The second of our Summer Series blog posts comes from Dan Burn of Panattoni, the UK’s largest speculative industrial developer and the worlds largest privately owned industrial developer.
Panattoni have recently been named the largest logistics real estate developer in Europe for the eighth year in a row, according to PropertyEU’s annual survey of logistics developers.
Dan is somebody that I have known for many years, from my former industrial agency ‘shed shifting’ days. Dan is the Head of Development in the North West and Yorkshire and whilst this keeps him very busy, he is also a big Coventry City supporter.
So, here we go with the second of the series…
1. How long have you been working at Panattoni and in the industrial sector?
I have been working in the sector now for over 20 years, first as an Industrial Agent with King Sturge and then JLL following their acquisition of the King Sturge business. After 16 years as an agent I decided it was time for something new so after a brief stint at DB Symmetry, I joined Panattoni to establish a Manchester office six years ago.
2. How has the market changed over the past 12 months for new developments reaching practical completion, and are the numbers up or down to last year?
The number of completions has slowed over the past 12 months as developers have reduced their exposure to speculative development. This has resulted in there being very little supply, particularly at the larger end of the market, and with funding still proving to be difficult, we expect this to continue, reducing supply further.
3. What is a Big Box and what is the criteria to meet?
The ‘market’ has traditionally classed Big Boxes as those over 100,000 sq ft with a minimum eaves height of 12.5 – 15m. However, I think that this is changing as unit sizes increase – we are now classifying those units over 500,000 sq ft as XXL Boxes. Units are getting higher too as increased automation means that occupiers can utilise more volume.
4. Is the Big Box market still alive and kicking, and where is the occupier demand mainly coming from?
Very much so – the market continues to see a flight to quality as occupiers either expand or consolidate into more efficient and sustainable space. Retailers remain a particularly important occupier as they grapple with having to be omni-channel, although over the last 12 months the market has been driven by 3PLs taking space for contracts where the end user may not be in position to acquire space themselves due to the political and economic uncertainty that we have experienced over the past couple of years. We’ve also seen an increase in manufacturers taking spaces, not necessarily to make things, but for inventory storage.
5. What is the minimum eaves height now for ‘institutional grade’ logistics units, and what site cover do you generally build out?
For buildings up to 100,000 sq ft, 12.5 m, for those over, 15m minimum. The market still works to a site coverage of c.40-45%.
6. What is the best performing UK region currently for new industrial logistics development, in terms of favourable market dynamics?
Whilst each region has their own benefits and advantages, overall and over the long term, it is difficult not to look past the Golden Triangle in the East Midlands, purely because of its position in the centre of the country. This isn’t going to change!
7. How important now is ESG in new logistics developments and are occupiers focusing on this yet in decision making?
ESG has risen to the fore over recent years, both as an investor consideration and increasingly by occupiers themselves. We all want to develop sustainable buildings and we are continuing to adapt our base specification to meet and be ahead of the latest legislation.
8. What is the one main challenge to new industrial logistics development, right now in the UK?
I’m afraid it remains the same old issue of a lack of availability of land with a suitable planning consent to bring forward development in a timely manner. I’m hoping that the new government will incentivise LPAs to expedite applications rather than the carrot and stick approach favoured by the previous administration.
Light stuff:
1. Where have you holidayed this year?
Australia – my sister has lived over there for over 15 years and we finally ran out of excuses to visit. We had a fabulous time and it was well worth the journey.
2. What one thing (only) would you take with you to a desert island?
A recording of the 1987 FA Cup Final between my team, Coventry City and Tottenham Hotspur. With so little success since, I’d never get bored of watching it!
3. Desert island discs – which one album would you take?
A difficult one – I’d definitely want something to keep my spirits up and sing along to, so probably Hot Fuss by The Killers
4. Are you a book reader, podcaster or both?
Books, although I should probably read more. Despite numerous recommendations from my wife, I’ve yet to really discover podcasts.
5. Where is your favourite location that you have visited for holiday, and why?
I do like a city break so I’ll say New York – full of iconic buildings, great restaurants and plenty to do to keep everyone happy.
Hopefully you enjoyed the second series of the blog post and if you want to get involved just drop us a line.
Thanks to Dan for his time and his thoughts. To make contact with Dan Burn and his team at Panatonni, his email is as follows: [email protected]
