Amazon’s record delivery

23 July 2016 – by Amber Rolt

Amazon is to sign Europe’s largest logistics prelet for what will be one of the sector’s most revolutionary buildings.

Amazon robots

The e-tailer has agreed to take 2.2m sq ft at Roxhill and Port of Tilbury’s 70-acre London Distribution Park in Essex, which will trigger the UK’s biggest industrial investment deal.

It will be the first four-storey distribution centre in the UK. The development will be forward funded by Legal & General through its annuity fund, which buys long-leased property.

The fund manager will pay £150m, reflecting a 5.25% yield. Amazon is signing a 20-year lease at a rent of close to £3.60 per sq ft.

Legal & General’s investment underlines its commitment to UK logistics and the confidence of institutional investors in a new generation of high-tech assets. Work started on site this week after planning was granted on 6 July.

The shed will be the largest and tallest warehouse in the UK at more than 70ft, with four floors, each of just under 600,000 sq ft. It will also feature a mezzanine on the first floor.

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Unlike SEGRO’s two-storey warehouse X2 at Hatton Cross, Heathrow – the only other multi-storey in the UK – the ground floor will act as the main processing area for deliveries, and lorries will not drive up to the upper storage floors.

Instead, there will be 61 loading doors for incoming and outgoing goods. The scheme also comprises a 100,000 sq ft office block and car park for 94 delivery trucks and 1,900 cars.

The warehouse will contain Amazon’s most cutting-edge technology and will be operated by its Kiva robots – the robotic business that it bought in 2012 in a $775m (£531m) deal.

Kivas are square, orange machines which run on wheels. They are about 16 inches tall, move at 5mph and can carry parcels weighing up to 700lbs – the weight of a small car.

Although they have only been operating in Amazon warehouses in the US for two years, the Kiva robots have already cut Amazon’s expenses by about 20%, according to Deutsche Bank – roughly $22m (£16m) for each fulfilment centre.

Amazon has been the most aggressive occupier in the UK logistics market this year as it continues to expand its Amazon Prime premium delivery service.

After this deal, Amazon will have accounted for 24% of all deals of more than 100,000 sq ft so far this year, according to Savills.

Knight Frank is acting for Roxhill; CBRE is advising Legal & General and Amazon. All parties declined to comment.

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