IF THESE WALLS COULD TALK: Blackstone's extinct Mammoth

Many Londoners can recall being sharply awoken by the explosions at the Buncefield Oil and Storage Depot just over three years ago. The series of explosions in the early hours of a December Sunday morning in 2005, created a thunderous sound and resulted in a blanket of black clouds above the city so large, they could be seen by satellites in space.

The disaster occurred after safety systems intended to prevent fuel from overflowing during deliveries failed. It resulted in 300 tonnes of fuel escaping and when mixed with a cold English winter day, it was enough to create a combustible environment. From six o'clock in the morning, an almighty pillar of smoke could be seen across South East England and beyond. The ensuing fires lasted five days and the cost of the disaster topped £1 billion.

Buncefield oil
depot explosion

Miraculously nobody died in the accident, although 43 people sustained injuries. Approximately 2,000 local residents were displaced from their homes and a significant section of the UK's main motorway, the M1, which links London to the North of England, was closed.

The real pain though was felt by the 746 businesses which operated close to the Buncefield depot, located to the east of London, and of course, to the owners of commercial real estate who, in less than a week, found their investments smouldering to ashes.

Among those landlords was The Blackstone Group. In July 2002, the New York-based private equity real estate firm purchased the largest warehouse development plot at the depot in partnership with UK developer Astral Developments.

Following the disaster though, health and safety officials have adopted a more safety conscious planning system, limiting redevelopment plans for the site by Blackstone. Now rather than developing a 466,000-square-foot distribution shed, Blackstone has been told it can only build 250,000-square-feet of developable warehouse space.

Last month that led Blackstone to ask property services firm Richard Ellis to find a buyer for the site. At the time of going to press, the site had already attracted one firm bid and other potential bidders had expressed interest, according to a source close to the matter.

Blackstone is not thought to be out of pocket on the site having been reimbursed by insurers for the build costs of the warehouse and by agreeing a compensation package with the depot's then-operator, the petroleum company Total. Blackstone may even see a small profit from the sale, according to the source.

Whether the site, imaginatively called “Mammoth” in line with Astral Development's unconventional branding programme at the time (other sheds on Astral's books included Mega, Magnitude, Magnum 25 and Massif), ensnares an occupier anytime soon is another matter.

The warehouse was slated to be leased to UK pharmaceutical retailer Superdrug in 2006, despite the mass destruction of the area. The company, however, opted instead to take existing space at a ProLogis-developed warehouse in nearby Dunstable, rather than wait for the unit to be rebuilt.

And as ProLogis, which took over Astral Developments in 2007 when it bought the logistics arm of Astral's parent company Parkridge, can testify: the UK logistics occupational market is far from flourishing.