Cost models

Cost model: Distribution warehouses

By James Morrison and Gary Marshall 2022-07-07T08:13:00

Suffolk Park - Weerts Group - SP870 - completed night time

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The combined impact of inflation plus materials and labour shortages is stretching developers of logistics centres – yet demand for this building type remains high

Suffolk Park - Weerts Group - SP870 - completed night time

SP870, which is strategically located in off the A14 in Bury St Edmunds, Suffolk, provides warehouse, office and welfare space totalling 870,584ft2. Designed and built to BREEAM Very Good, the scheme was completed in October 2021. BREEAM Very Good is now a baseline on speculative logistics developments

01 / Introduction

UK distribution centres have been a growth market for years, driven by the e-commerce boom. Appetite continues to be high, and availability of funding is therefore strong, particularly from North American investors seeking international opportunities.

Perhaps the most noticeable trend in logistics at present is that the market is buoyant in the face of staggering materials price hikes. The industrial market has experienced double-digit increases in build costs over the past 18 months – leading to an incredibly challenging time for market participants, where demand is high but supply of key elements is low.

This cost model will examine the factors influencing the hypothetical development and construction of a 160,000ft2 logistics building, focusing on the shell.

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