July 2020 Most readers will have heard of the Bermuda Triangle, but some may be less familiar with the term ‘Golden Triangle.’ At its simplest level there are two differences. The first is that the Bermuda Triangle is in the Caribbean, but the Golden Triangle is in England. The second is that the Bermuda Triangle is associated with the mysterious disappearance of ships and aircraft, but the Golden Triangle is associated with the disappearance of open spaces and farmland.
“There is no official precise measurement of exactly what constitutes the Golden Triangle, but it pretty much covers Leicestershire, Northamptonshire, Warwickshire, plus parts of Staffordshire and Derbyshire,” explains RCS Logistics, a specialist in warehousing and distribution services. “When you throw in Birmingham International Airport and East Midlands Airport (which itself contains a freight hub) plus the various rail links to the UK’s ports, the Midlands begins to look more and more like the natural home for nation’s supply chain.”
“As well as being in proximity to the huge distribution centres of supermarkets and high street stores, Midlands-based supply chain companies enjoy access to over 90% of the UK population within 4 hours drive.”
The company says that in addition to the giants of UK haulage, smaller independent logistics companies are also numerous in the Golden Triangle and are typically based in logistics centres. Proximity to major motorways, notably the M1 and M6, means that major cities such as London and Manchester are not difficult to reach. With London’s huge demand and scarcity of property meaning rental for a typical premises is much more expensive than in the Heart of England, the result is that the Midlands has close to 150 million square feet of warehouse space. This is more than twice the combined warehousing activity of London, Scotland and Wales.
Brownfield sites, already developed, are not always available, and those who travel across the Triangle will be familiar with how these developments have accelerated in recent years, the disappearance of fields, and the appearance of massive new buildings. In 2015, the Golden Triangle was home to 13.4 million square metres of warehouse space, but in the next six years it is estimated to have increased to 18.5 million.
And there’s more to come.
German logistics firm DHL, for example, is to expand in the UK in response to the growth in home deliveries, setting up new depots and enlarging others. This amounts to an investment of £482m across its UK e-commerce operation, DHL Parcel UK, following a 40% rise in volumes since the start of 2020, when the coronavirus pandemic led to a surge in online shopping.
Ten new collection and delivery depots will be created across the UK, while 20 more existing sites will be expanded. It includes a new 25,000 sq. metre hub in a warehouse park south of Coventry airport, which will be able to handle more than 500,000 items a day. The hub will have a 48-door cross-dock facility so that products from a manufacturer are distributed directly to customers, with little or no storage required.
Industrial and logistics expansion has broken all records in recent years. “Activity in the UK industrial and logistics market went into overdrive during 2021, although insatiable demand is being challenged by rising costs and acute supply shortages,” says Lambert Smith Hampton, a leading UK commercial and residential real estate consultancy and agency. “Even against the backdrop of a stellar few years for the industrial and logistics market, 2021 will go down in history as the year in which just about every conceivable record was emphatically broken With over 50 million sq ft of active requirements across the UK, the main impediment to both occupier and investor activity is a critical lack of supply.” Developers have responded with a record 20.7 million sq. ft pipeline of speculative space under construction, up 80% year-on-year.
Some critics dislike the speculative nature of some of the developments. “They’ve been built to meet demand from investors in Europe, the Middle East and the United States to achieve returns on their cash,” says Samir Dani, professor of operations management and deputy director of Keele Business School. Texas-based investment firm Hines is said to have bought at least five warehouses in the golden triangle in less than a year, while American pension investor Blackstone is also thought to be a big buyer.
The Groby controversy
When justifying the Anstey Lane development at Groby, I M Properties referred to a study commissioned by councils across Leicestershire to look at the warehousing and logistics requirements across the county. “This identified the area west of the A46 as one of the ‘key areas of opportunity’ for road linked logistics sites.” said the company. “First and foremost, the site is well connected to key transport corridors (the A50, A46 and M1) which provide access across the East Midlands and to all parts of the country.”
IMP came to the conclusion that Groby is within one of these key areas. “Given the shortfall in land required to accommodate floorspace needed to 2041 identified in the land use forecasts section, we have identified general broad areas across Leicestershire where new strategic logistics sites should be located (Areas of Opportunity),” says the report. And it does identify six key areas which it shows on a plan, and acknowledges that the boundaries are not definitive and are shown for indicative purposes only. Groby is just outside the key areas identified and, even with the caveat concerning boundaries, it is legitimate to question their interpretation of the report.
