CO-OP DEAL COULD BE FIRST OF MANY AT CASTLEWOOD

Industrial/Warehouse News

Midlands property consultancy FHP has completed one of the biggest industrial warehouse lettings in the country this year with the signing of contracts on a deal which will see a major food retailer consolidate its regional distribution on to another major site owned by Clowes Developments.

The Co-operative Group, the fifth largest food retailer in the UK, has signed a pre-let for a 477,100 square foot industrial warehouse at Castlewood, a strategic distribution park alongside the M1 corridor in the East Midlands. It has taken a 20-year lease at an initial rental of £4.60 per square foot. It is investing around £22 million in the development of the new facility, which will employ around 900 people.

The deal was secured on behalf of landlord Clowes Developments by FHP industrial partner John Proctor. He says it is likely to be the first of many in an area which has both the location and the labour force to service major distribution clients in retail, industrial and logistics.

John Proctor said: “This is the culmination of a long-term effort to market this area as an ideal location for industrial and warehousing activities. Clowes’ decision to purchase the portfolio containing Castlewood has also proved astute, coming at a time when retailers are looking to consolidate regional operations on high-quality strategic sites.

“Clowes Developments now owns two of the most prominent distribution warehouse sites in the East Midlands’ M1 corridor. The East Midlands Distribution Centre at Junction 24 has already attracted Marks & Spencer, which is one of the biggest votes of confidence you can get in the retail distribution market.

“Co-operative Group’s decision to sign up to Castlewood is likely to have a similar effect. The site is less than a mile from Junction 28, which unites the north-south M1 with the east-west A38, which puts businesses in the retail and distribution markets in the perfect position to service the East Midlands and South Yorkshire.”

The Castlewood deal reflects the current trend among major retailers to focus on fewer, larger distribution hubs. Co-operative Group will replace two smaller food retail warehouses with a single site likely to employ up to 900 people – mostly current staff transferring from the existing locations but with around 130 new recruits.

John Proctor added: “It is no coincidence that the country’s fifth largest food retailer opted for this site. They can call on an experienced workforce from the surrounding area and they know they are dealing with a developer with a long track record of delivering what major clients look for.

“Inquiries of the Co-operative Group’s calibre don’t crop up every week, and the fact that they have signed up to Castlewood will raise its profile significantly. The infrastructure is in place, the location is excellent and there is a demand for facilities like this.”

A planning application for the Co-operative Group building has now been submitted, with work due to start on site by the end of this year and the facility coming on stream in early 2013. The project will be managed by First Industrial Developments.

James Richards, of Clowes Developments, said: “This is an important milestone in the development of Castlewood Business Park, one which we believe will open the door to further significant inquiries. The Co-operative Group’s decision to come here is a testament to a very high quality location.”

The Co-operative Group’s move is part of the restructuring of its national food distribution network, with similar hubs in Hampshire, Lancashire, County Durham and Scotland.

Ian Smith, The Co-operative Group’s Head of Logistics for the Northern Region, said: “Castlewood is an excellent location to serve our stores throughout the North Midlands and surrounding area. This is a major investment in, and commitment to, the local community.

“The Co-operative Group’s food business has grown significantly in recent years and our logistics operation has undergone a major overhaul to develop accordingly. This investment will help us to continue to provide high standards of service to our customers while also allowing for future growth.”