Johnson Fellows works its property magic at Merlin Park

Johnson Fellows has successfully retained 100% occupancy at a Birmingham industrial estate through complex negotiations with its existing tenants.

We have worked with leading home delivery courier Hermes and entertainment retailer HMV – both existing tenants at Merlin Park in Erdington – to reorganise their occupation on site to better suit both operations’ ongoing property needs.

HMV has consolidated its distribution from two warehouses on the estate into the single occupancy of a 45,000sq ft unit on site. HMV’s shop portfolio has dramatically reduced since the company entered administration in January 2013. The company has subsequently been re-aligned and now Merlin Park forms its sole distribution facility, feeding the 90 retained retail outlets.

In contrast, Hermes has experienced rapid growth in its parcel deliveries operation – prompted by the increased online sales growth across the UK. Hermes had served a valid break notice on their existing premises however, through detailed negotiations with both Hermes and HMV, we negotiated for the courier to remain on site and take additional space released by HMV under new 10-year leases.

We also advised the landlords, Helix Property Investors, on the necessary refurbishments required by Hermes to increase their occupation on the estate. The deal has been shortlisted for the Best UK Deal below 50,000 sq ft category in the Industrial Agents Society (IAS) Awards. The winners will be announced at an awards ceremony on 26th September 2013.

Mike Price, partner at Johnson Fellows and head of the industrial team, said: “We are delighted that our negotiations have allowed both Hermes and HMV to remain at Merlin Park. They are two well-known companies but with very different property needs. Accommodating both of their requirements on the estate has been a complex, although worthwhile, process. Our client will benefit significantly from a stable revenue source which has increased the investment value of the whole estate.”

He added: “At one stage it looked like both Hermes and HMV would leave and as a consequence nearly 60% of the estate could have been empty leaving our client significantly exposed to high holding costs including void rates.”

Adam Leach, of Hermes, said the company expects to handle more than 187,000,000 parcels this year and, therefore, is looking for more space to support its growth.

“We plan to double the number of hubs in our network to cope with a 15% increase in parcel volumes this year. Consequently, we are taking further space across the UK and the additional accommodation at Merlin Park is of enormous importance to our business,” he added.

Ben West, of Helix Property Investors, said: “Johnson Fellows’ understanding of Hermes and HMV’s requirements ensured that they could remain in operation at the industrial estate, while we as landlords retained two substantial tenants.

“The firm’s Building Consultancy Team oversaw the refurbishment works for Hermes and ensured the project was delivered on time and within budget.”