 investment deals in the region with a total value of £1.3bn, an increase of 86 per cent on 2020, while letting activity rose by 16 per cent and prime rents by 7.4 per cent.
Danny Pinkus, partner at property consultants Robert Pinkus and Company, based in Preston, says investors are looking at places like Lancashire because prime markets such as Manchester and Liverpool have become “quite heated”. They are also looking to create more value.
However, he says: “There is not a huge amount for them to look at. The main problem generally is a lack of vacant opportunities. We just need more stock.”
Danny adds: “The demand from developers and owner occupiers for employment land in Lancashire is still very strong but the sites aren’t coming forward very quickly.
“If we are not careful the money will get spent elsewhere. The speed at which land is coming forward is a major issue, it is just taking too long.
“The cost of construction also continues to rise, making it difficult for developers to firm up on pricing. Delays cause real problems.
“Another problem is that a number of good employment sites have gone for housing, which appears to have been more of a priority for some local authorities, to the detriment of business.”
Caroline James, managing director at Blackburn based commercial property consultants Trevor Dawson, says there is increasing interest in Lancashire from overseas investors.
She adds: “The perception of the M65 corridor is improving, especially since Frontier Park established itself as a logistics destination.”
The £100m business park on the Hyndburn/ Blackburn border, near junction six of the M65, has been a major success story.
Caroline says the arrival of the National Cyber Force headquarters at Samlesbury, near to the new Advanced Manufacturing Research Centre and BAE Systems’ military aircraft plant, will also bring spin offs.
However, she echoes the warnings over the lack of sites, and adds: “We have to provide the opportunities, we will lose out to other areas if we don’t.”
Some projects are moving forward. Planning approval has just been given for a 55,570 sq ft multi-let industrial scheme at the Old Mill Industrial Estate in Bamber Bridge.
Industrials REIT will transform its existing estate by redeveloping an old industrial building and utilising some vacant land to create 44 new light industrial units.
Once operational, the scheme is expected to provide a £3.8m annual boost to the Bamber Bridge area.
Paul Batho, senior development manager at Industrials REIT, says: “The highly sustainable design provides for flexible unit sizes and responds to the unprecedented demand we are seeing for new space on this sought after, wellconnected estate.”