Oxford Properties Group and Logistics Capital Partners have formed a new co-investment joint venture, to acquire a 734-acre site near Birmingham, which they will develop into a major new logistics hub with an associated rail freight terminal known as West Midlands Interchange. Oxford and LCP will jointly invest c. €1.2bn (£1bn) to bring forward the project over a number of years, with Oxford providing the majority of the capital and working alongside LCP’s highly experienced and professional team as development manager. West Midlands Interchange will be a technologically advanced and environmentally sustainable development that meets modern occupiers’ efficient operational and environmental requirements.
Planning consent has already been secured by the vendors, which allows for the delivery of around 8 million ft² of prime logistics space and provides flexibility around the project timeline and scale of units. Infrastructure works are expected to commence in the first half of next year with the first buildings starting on site in 2022 ready for occupation in 2023. The site can accommodate new warehouses ranging in size from 200,000ft² to over 1 million ft², with building heights up to 30 meters. This scale and flexibility will create space for some of the most efficient operations in the country, maximising cubic storage capacity and the possibility for occupiers to deploy the latest technology.
In addition, the project will create a new Strategic Rail Freight Interchange, which will provide intermodal access for occupiers. This gives the site a significant competitive advantage, with rail transport a cheaper and more environmentally sustainable option while also reducing congestion on the roads. The West Coast Main Line is already one of the most important freight routes in the UK, used by 90% of all intermodal trains, and its capacity likely to be transformed by High Speed 2, the next phase of the UK’s high-speed rail network linking London with the North, currently due to open between London and Birmingham in 2026.
James Boadle, Head of Logistics and Residential, Europe at Oxford Properties, commented: “In recent years we have significantly increased our exposure to the logistics sector globally through several major transactions, including making our first direct investment into European logistics last year with LCP. Logistics remains one of our highest conviction calls globally, benefitting from substantial undersupply of prime new space while the growth of e-commerce and demand for expedited supply chains continues unabated, accelerated by the effects of Covid-19. The transaction represents a rare opportunity to gain significant exposure at attractive risk-adjusted returns in an increasingly competitive landscape. We are pleased to be again working alongside LCP’s highly experienced and professional team as we deliver a best-in-class logistics park with occupier demand, technological advancements and environmental, social and governance principles at its core.”
Pierre Leocadio, Head of Investment, Europe at Oxford Properties, added: “This transaction presents an exciting opportunity to develop a market-leading, prime logistics hub, alongside our trusted partner, LCP. Oxford is renowned for its ability to deliver major large-scale projects, and this aligns with our strategy to deploy capital at scale into the logistics sector. The inclusion of a new rail terminal in the masterplan allows us to create a site that has strong appeal to potential occupiers, while also helping reduce the environmental impact of its supply chain by reducing lorry traffic. The project will also create economic impact to the region through the creation of a significant number of local jobs.”
John Pagdin, Head of UK Logistics Capital Partners, commented: “We have been tracking this particular site for some time and are delighted to have secured the park alongside Oxford Properties. West Midlands Interchange is a fantastic opportunity to build out a uniquely positioned development scheme, allowing us to offer occupiers every possible size, scale, configuration and specification of unit with none of the usual planning delays or uncertainties often associated with schemes of this nature. We look forward to progressing first stage preparatory works and welcoming occupiers to this exciting project.”