No sooner had I signed off a data story for this week’s blockbuster Sheds supplement on the decline of big-box spec development than our resident shed-head Richard Williams presented me with this week’s splash revealing new developer First Panattoni’s hugely ambitious plans for… big-box spec development.
Balls on two counts: it would have been nice to know before I signed off the data story – and it takes big ones to develop big boxes on a spec basis in this market. Even Prologis and SEGRO have been circumspect about spec development over recent years. It’s not hard to see why.
The psychological scars have yet to fade from the financial crisis, which left huge swathes of speculatively built warehouses vacant for years. Bung Brexit into the mix and the uncertainty it raises over the retail market in particular and you can see why there is so much trepidation about committing to speculative schemes.
Until the First Panattoni news, that trepidation only seemed to be growing. The GVA research cited in the data story reveals that 3.3m sq ft of 100,000 sq ft-plus spec schemes completed in the first half of this year – down from a peak of 5m sq ft in the first half of 2016 – and the rm forecast that just 2.3m sq ft would be delivered in the second half, dwindling to a paltry 1.6m sq ft in the first half of 2018.
First Panattoni’s promised 3m sq ft a year over the next few years knocks these figures into a cocked hat – and the big boys may well rue the day they left the door ajar for it to kick open. After all, it is not just talking about sheds that sneak above the 100,000 sq ft mark.
When it says big, it means big: its sweet spot is in the 350,000 sq ft to 750,000 sq ft range, precious little of which has come to market recently. Hence chief executive Robert Dobrzycki’s confidence that it has spotted a gap in the market it can grab.
The developer’s track record suggests his confidence is not misplaced.
It took just two-and-a-half years to become the leading developer in Germany and between 2014 and 2016 was the biggest developer by volume in Europe, delivering 29m sq ft of new-build stock.
It won’t be hanging around in the UK either. Dobrzycki wants the firm to be “at least a substantial player” in the UK in as little as two years.
The market has been holding out for a spec hero and will be watching with interest to see whether the new kid on the block’s gamble pays off.
If, as Dobrzycki expects, it does, I can’t see the UK big boys sitting on their hands for much longer…
A resounding RESI success
I said this year’s RESI would be the most important yet and so it proved. Couldn’t make it or want to remind yourself of the highlights?
Visit here for our round-up of the key takeaways from this year’s event as well as highlights of that speech from the new housing and planning minister, Alok Sharma.
Thanks to all who joined us and to everyone from Property Week who went above and beyond the call of duty to make it the great event it was. It was emotional!