The fourth of our Summer Series blog posts comes from Mike Walker of Chancerygate.
With nearly 25 years’ experience, Chancerygate is the UK’s largest multi-unit industrial property developer and asset manager, specialising in the UK’s urban logistics and industrial warehousing sectors.
Chancerygate has more than 2.65m sq ft of industrial space under construction or ready for development across 19 sites ranging from Edinburgh to Chichester, and also manages in excess of £385m of assets across more than five million sq ft of commercial space in over 480 units. They have offices in London, Warrington, Birmingham and Bristol.
Mike joined Chancerygate in January 2015 to head up operations in the company’s Warrington office as part of the business plan to develop and invest further in the regions. Mike has over 20 years’ experience in the industrial property market both at a regional and a national level to include experience in the forward funding of developments.
Prior to joining Chancerygate, Mike held the position of senior director at CBRE heading up their North West industrial team and before that was head of the Colliers International Manchester office. At Chancerygate, Mike oversees the sourcing, appraisal and delivery of development and investment opportunities in the north of England.
I have known Mike for many years starting at CBRE when we were both ‘shed shifters’ for our respective employers. He is a well known figure in the industrial market and has a wealth of experience and knowledge.
So, here we go with the fourth of the series…
- How long have you been working at Chancerygate and in the industrial sector?
I will clock up 10 years with Chancerygate in January 2025 – the 10 year anniversary of the NW Office!
- 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?
There still seems to good demand in the sector and evidence that rents are certainly holding up and growing in key locations. We are entering a critical period though, post summer holidays and hope to see increased take up following interest rate reductions and general growing macro – economic confidence.
- The majority of your units are sub 10,000 sq ft. Why does this work best for you?
Our schemes tend to have units ranging from say 5,000 sq ft to 35,000 sq ft and a total floor area of c 120-150,000 sq ft. This gives us a good mix of unit sizes and tends to cater for most occupiers in the diverse SME and MLI sector. The best MLI estates offer a diverse range of unit sizes and indeed lease events, which gives investors good asset management opportunities in the future.
- Is the MLI market still alive and kicking, and where is the occupier demand mainly coming from?
The MLI sector is still very strong. It is a massive part of the “ Industrial” sector and is sometimes overlooked in favour of the sexier big box stuff – but it is vital as it creates significant employment in our Cities and Towns and is also a vital constituent part to servicing city centre living – trendy bars and restaurants need a warehouse to supply food and ingredients, Hotels need a linen supplier, white van man needs an estate close by to pick up taps and screws etc. These are just some examples. Also, what is often ignored is the vibrancy of the manufacturing sector on MLI estates – we are currently seeing quite a lot of interest from occupiers who need to upgrade the quality of their units. Their customers are demanding it and importantly staff want to work in a better environment. Recruitment and staff retention is a key element for our occupiers.
- Is demand currently greater from owner occupiers/investors to purchase, or from businesses looking to lease?
There is always a lot of occupiers who want to own their own buildings, however the maths don`t really stack up currently – the cost of land and overall current build costs means that selling units to occupiers is rare. Leasing activity is strong, there is a shortage of Grade A estates, and the amount capital raised by Investors to put into the sector means that we believe yields will remain keen and probably move in, therefore we are unlikely to do many sales to occupiers.
- What is the best performing UK region currently for new industrial development, in terms of favourable market dynamics?
Hard to nominate one particular region – we as a business focus on London and the SE for obvious reasons and the big UK regional cities. Each site we consider, we have to look closely at the local supply and demand dynamics before making a decision to invest. This is both in the UK and now Europe. We have opened offices in Dublin and Madrid recently and hope to open in other territories soon.
- How important now is ESG in new industrial developments and are occupiers focusing on this yet in decision making?
ESG is a big part of what we do currently, not just a tick box exercise. We have appointed a new Head of ESG last year and have a committee that meets every quarter. Occupiers are interested I would say, but we do need to educate more so they can see the benefits of taking new units over second hand. I would say it`s not currently a key decision making driver on occupiers taking premises yet, but it is definitely on the agenda now ! It probably wasn`t at all 5 years ago. It is key though for our investors.
- How are you integrating ESG into new developments?
We have just achieved our first EPC A+ development following PC at our scheme in Tolworth in Surrey. All our schemes target a minimum EPC A and BREEAM Excellent. As a rule, we are always looking at how we can improve ESG by doing such things as increasing PV provision on roofs, battery storage, use of timber, do we need to provide gas?, improving airtightness of units, bird boxes etc, green roofs and green walls. I`m really looking forward to seeing the end result of the scheme`s my team is currently planning and bringing forward now.
Light stuff:
- Where have you holidayed this year?
Done all right so far this year: Austria, Portugal, Cumbria, Menorca and Crete (later this month).
- What one thing (only) would you take with you to a desert island?
Some kind of streaming device to let me keep up with my favourite sports – football (I would need to know how the Mighty Reds are getting on – Liverpool obviously! ), golf and cricket.
- Desert island discs – which one album would you take?
London Calling – The Clash
- Are you a book reader, podcaster or both?
Book at bedtime, Podcasts when driving around or on trains and planes
- Where is your favourite location that you have visited for holiday, and why?
Our family`s beach chalet on the Cumbrian coast. The why ….. A – it`s beautiful B – the family connection to that part of Cumbria, my family have been there for over 240 years C – the view constantly changes with tide and weather D – the solitude but there is still loads to do if you want!
Hopefully you enjoyed the fourth in the series of the blog post and if you want to get involved just drop us a line.
Thanks to Mike for his time and his thoughts. To make contact with Mike Walker and his team at Chancerygate, his email is as follows: [email protected]
