Newhouse
Industrial Estate

Newhouse Estate was set up by East Mon Holdings Ltd (EMH), an established property development company founded in 1971, to deliver employment accommodation for occupiers wanting to be strategically located for Wales and the South West of England, immediately adjacent to the original Severn Bridge crossing at Chepstow.

Newhouse is now a major logistics hub totalling circa 2 million sq. ft of buildings in 33 units covering a core 120 acres. The site is an important local and regional employer thanks to successful companies such as Micheldever, ALuK, Mon Motors, Bidfood, Bond International and Reid Lifting, amongst many others.

The proposed next phase of development is known as Plot A, which extends to 11.2 acres gross, 9.5 net developable. The plot is located at the entrance to the trading estate on higher ground adjacent to Junction 2 of the M48, with very good visibility from the motorway and the first Severn Crossing at Chepstow.

EMH has market tested alternative development options for Plot A over the last 5 years and identified a scheme that is deliverable in the marketplace, putting in place the base blocks for a mixed-use planning permission with Monmouthshire Council based on enabling development for additional industrial and distribution accommodation. The Masterplan provides a local service station offer on circa 3 acres of the plot, with the residual area marketed to occupiers for a 100,000 sq. ft distribution facility.

East Mon Holdings and Newhouse

EMH is a property development and investment company, founded in 1971, and set up to deliver the Newhouse Industrial Estate located immediately adjacent to the original Severn Bridge crossing at Chepstow. The first development phase successfully secured two major businesses, Littlewoods and Nestlé, who occupied purpose-built distribution warehouses. EMH were then successful in attracting Tesco to select the site for one of their first UK regional distribution centres, followed by other logistics operators including Downton and Uniserve.

The second major food retailer to locate to Newhouse was Asda, who initially started from a small rented unit and expanded into a bespoke, purpose-built 350,000 sq. ft facility in 2000 — today one of Asda Group's most efficient distribution sites, serving Wales and the South West of England.

Newhouse benefits from its own road access directly off Junction 2 of the M48, providing motorway access to the M4 (Bristol), M5 or M4 (South Wales) and the national road network. The removal of the Severn Bridge tolls in 2019 has boosted investment into this area of Monmouthshire, which is very attractive as a residential alternative for families in South West England and especially Bristol, as properties are larger and more affordable. Business investment is following suit, with the catchment benefitting from a large local pool of skilled and blue-collar labour.

Development Background

The proposed next phase of development at Newhouse is known as Plot A, which extends to 11.2 acres gross, 9.5 net developable. Part of the development land is owned by EMH, including the access, with the remainder owned by a private farmer and secured by EMH under an option to purchase contract valid until October 2023. The plot is located immediately adjacent to the motorway roundabout, in a prime location and very visible on land at a higher level than the main industrial estate.

Development of this prime parcel of real estate was restricted whilst Newhouse was developed out, through a Section 52 Notice which reserved the land for future expansion of the Severn Bridge Crossing. EMH successfully removed this restriction and the land has been brought forward for inclusion within the local development plan process for employment purposes. Historically, the bulk of the land has been managed within an arable and grassland rotation, with roadside areas maintained mechanically to a mown finish as part of the overall Newhouse landscape maintenance programme.

Whilst the land is in a prime position, the plot has an 8-metre difference in levels, making the creation of the development platform and provision of utilities relatively expensive. Consequently, EMH has promoted retail use on the site, with occupier interest from Lidl and Aldi. Following a pre-application with Monmouthshire Council in 2019, it became evident that food retail would be strongly resisted; however, less threatening uses to town centre trade — such as hotels, petrol filling stations and drive-through restaurants — would be supported as part of "enabling" development to bring forward more distribution and industrial development on the site.

The Masterplan divides Site A into two plots. Plot A.1, housing the PFS and two drive-through restaurants, is positioned on the eastern part of the site, and Plot A.2, which will accommodate the logistics operator, is located on the western portion.

Plot A.1 extends to circa 3 acres and comprises a petrol filling station, a Starbucks restaurant and a KFC restaurant. The operator is Eurogarages (EG), part of EG Group, who have recently been in the press as the purchasers of Asda from Walmart.

Plot A.2 extends to circa 6 acres and can accommodate up to 100,000 sq. ft of warehousing in a single unit or a combination of smaller units. EMH is currently in discussions with two logistics operators, with additional strong market demand.

Planning Status

The adopted statutory development plan for the area comprises the Monmouthshire Local Development Plan (LDP) 2011–2021, adopted on 27 February 2014. The site is located within the settlement boundary and is allocated in the LDP under Policy SAE1 (Identified Industrial and Business Sites), for Class B2 or B8 development. The 4ha allocation is noted to have an employment potential of circa 200 jobs.

Our planning advisers, WYG (Cardiff), report that the proposed logistics operation, falling within Use Class B8, is entirely in accordance with the site's allocation in the LDP and will be seen as a positive and beneficial development.

While the EG operation does not fall within the allocated use classes, WYG advise that a site adjacent and accessible to the M48 represents an appropriate location for roadside uses to serve nearby employment facilities and passing traffic. WYG anticipate the development will be welcomed given the significant Class B8 floorspace it includes, notwithstanding the technical non-compliance of the otherwise appropriate roadside uses.

EG Deal & Land Costs

EMH has contracted with EG to sell Plot A.1 for a consideration of £2.00m, conditional on achieving planning permission and completion of works that create the access and development platforms and install utility services to the boundary of both plots.

EMH will be responsible for the infrastructure and servicing costs, including professional fees and contingency. EMH has carried out detailed and intrusive site investigation works and briefed two contractors to price the works. The ground is of good quality for development with no contamination, with historical agricultural uses only on the land. The infrastructure works programme is approximately 4 months; on completion, both plots will be fully serviced and Plot A.2 retained by EMH, currently marketed through CBRE to secure an occupier on a leasehold or turn-key basis.

Site Works

Infrastructure and utility works will be undertaken by a reputable contractor following a tender and negotiation process, appointed under a JCT construction contract with warranties from the contractor and design professionals in favour of the lender and EMH. Earthworks will comprise the clearing and regrading of the site to an agreed level to suit EG's requirements. Utility supplies will be capped at the corner of the plots for occupiers to connect into:

• Gas — minimum supply 30m³ per hour
• Water — minimum 100mm diameter supply @ 2 bar
• Mains foul drainage
• Telephone — 50mm underground PVC duct
• Electricity — 250 kVA to the petrol station, 110 kVA to the drive-thru Starbucks, 150 kVA to the KFC (510 kVA total)

All utilities are currently available at Newhouse, with the above capacities accommodated within the infrastructure budget produced by Watts and Partners.

Third Party Land

60% of the land within Plot A is held under option at a strike price of £1m. On receipt of planning permission from Monmouthshire Council, and prior to commencement of works, EMH will exercise the option to purchase the additional third-party land required to make up Plot A.1.

Current Status & Financial Returns

EMH is seeking finance on a subject-to-planning basis to fund the acquisition of the land held under option, plus site enabling works and professional fees for Plot A. The lender's security for the main facility will be a first charge on the development land, with EMH holding an executed legal contract for EG to pay £2.000m. Plot A.2 will be 100% owned by EMH, extending to over 6 acres of fully serviced development land with planning permission for 100,000 sq. ft of warehousing, currently marketed through CBRE to logistics operators on a subject-to-planning basis. The preferred strategy is to pre-let and develop the plot to maximise returns, with sale to an occupier as the alternative.

Return metrics for the preferred option — pre-selling Plot A.1 to Eurogarages and developing Plot A.2 on a pre-commitment basis — excluding all finance costs:

Assumptions: ERV £6.75 psf, Cap Rate 5.25%. Detailed DCF financial appraisals can be supplied for further discussions on financing. EMH has plans for future phases on land to the west of Plot A, and owns land to the north of the M48, west of the Wye Valley Link Road.

Market Demand — Warehousing

CBRE report strong demand from logistics operators for land at Newhouse, with advanced enquiries being progressed. To differentiate from the very large warehouses at Avonmouth, Newhouse will target occupiers seeking up to 100,000 sq. ft; the entirety of Plot A.1 could cater for circa 180,000 sq. ft. The location also benefits from a readily available labour supply from the Chepstow area and Newport. A full market report can be provided.

Newhouse is delivered by the East Mon Holdings directors and family, alongside a long-standing panel of consultants — surveyors, architects, planners, engineers and legal advisers.

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