commercial property lambert smith hampton

News - 18/11/2014

Road upgrades will bolster logistics sector

The government’s proposed road improvement programme will benefit the logistics market in many parts of the UK by unlocking hundreds of hectares of development land and encouraging rental growth – according to new research released today by national commercial property consultancy Lambert Smith Hampton.

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However, the authors argue that there is a need to widen the scope of the road improvement works to tackle congestion and improve the efficiency of the UK’s logistics operations, as the government has itself recognised by indicating that the Chancellor will announce additional proposals during his Autumn Statement on 3 December.

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Seven core projects identified

Lambert Smith Hampton analysed around 50 infrastructure investment schemes proposed by the government over the past year under the umbrella plan ‘Investing in Britain’s Future’ and other initiatives.  The ‘Roads to Riches?’ report focuses on seven planned and proposed schemes that Lambert Smith Hampton expects will have the most impact on the industrial and logistics sector:

  • A5-M1 Link and Woodside Link, Dunstable
  • South East Nottingham Corridor improvements
  • A45 Development Link Road, Daventry
  • A38 Peddimore Junction improvements, Birmingham
  • A5 improvements, Nuneaton/Hinckley
  • A14 Cambridge to Huntingdon improvement scheme
  • A6 to Manchester Airport Relief Road

Unlocking new areas of development

Collectively, these projects could potentially unlock 250 hectares (26.9m sq ft) of development land for industrial and logistics use – over a quarter of annual take-up in the sector -  support the leasing of existing schemes in the surrounding areas, encourage rental growth of around 5%, and make some areas more acceptable to institutional investors.

Steve Williams, National Head of the Industrial and Logistics team at Lambert Smith Hampton, said: “In a sector where time is critical to success and profit margins are wafer thin, there is a direct link between the provision of road infrastructure and demand for industrial premises, particularly distribution warehousing for retailers and third party logistics providers.

“The government has recognised that congestion and delays are a major problem, not just for road hauliers and logistics operators, but for businesses dependent on time-sensitive and cost-effective logistics. In a multi-channel world, where online retailers are promising next day or even same day delivery, there is a high demand for efficient logistics operations.

“The improvements being undertaken as part of the government’s infrastructure upgrade programme will provide a boost to the industrial and logistics market in several parts of the UK.  New roads, junctions and improvements to existing roads will shave vital minutes off journey times and open up areas for viable development on sites that might previously have been discounted for operational reasons. In addition, making an area more attractive to occupiers will stimulate land prices, rents and capital values.

More needs to be done

“However, more needs to done to tackle increased congestion and delays on the road network, and we look forward to the announcement of additional measures during next month’s Autumn Statement.  In particular, we would like to see action taken to widen the A34 between Newbury and the M40, widen the entirety of the A14 – effectively converting it into a motorway - and permit hard shoulder running along more of the M25.” 


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