Recycling boost for industrial sector
Demand for distribution and logistics space is set to rise sharply thanks to changes in the way we deal with our waste and recycling, with an area the size of 1,500 football pitches needed over the next five years. There is a “huge opportunity” for commercial property investors and developers, says Paul Rixon, head of BNP Paribas Real Estate’s Birmingham office.
In an interview with the Birmingham Post, Rixon says that EU rules will reduce our reliance on landfill sites by 75% by 2015 and may eliminate landfill altogether by 2020, meaning that thousands of other sites across the UK will be needed to deal with waste and recycling. BNP Paribas estimates that at least 50m sq ft of industrial space will be required.
“There has been no trend set as yet in the types of deals that are being done with waste operators in terms of size and price,” Rixon notes. “We have witnessed transactions nationally on units ranging from 30,000 sq ft to 300,000 sq ft at rents varying from £2.80 per sq ft to £7.80 sq per ft. However, we have noted that leases being taken on these units are increasingly longer than in other sectors of the distribution market, with some deals being struck on 20-year-plus leases.”
Rixon believes that the growing requirements of the waste and recycling sector are an excellent opportunity to absorb some of the current available industrial space in the short-term, and in the long term he sees opportunities for investors and developers with landbanks to create bespoke properties for these types of users.
