UK Commercial Property News

Bringing opportunities

2011-11-02T02:34:00.000-07:00

As usually happens, building new transport networks opens up development opportunities. In this case it is the Crossrail with its creation of new stations. Derwent, in collaboration with Crossrail, has put in a planning application for a mixed use scheme of 25,548 sq.metres to be built above the new Tottenham Court Road Station, to be called 1 Oxford Street.

The main part is offices of 16,443 sq.metres on eight floors, complemented by further offices and a new 350 seat theatre.
There will also be retail space. Derwent’s John Burns commented: “The planning application is an important first step in the much needed revitalisation of the eastern end of Oxford Street and is essential for the long term growth of Fitzrovia and Soho, where we have holdings of over 139,350 sq.metres.”

Derwent now has planning permission for a mixed use scheme of 31,214 sq.metres at 80 Charlotte Street, Fitzrovia, W1 plus more residential space at nearby 65 Whitfield Street and Whitfield Place. It will be part new build and part refurbishment to a design by Make Architects on an island site in the middle of Fitzrovia. It will have a capital value of £125 million. Public realm improvements bring the creation of a new park.

Derwent has also linked with Grosvenor for a mixed use scheme at 1-5 Grosvenor Place, next to Hyde Park Corner, that will feature a hotel, commercial and residential space. Just to add to the big list of Derwent projects, it has planning permission for another mixed use scheme of 27,034 sq.metres at the City Road Estate, EC1. This will be mainly offices with some retail and residential accommodation.

How long will the fun last?

2011-11-02T02:30:00.000-07:00

The intriguing question in London is how long the inward flow of money into prime assets will continue, although the recent increase from Greece and Spain indicates demand is undiminished.

Apparently there are no limits to what can be sold with the German CLI Group Fund putting he iconic 28,910 sq.m. Lloyds Building on the market for £290 million for a yield of 5.5%.

A similar price is being asked for the 30,110 sq.m Tower 42, another landmark property in the Square Mile.

Knight Frank’s Stephen Clifton said: “Investors with global perspective can find best in class assets and tenant covenants in the city.” Adding to the attraction is that sterling is down 30% since 2007 and there is also the consideration of the euro being under pressure. The high prices available and the prospect of rental increases make this a perfect period for selling, particularly as some of the German funds show large gains.

One of the largest portfolios on offer is from KanAm which is using Knight Frank for the 34,373 sq.m. headquarters of the European Bank for Reconstruction and Development at One Exchange Square, EC2. Also in the portfolio, which could raise £1 billion, are Deutsche Bank’s Winchester House, Thomson Reuters’ 30 South Colonnade and Olswing’s HQ at 90 High Holborn.

Some of the selling is coming from the Irish, such as Shieldpoint, which is putting the 8,361 sq.m. Royal London House at 22-25 Finsbury Square on the market through Savills. This is the third time Shieldpoint has sought to sell city properties in the past two years. What is impressive in London is the wide range of investors. For example, the Canadian group Brookfield is prepared to pay over £300 million for the 42,734 sq.m. Broadgate West, EC2, from Gemini Commercial for a yield of 6%.

Big numbers for west end residential

2011-11-02T02:24:00.000-07:00

Developers’ ambitions to build ultra luxury apartments in the West End are increasing as the flow of foreign buyers continues to grow, the latest being Greek and Spanish investors seeking safe havens for their cash.

Among the luxury projects is a proposed plan by Brockton Capital for a £400 million residential scheme on a corner site at 56 Curzon Street where it has been piecing together the land since 2007.

At the moment, the block has 35 flats and the new scheme would have a restaurant, garden, spa and underground parking. Initial estimates are that selling prices would be £48,420 a sq.metre (£4,500 a sq.ft.).

Another major residential scheme is for the Clarges Estate at 82-84 Piccadilly, a former office of the MI6 spy agency, which is expected to go to Chelsfield Partners for £170 million. The 1 acre scheme could mean similar prices to those
expected for Brockton’s project and comes at a time when there is a shortage of major sites for offices in the West End.

John Caudwell, who made a fortune marketing mobile telephones, has joined in the quest for luxury residential schemes in the heart of Mayfair. He has purchased Audley Square House for £143 million and plans a large residential scheme.

Caudwell said: “The intention is not just to re establish Audley Square as one of the most desirable residential areas in London, but as one of the most desirable in the world, with super prime properties appealing to the most discerning buyers and I believe traditional Mayfair architecture is the key to success.”

Summer high

2011-11-02T02:22:00.000-07:00

Far from slowing down, office demand in central London rose strongly again in August with a 13% rise in the City pushing requirements up to 706,040 sq.metres (7.6 million sq.ft.). There was a contrast with the West End, said CBRE, where demand was steady at 445,920 sq.metres (4.8 million sq.ft.). Digby Flower of CBRE said:

“However, a fourth consecutive month that space under offer has remained at or above the ten year average reaffirms our belief that the second half of the year will witness an improved picture on the first six months.”

Further research by CBRE has shown that secondary property has taken over from prime in leading capital growth. Yields on prime central London offices have stabilised but have tightened on secondary property. “Yield compression on prime property looks to have run its course,“ said Peter Damesick, EMEA (Europe, Middle East & Africa) Chief Economist at CBRE.

London commercial property remains the best performing part of the UK with Midtown outpacing the other London areas throughout the summer. Iain Malcolm of Farebrother said “Total investment transactions and occupier take up in Midtown could match, or even exceed, pre recession levels by the end of the year. Demand from a wide variety of business sectors, low supply (6% availability rate) and a modest development pipeline has driven investor interest.”

The most notable recent lettings have been at UK & European’s recently completed 1 Kingsway, where the creators of the iconic Wolseley restaurant will be opening a new 13,500 sq.ft. sister restaurant at the end of this year. Tate & Lyle has taken the top floors (24,780 sq.ft.) for its new corporate headquarters at a headline rent of £67.50 per sq.ft. a benchmark for new space in WC2 in the current cycle and John Laing has just signed up on the 1st & 2nd floors.

One part of Midtown has been transformed with the first stage of the Chancery Lane Enhancement Project completed. It has brought a host of improvements from footpath widening and repaving as well as better street lighting. There has also been tree planting and new seating.

City of London Planning Chief, Peter Rees, said: ”This long term strategy has been carefully coordinated to preserve the unique character of one of the most historic and unusual streets in the City while also making it fit for purpose as part of a 21st century business centre.”

In fine fettle

2011-11-02T02:21:00.000-07:00

What is clear is that the City office market continues in fine fettle, despite the woes of the national economy, with new developments and a flood of investment deals. The City of London has given planning permission for four new schemes, including greater height for Great Portland Estates’ and Brookfield Office Properties’ 950,000 sq.ft.100 Bishopsgate scheme. A similarly sized scheme is planned by Hines for 100 Cheapside, where Canary Wharf Group was originally the front runner, while Rockspring and Chesterfield Asset

Management have planning for a slightly smaller scheme at Centurion House, EC3. Rockspring’s Richard Bains said: “Since acquiring the project last year, we have drawn up ambitious plans to create an entirely new ground up development which will appeal to a wide range of city occupiers.” The largest development getting planning permission was City Site Estates’ 11 storey scheme of 12,077 sq.metres (130,000 sq.ft.) at 51 Eastcheap, EC3. One scheme that already has planning permission is Hammerson’s £485 million Principal Place, E1 project. Now Hammerson is seeking a partner for the 50 storey residential element of the 73,856 sq.metres (795,000 sq.ft.) development which will have 243 private and 56 affordable units.

Getting the best return

2011-11-02T02:20:00.000-07:00

One West End site that will be developed mainly for offices is 8-10 Hanover Street which has been sold by LaSalle Investment Management to Morgan Capital Partners for over £25 million.

The property has planning permission for a mixed use scheme for offices of 2,321 sq.metres (24,984 sq.ft.), together with retailing and six apartments.

“The sale of this asset is the culmination of a process of site acquisition, planning, design and construction development which has resulted in superior returns for our pension fund client,” said LaSalle’s Richard Maple.

Backing technology

2011-11-02T02:17:00.000-07:00

The days when the City was a jealous guardian of its role as the top global financial centre has shifted to a more subtle position.

That earlier hostility was mainly directed at Canary Wharf, which is now a fact of life and has added to the global appeal of London. The new role is to foster the creation of an East London Tech City stretching from a roundabout in Shoreditch to the Olympic site in Stratford. Young entrepreneurs and new start ups are flocking to the area around Silicon Roundabout. Simon McGinn of the City of London said: “The City Corporation has facilitated the start up of an Innovation Centre in Smithfield which provides advice and guidance to SMEs (small and medium enterprises).

In fact, we have already actively supported the SME community for some years through the provision of affordable accommodation in City fringe areas.” He noted that the government was pushing the initiative hard with its vehicle, the Technology Strategy Board, having a £200 million war chest to help the high tech industry. In fact the government has taken its role to promote the Tech City aggressively as witnessed by its support for Eric van der Kleij as UK’s Trade and Industry’s“entrepreneur in residence.”

Also, Intel has thrown its weight behind Tech City, earmarking a supercomputer, capable of handling 2.25 trillion calculations per second, for startup companies in the area to use free of charge. The City of London has sponsored a scheme known as “Angels in the City” to recruit 125 investors prepared to put seed money into new companies. The scheme is in cooperation with the London Business Angels and aims to generate £10 million in new investment annually.

What attracts the young businesses to the area is that costs, notably rent, are relatively low and they are physically close to sources of funding in the Square Mile.

Access to these young companies is one of the reasons why Google and Cisco have moved into the area. McGinn points out that “it is hard to plan a cluster of like minded companies and entrepreneurs but in the case of Shoreditch there was already the framework for high tech operations because the creative industries had already moved in.”

The competition from other parts of Europe, notably Berlin and Dublin, is fierce. The advantage in London is the adjacent pool of wealth through individuals and financial institutions plus the experience of the City of London.

Rebuilding Bromley

2011-11-01T16:10:00.000-07:00

Bromley has joined nearby Croydon in ambitious plans for town centre regeneration.

The Bromley master plan names 12 opportunity areas for offices, hotels, housing and, in particular, shops, in a £1 billion plan that will need private developer involvement. Among the sites is one west of the High Street that could have 19,974 sq.metres (215,000 sq.ft.) of shopping and 1,180 residential units. Included in the proposals is a major extension of the Glades Shopping Centre.

Two sites have already gone to developers; Land Group will turn the town hall into a 150 bedroom hotel and Cathedral Group will embark on a £300 million scheme in Westmoreland Road.

In the case of Croydon, the master plan for the key site between George Street to the north and the High Street to the west, in the heart of the metropolitan centre, has been up for public consultation in September and October.

The area has some impressive buildings, such as the art deco Gas Board property and also the headquarters of Nestle UK, but it suffers from a poor quality public realm and the legacy of the 1960s St George’s Walk Shopping Precinct.

Bromley based Jeff East of Acorn has already put together a deal for a Travelodge in the town, one of four in the immediate area, the others being in Sidcup, Bexleyheath, and East Grinstead (which will have a Wilkinson store as part of the scheme).

"Generally speaking the lettings we have transacted have been small. The investment activity has been from private buyers, such as the portfolio of 11 freeholds we sold, three of them let to Swintons," East said. He noted that business had become harder in the past two months "but we have had a good year and double that of 2010."

Gateway Starts

2011-11-01T05:36:00.000-07:00

With funding agreed, preliminary work is starting on the Mersey Gateway project that will bring a six lane toll bridge between Runcorn and Widnes. Steve Nicholson of Mersey Gateway said: “The agreement represents the best possible deal for the public purse and means that we can focus on delivering a project that will bring benefits to local people, commuters and businesses across the region.” It comes at a time of increased development activity in the area, epitomised by Peel getting the green light for the £175 million Trade Centre in the Wirral Waters scheme at Birkenhead Docks. Also in Merseyside, Barnfield Centric, a joint venture of Capital & Centric and Barnfield Construction, has started building the 7,618 sq.m. at the Estuary Banks Business Park, Speke, South Liverpool. The scheme has been helped with £2.54 million from the European Regional Development Fund.

The twenty hybrid units can be used for offices, research & development, light industrial and warehouse accommodation and come in a variety of sizes.

Cauldwell joins Prince

2011-11-01T05:35:00.000-07:00

The role of local entrepreneurs in regenerating their areas has been a key factor in many parts of the UK, not least in the North West through John Whittaker of Peel.

Now we have John Caudwell, who created a successful mobile phone business employing thousands in Stoke-on-Trent, with his involvement in the conservation and regeneration of the Middleport Pottery in his home town.

This has also become another project for the Prince of Wales’ charity, Tthe Prince’s Regeneration Trust. The objective is to create local jobs, attract new business to the area and ensure that production of the Middleport blue and white Burleighware remains in Stoke.

“In an era of invisible and largely electronic economy, it is sometimes forgotten that everything we know today was built on an industrial and manufacturing revolution, which bred incredible craftsmen and products and made Britain a manufacturing powerhouse.

Coming from an engineering background myself, I really appreciate the skills required in making and producing quality products,” Caudwell said.

He added that “nowhere on earth are the skills and craftsmanship of working with clay, water, heat and colour so deeply imbedded in the DNA of the population and it is crucial that this is preserved in Stoke.”

Stoke already benefits from the skilled development by St Modwen, which has now submitted a planning application for the latest phase of the Etruria Valley development, an area which is at the heart of the city’s pottery history.

This will see an increase of 16 acres in the Etruria Valley Business Park, which is part of the wider Festival Park area, once the home of the Shotton Iron and Steel Works. The joint venture of St Modwen and the city’s regeneration company aims to build a mixture of offices, manufacturing and storage space.

Since the regeneration plan for the area was launched in 1988, there has been development of 125,415 sq.metres (1.35 million sq.ft.) which has included a large contact centre for Vodafone and a new factory for Wade Ceramics.

Backing Birchwood

2011-11-01T05:34:00.000-07:00

Cantt Pak has added to its holdings in Birchwood Park, Warrington by buying Washington House and Allday House advised by Pin Property Consultancy, whose MD, Nasira Majid, won Woman in Property and Outstanding Business Woman of the Year awards at the first North West & Isle of Man Women in Business Awards.

The two buildings total 9,755 sq.metres (105,000 sq.ft.) with Washington House occupied by URS, an engineering consultancy, while Allday House is empty. Imran Younus of Pin said: “We will soon announce details of the refurbishment programme that will totally transform Allday House. We have already had interest from potential occupiers.” DTZ acted on the acquisition. Also in Warrington, Allen & Appleyard has taken the 1,505 sq.metres (16,196 sq.ft.) Unit 3, Taurus Park, Europa Boulevard.

Pannone in the market

2011-11-01T05:32:00.000-07:00

Yet another major Manchester based law firm is seeking a large new headquarters in the city. Pannone wants to move out of its Deansgate building by the spring of 2014 and is using p3 to find a site of 8,826 sq.metres (95,000 sq.ft.). It has 620 staff in Deansgate, Hale, Alderley Edge and London. Pannone Managing Partner, Emma Holt, said: “We have spent a great deal of time this year finalising our strategic growth plans to position the firm to capitalise on opportunities in the evolving legal market.” She indicated that Pannone might go for two properties in the city centre to cope with its needs.

Catering for the media

2011-11-01T05:31:00.000-07:00

In the competition to attract new investment, Manchester has stolen a march on many cities in the UK and Europe by having a major new media complex in Salford Quays.

The scheme by Peel that has brought in the BBC and ITV is of such a size that it has impacted on the whole UK media industry o the point where a wide range of companies catering for media want to be located in the region. This potential has prompted Canning O’Neill to start a new company focusing on the needs of the media, a sector of the economy that was already thriving in the region with a considerable history, including being the most important newspaper centre in the north of England for many years Mark Canning said: “We have seen a dramatic increase in enquiries from media companies and realised there was the potential for a company focused on the industry. In my view, this is the most important trend I have seen in my 22 years in Manchester.”

Among the initiatives from Canning O’Neill is a website devoted to the media industry This is not something that has come out of the blue, because they already had considerable experience of dealing with media requirements.

“We have been involved in filming, notably at the Soapworks,and are familiar with the needs of media companies,“ said Canning. The creation of a new company at a time of tough economic conditions speaks for a degree of optimism. Another new company is Capital & Centric which brings together two North West developers, Tim Heatley and Adam Higgins. Both have considerable experience, with Heatley having been a director of Modus while Higgins has been with Peel, Ask and Manchester Property Alliance Group.

The company’s strategy is to build a portfolio organically without exposure to excessive debt. Heatley said: “The current market provides an opening for companies run by individuals with extensive experience but without the legacy of servicing debt with their portfolio.”

Axa build

2011-11-01T03:03:00.000-07:00

Axa Real Estate Investment Managers are likely to be one of the gainers from the current market having received planning permission for the £50 million office scheme at St Peter’s Square. It manages this property on Dickinson Street, fronting St Peter’s Square, for the Co-operative Insurance Society and will now develop a property with a 12 storey structure of 10,033 sq.m. more than double the existing building. WHR and CBRE are lettings agents for a project that apparently depends on a pre let to trigger construction.

The property will meet the top BREEAM standards on sustainability. Axa’s Dorrien Thomas said: “In recent years, Manchester has firmly established itself as England’s premier business location outside London and we are confident that the new development’s prime city location, together with the quality of the space, will make it an ideal destination for local, national or international businesses.”

Going bust

2011-11-01T03:02:00.000-07:00

Judging from the latest figures for business failures, the economy is having a hard time picking up speed in the region. According to Equifax, the failure rate of businesses in the North West increased by 9.1% in the third quarter compared with the same period of 2010. In fact, that is half the national rate.

To some extent the figures should not surprise since retailing has had a bad period with a 41.8% rise in failures. Mark Nuttall of Equifax commented: “The North West has seen failures creep up by 10%, which highlights the overall UK picture and suggests that businesses everywhere need to remain cautious. The reality is that businesses are continuing to find it much harder to keep their heads above water as the economy fails to pick up.”

Attracting investors

2011-11-01T03:00:00.000-07:00

F&C Reit Asset Management has bought the 7,060 sq.metres Boulton House, Chorlton Road, Manchester. F&C’s Daniel Plummer said: “We recognise Manchester attracts top inward investors and is a continuing base for existing businesses resulting in a strongly performing occupational market.” Greg Ball of Jones Lang LaSalle, letting agents on the property, added that F&C “take a competitive approach to quoting rentals and offer flexibility, as we intend to subdivide one floor into small suites.”

Holding up

2011-11-01T02:58:00.000-07:00

It may surprise the more pessimistic forecaster in the UK, but the regional commercial property market is holding up well and is set to at least match last year’s outcome.

Among the major cities, Manchester has the best balanced market, helped by the scale of its economy and strong entrepreneurial spirit as exemplified by Media City and Spinningfields.

What is happening is that the downturn in the UK economy is providing a test for all regional economies and markets and those with the greatest resilience are emerging as stronger entities. To some extent the fierce competition between Manchester’s two football teams illustrate that spirit.

Analysing the first nine months’ figures for regional office markets, Jones Lang LaSalle (JLL) expects aggregate take up by the year end to equal 2010. JLL notes that in the third quarter rents in Manchester increased by 5.3% on the
previous three months and the Grade A vacancy rate is only 2.1%. Given the tough market, those are impressive figures. Even so, Peter Skelton of Lambert Smith Hampton said: “The market is extremely quiet and it appears that a short term approach has returned bringing a lack of decision making.

That contrasts with the start of the year when there was expectation that we were overcoming the financial problems in the UK.” In his view, the office market lacks direction and there is no confidence that it has reached the bottom. One of the future problems could be the amount of property that will be released by the banks holding it because of bad loans.

So far, financial institutions have been unusually careful in the release of this property but some is being filtered out, notably from Irish sources. In fact, the overall picture of the market can be painted in brighter colours because of planned new development and demand from large companies. An indication of the demand is that there are requirements for at least 27,870 sq.metres (300,000 sq.ft.) of Grade A offices, led by BUPA with a need for 13,006 sq.metres (140,000 sq.ft.).

The impetus is that a majority of its leasing contracts end in 2015. Another major requirement is from Jacobs Engineering for a regional headquarters of 9,290 sq.metres (100,000 sq.ft.). In this case there is the question of whether the company takes existing space or goes for the option of design and build. Also in the market for a large office is the insurance company Aviva.

Yorkshire grit payout

2011-10-06T06:12:00.000-07:00

Perhaps it is a reflection of the region’s determined spirit, but the commercial property market is apparently ignoring the dire economic warnings and having something of a revival.

That has opened the way for higher office rents and a return of new development in central Leeds. Jeff Pearey of Jones Lang LaSalle takes an optimistic view of the situation.

“We have seen a significant improvement in occupier activity in the second quarter (which has continued since) with a 331% increase in lettings compared with the first three months and shows
that stronger sentiment is finally returning to the market,” he said. According to the Leeds Agents’ Forum there are promising signs that take up this year could top 37,160 sq.metres, well ahead of 2010. The Forum said: “While occupiers remain cautious, the figures show a healthy level of interest, at what is traditionally the quietest three months of the year.”

Some of these requirements are of impressive size. The law firm Squire Sanders & Dempsey is seeking 5,574 sq.metres. This illustrates Leeds’ role as a legal and financial centre. The natural reaction in a city where the amount of Grade A space is declining is new development.

And so to the action. Planning permission was granted in October 2011 for the redevelopment of a 120,000 sq.ft. landmark building above Leeds City Station. City House will provide Grade A, BREEAM Excellent offices suites of all sizes, meeting/conference facilities and serviced offices. The main contractor is due to be selected and various approvals with Network Rail are progressing to enable a start on site early next year with completion scheduled for mid 2013.

Gregory Projects and Marshall have also submitted a planning application for a £30 million office and hotel scheme at Whitehall Plaza, next to the railway station. It will have a 130 bedroom hotel and 4,645 sq.m. of offices. Richard Dunn of letting agent Sanderson Weatherall commented: “There is a shortage of Grade A offices in prime city centre locations and even ahead of the planning application, occupier interest in the scheme has been encouraging.” Adam Cockcroft of joint agent DTZ added that “Leeds remains one of Europe’s top business destinations and still enjoys a healthy demand for high quality offices, despite the economic downturn.”

Taking a shine to Leeds

2011-10-05T06:35:00.000-07:00

The improved climate for development is likely to lead to the Lumiere scheme on Wellington Street, which was originally slated to be a residential tower, being developed commercially.

Ripley Capital and Axa Real Estate Managers have teamed up to acquire the site from Lloyds Banking Group. The property was designated to be Europe’s tallest residential tower but is now in the hands of the Receiver, Deloitte.

The new plans calls for a 1,1148 sq.metres scheme of offices and shops on the ground floor. Meanwhile, Legal & General, advised by Jones Lang LaSalle, has paid Danmerc £14.38 million for the 4,755 sq.metres office property at 1 Whitehall Quay, an initial yield of 7.88%. The largest investment deal, however, was RREEF buying the 9,011 sq.metres Lateral office building on City Walk, Leeds for £24 million from DTZ acting as the LPA Receiver.

The property is let to the Department of Communities & Local Government. In another major deal, a prime Leeds shopping arcade that boasts some of the UK’s top retailers has been put on the market by the Bank of Ireland Private Banking. The 20,903 sq.metres Grade II listed Victoria Quarter has been given a price tag of £135 million for a yield of 5%, reflecting the quality of the high end occupiers such as Harvey Nichols, Wolford and L’Occitane. The bank paid £126 million for the arcade in 2006 and there have been off market efforts to sell it for some time.

A Warning of Shortages

2011-10-05T06:34:00.000-07:00

While the industrial property market in the region has displayed admirable stability, the lack of new development means that shortages are already occurring.

That is the message from Mike Baugh of DTZ who said: ”As the market improves and take up of vacant stock continues, we move closer to the situation where there is a shortage of some sizes of units. This is intensified by a shortage of land and a limited number of developers holding back speculative development.”

He suggested that the problem in Leeds was for companies seeking units of below 1,394 sq.metres (15,000 sq.ft.) bringing a ”hardening of rents and a reduction in incentives.” Even so, Yorkshire offers a higher proportion of Grade A industrial space than most of the UK.

Baugh said: “The window of opportunity for occupiers to secure an attractive deal is closing and they will have to be more organised and forward thinking in their search for new premises.”

Nationally, reports Jones Lang LaSalle, occupier demand in the first half for big sheds weakened and this continued in the three months to 30 September. But “investor demand is strong, concentrating on prime stock let to strong covenants on long leases.”

Two examples of recent industrial deals come from Knight Frank. It acted for Havells Sylvania who sold a 12,727 sq.metres (137,000 sq.ft.) warehouse in Shipley to Card Factory. At Harley Business Park, Bradford it has let 1,858 sq.metres (20,000 sq.ft.) to Barrett Steel.

Another significant industrial transaction in Yorkshire is provided by the bus manufacturer Optare which is amalgamating its three factories in Leeds, Blackburn and Rotherham into one 13,006 sq.metres (140,000 sq.ft.) unit at Sherburn Distribution Park, Sherburn in Elmet. This will be the first new bus assembly plant in the UK for 40 years.

Paul Mack of DTZ said: “The latest addition demonstrates the capabilities of the area as a hot spot for manufacturing and distribution in the Yorkshire region. The Sherburn Industrial Estate benefits from a huge power supply which is the key to the manufacturing sector.”

Inland Port for Doncaster

2011-10-05T06:33:00.000-07:00

The pace is also quickening at Doncaster where there are ambitious plans for new transport links and regeneration. Top of the list is a new £400 million plan to build Britain’s largest inland port and logistics park. This is the result of a deal between Helios Europe, SEGRO and Shepherd Developments for a site at Rossington, near Doncaster.

It is designated as an inland port because it will have customs clearance and bonded warehouses in a total scheme of 534,175 sq.metres (5.75 million sq.ft.), all linked by rail and direct motorway access. The key target is for goods from Felixstowe to be shipped inland to the port, which is on Junction 3 of the M18. Mike Hughes of Helios Europe said: “Doncaster is acknowledged as a premier location for logistics in the UK.” Meanwhile, construction by Vinci has started on the joint venture (council/Muse Developments) at Doncaster’s new performance venue with completion due in 2013. The new link road to Junction 3 of the M18, a key part of the inland port, is also taking shape. Muse Developments’ Michael Broadhead said: “The civic and cultural centre is really taking shape.”

Ripley in Halifax

2011-10-05T06:27:00.000-07:00

Two transactions in Halifax add to the growing evidence of a more widespread recovery in the property market. Ripley Asset Management has paid a private investor £1.78 million for retail property at 26-30 Southgate let to Sports Direct and Banana Beach Tanning. Michael Hardman of Ripley said: “Halifax town centre is a popular retail destination with a high footfall.

There are now signs that both the residential and commercial property markets are beginning to recover, albeit slowly, and we are ready to seize attractive investment opportunities.” Also in Halifax St James Securities has completed the refurbishment of the Grade II listed 372 sq.metres (4,000 sq.ft.) Shaw Lodge House into 10 office suites. Oliver Quarmby of St James said: “We have restored the splendid Shaw Lodge House to its former glory. The refurbishment is the first major piece of work on the path to restoring the mill complex.”

York looks good too

2011-10-05T06:22:00.000-07:00

What is impressive about the regional market is that there is a healthier situation in other towns and cities.

The improvement is not confined to Leeds because there has been plenty of activity in York, such as a 124 bedroom hotel at Layerthorpe for Tiger Developments and four deals at the Stirling Park Industrial Estate, Clifton Moor.

The four deals total 3,066 sq.m. (33,000 sq.ft.). DTZ’s Paul Mack said: “Clifton Moor continues to be the location of choice for many businesses and trade counter operators in York and the wider North Yorkshire area.” At York Business Park, Evans of Leeds has sold three office and hybrid business units at Opus Avenue and Novus Avenue for £1.54 million.

Richard Flanagan of Lawrence Hannah said: “These deals are another chapter in the success story of York Business Park, which is well located two miles from the city centre.” In the centre, Mott MacDonald has taken space at St Saviour
House through DTZ whose Eamon Fox said: “The city’s reputation as the centre for the UK rail industry makes it an attractive destination for professional firms such as Mott MacDonald.” The consultants made the decision after cycling
to work was the preferred mode of transport for its staff. At nearby Knaresborough the tea and coffee merchants, Taylor of Harrogate, has leased a 6,968 sq.metres (75,000 sq.ft.) distribution centre on the 22 acre St James Business Park. Roger Quarmby of St James said: “It is one of the final pieces in the jigsaw of our successful business park, which we have been developing for the past 15 years.” He believes that the success of the business park “will help to drive the economic growth of the historic town of Knaresborough.”

Backed by investment

2011-10-05T06:20:00.000-07:00

Underpinning the positive view of the office market in the region is the steady flow of investment transactions.

In the largest deal for years, a fund managed by the investment manager Orion Capital Managers has bought a 50% stake in 43,663 sq.metres (470,000 sq.ft.) White Rose Office Park for around £130 million from Munroe K.

The transaction comes at a time when Munroe K is planning to expand the 27 acre park, which is three miles from Leeds city centre, with a 2,787 sq.metres (30,000 sq.ft.) office building and extended conference facilities.

David Aspin of Munroe K said: “The acquisition by Orion underscores my belief in the future of the park and gives us one of the truly forward thinking fund managers to partner, further manage and develop the business park.” There is one small office suite to let at the park, which has a number of blue chip tenants such as HSBC, O2 and the WSP Group.

Occupiers are optimistic

2011-10-05T06:18:00.000-07:00

The improved outlook from the property sector is reflected in positive views by business in Yorkshire and Humberside for future growth.

A survey by Santander, the Spanish bank that owns a number of British banks, showed that directors of businesses in the region with a turnover of up to £20 million are expecting, on average, to double their annual turnover (109% growth) in the
next five years.

In the shorter term, businesses are concentrating on survival rather than actively pursuing growth. On the plus side, 40% of the businesses in the region are investing in research and development, which Santander said is the highest of any region in the UK.

Santander’s Steve Pateman said: “The country is reliant on these businesses to drive economic recovery and it bodes well that they are confident in their growth potential.”

Looking at enterprise

2011-10-05T06:04:00.000-07:00

Viability of the Bristol Temple Quarter Enterprise Zone has been improved by the inclusion of residential development.

That is the view of Gordon Isgrove of GVA, saying that the Enterprise Zone should look to Bristol’s Harbourside for inspiration on how to achieve a 24 hour city. Isgrove said: “The new Enterprise Zone has laid out a vision of being a hub for creative and digital industries. I should urge those planning the zone not to overlook the benefits of including an element of residential use to create truly mixed use and creative development.” In his view the success of the zone will not only be the number of jobs it creates but also the establishment of a sustainable city quarter where people want to live and work and prove an attraction to property investors over the long term.

The zone will play an important part in the growth of the city because it aims to create 17,000 jobs over a 25 year period, although some doubt has been cast on whether this can be achieved solely with creative and digital industries. That said, the letting of space in Bush House, one of the most prominent buildings in Bristol, to Yucca, a digital marketing agency, indicates a demand from that sector even if it has taken a small amount of space. Ben Martin of Yucca commented: “Bristol has been establishing itself in the past few years as a creative hub for the digital media.”

Cashing in at Cabot

2011-10-05T06:03:00.000-07:00

The Crown Estate is cashing in on the successful Cabot Park, Avonmouth by selling a third share to Axa Real Estate acting for a client.

The 33 acre site will be developed by the Co-operative group as a regional distribution centre. The Crown Estate will retain the other 64 acres on the park, which is used by Honda for storing its vehicles. The park wasdeveloped by a joint venture of Gallan and Stoford with DJ Deloitte acting for the Crown Estate.

The Crown’s regional portfolio includes shopping centres, retail parks, industrial estates and business parks across the UK. Its portfolio is valued at over £7 billion.

Avonmouth is at the heart of an active industrial market that benefits from good transport links. This brings a steady stream of deals, such as Flights Hallmark taking 3,467 sq.metres (37,317 sq.ft.), through Lambert Smith Hampton (LSH), in Silverton Investments’ Port Edward Centre. The building will be used by a fleet of buses serving the region. LSH’s Tim Beare commented: “The Port Edward Centre is now a fully occupied estate, further demonstrating that Avonmouth
continues to be a target destination for a broad range of high quality occupiers.”

The strength of the Avonmouth market makes refurbishments such as the Croudace Properties’ unit at Third Way Corner (which is being marketed by DTZ and Jones Lang LaSalle), profitable. Research by DTZ shows that the south west has the smallest amount of industrial space available in the UK, now below 10% of total availability.

The firm’s Philip Cranstone said: “The refurbishment of the unit is a good example of the emerging Grade B battleground in the south west and results in some of the best quality refurbished space in Avonmouth.”

A foretaste of how the market is going is provided by Central Park, Bristol getting its first pre let with the pallet distributor CHEP taking 4,645 sq.metres (50,000 sq.ft.) for a 15 year lease. It will be operational in the second quarter of 2012.

£50 million Exeter project

2011-10-05T06:01:00.000-07:00

Exeter is in line for a major development with Network Rail seeking a partner for a £50 million project adjacent to Exeter St David’s.

The 6 acre site could support more than 13,935 sq.metres (150,000 sq.ft.) of mixed use space together with a better transport interchange to mate in with Network Rail’s work on the station. There will also be a new public park.

The likelihood is that the scheme would have student accommodation, offices and a hotel. Network Rail’s plan is to fund the scheme by passing the freehold, or a long leasehold, onto the developer once two parts of the project are completed: the multi storey car park and the train crew accommodation.

Creative in Bath

2011-10-05T05:59:00.000-07:00

Bath is also due for a substantial new development through St James’s Investments and Tesco. The £50 million mixed use scheme on the site of the former Bath Press site has been modified to increase the amount of commercial space.

The new proposal is for a Tesco store, 4,554 sq.metres (49,000 sq.ft.) of creative work units, 2,834 sq.metres (30,500 sq.ft.) of offices and 10 residential units. This would make the joint venture the largest provider of workspace for artists in Bath.

Reaping the benefits

2011-10-05T05:57:00.000-07:00

One developer that clearly believes in the prospects for growth in Bristol and the positive outlook for new schemes is Salmon Harvester.

Together with NFU Mutual, it as now bought the 0.3 acre Three Glass Wharf site on the waterside at Temple Quay from PWC, the Administrators, which is within the upcoming Enterprise Zone. There is an existing planning permission for a mixed use scheme of 12,077 sq.metres (130,000 sq.ft.), including offices, retail and residential.

Rorie Henderson of Salmon Harvester said: “The purchase is a further endorsement of our confidence in the city centre market in Bristol and follows our purchase of Two Glass Wharf last November.”

This adjacent site, which has been close to a pre let deal, can accommodate a similarly sized scheme to Three Glass Wharf (which, if built, alone would have an investment value of £40 million) and could be combined with the new acquisition for a larger project.

Axa was negotiating for a pre let on Two Glass Wharf which, had it been completed, would have been the largest in the south west at 6,503 sq.metres (70,000 sq.ft.). The insurance company wanted to bring its staff into one building, but has now decided to review its space requirements. Salmon Harvester had been one of the investors in the original Castlemore scheme for Glass Wharf and paid £5 million for the Two Glass Wharf site.

Another strategic site which will provide one of the largest development opportunities in the south west is coming onto the market in the shape of the University Hospital Bristol NHS Trust’s General Hospital. The city centre 3 acre site has 17,465 sq.metres (188,000 sq.ft.) and will be vacant next year.

Bristol is the fourth cheapest city in the UK at £4,410 per workstation, above Leeds in fifth spot. DTZ’s Philip Morton said: “Once again Bristol features as a good value for money location in terms of overall business cost. Occupiers continue to look at the cashflow over the length of their lease which will become critical when the International Accounting Standard 37 affecting lease accounting comes into operation in April 2012.”

Swindon more active

2011-10-05T05:52:00.000-07:00

Eduserve is to use Jones Lang LaSalle (JLL) to promote its 3,437 sq.metres (37,000 sq.ft.) data centre in Swindon. This means promoting the dedicated customer data vaults to a wider business audience. JLL’s Charlie Carden said: “The centre has the ability to deliver bespoke customer solutions within an established facility from a proven provider of IT services.”

It comes at a time when the Swindon office market is struggling to break out of the recession. Jeremy Sutton of Keningtons said: “The office market has become a bit more active and there has been an increase in viewings in the current quarter.” He noted that there has been an increasing workload on lease renewals, which will become increasingly important in the future as the 25 year leases of the 1980s run out.

Efficiency beckons

2011-10-05T05:51:00.000-07:00

Savills estimates that a staggering 6.5 million sq.metres (700 million sq.ft.) of commercial floor space may need to undergo an energy efficiency overhaul by 2018. Of this total, 538,220sq.metres (5.8 million sq.ft.) is in Bristol. The analysis is based on the impact of the Private Rented Sector Regulations which form part of the 2011 Energy Bill. Michael Pillow of Savills said: “If the legislation goes through, leasing of a sub Grade E standard property will become unlawful from April 2018”. The advice is to go beyond basic levels of refurbishment to make properties easier to let because companies are increasingly attracted to greener buildings.

The chances are that this will lead to higher rents as well as making it easier to let. Even so, Savills’ warning is a real scare at a time when letting markets are in deep trouble.

Cubex buys in Glastonbury

2011-10-05T05:45:00.000-07:00

Cubex has bought the 30 acre Morlands Enterprise Park, Glastonbury from the South West RDA funded by Palmer Capital and the Beckley Island Regeneration Trust (BIRT). Situated on the edge of Glastonbury and close to Street, the former tannery site has a number of blue chip clients such as Screwfix, Avalon Plastics and Thompson Group.

Cubex has also bought the residual land for further development. Peter Walford of Cubex commented: “We already have a number of enquiries from people interested in taking space and expect to announce new deals in the near future. The purchase has been funded through our principal funding partner, Palmer apital, and follows on from the successful model established at our Bath Business Park.”

Backing Bristol

2011-10-05T05:39:00.000-07:00

There are signs that Bristol is heading for an improved office market that will put it back in the spotlight as one of the top regional cities.

The growing shortage of Grade A space indicates that speculative schemes could be once again on the agenda and that rents will respond. At the moment, said Simon Price of Alder King, “the city centre is polarised around a considerable amount of empty second hand space that is unlikely to be let in the near future.”

The likelihood is that space will be refurbished for a variety of uses and in some cases demolished for new schemes. “We now have five or six active enquiries for sizeable amounts of space of between 2,323 and 6,503 sq.metres (25,000 and 70,000 sq.ft.) and believe the growth prospects are good for the next 12-18 months,” Price said. He has two clients examining plans for new development, a sensible policy given that supply of Grade A is only sufficient for just over a year. As far as rents are concerned, the top rate is £296 a sq.metre (£27.50 a sq.ft.) which will now apply to new schemes. The expectation must be for incentives to narrow.

Although take up declined by 47% to 8,0822 sq.metres (87,000 sq.ft.) in the second quarter, there was, said DTZ, “greater interest in highly specified Grade B which offers more options and flexibility for mid sized professional firms.” The consensus is that take up will be around the same level as 2010 although this could be beaten if Axa take the sizeable amount of space they have indicated they need in the future. Indeed the financial sector was more active with some firms seeking space that they can grow into. The investment market reflects the improving situation “with a tentative equilibrium at the prime end and a contrast with the secondary properties which will be re priced.”

Crowing King's Norton

2011-10-03T02:57:00.000-07:00

SEGRO’s King’s Norton Business Centre has proved that a well managed business park will pull in the tenants.

This year has seen a steady stream of new occupiers. Recent growth in business has prompted Sterling Technical Engineering to consolidate its three existing locations into one unit. Similarly, a growth of business has sent Mechatronic Solutions, a civil and structural engineering practice, into a larger unit at the park.

SEGRO’s Jane Leedham said: “We have invested in making the centre a pleasant and secure place to work and we’re confident that we provide the premium business space in south Birmingham.”

Barberry in Coventry

2011-10-03T02:55:00.000-07:00

Another Royal Mail sorting office, this time in Coventry, is also to be redeveloped in a £50 million scheme by Barberry Developments.

The mixed use Bishop Gate scheme is being funded by the Co-operative Bank in Birmingham and has already been granted planning permission. It will have a supermarket of up to 12,077 sq.metres (130,000 sq.ft.), a gym/leisure facility including a swimming pool and 585 car parking places. Steve Pamely of the Co-operative Bank said: “Our lending to Barberry proves the benefits of the Bank’s strategy of developing long term relationships with customers that have clear and proven corporate strategies.”

Professionals like space

2011-10-03T02:53:00.000-07:00

Although the regional office market was boosted by a number of large deals in the second quarter, such as the Ministry of Justice and Deutsche Bank in Birmingham, the lower end of the market is still the most active. That is the view of DTZ in a report that also highlighted the strengthening demand from smaller professional firms.

Apparently some of these were on flexible terms during the economic downturn, but are now seeking to take advantage of the current market to upgrade to better accommodation.

It could indicate an improved market for new developments in the Midlands in the main cities. Matthew Long of DTZ said: “Take up in Birmingham in the second half is forecast to reach 18,580 sq.metres (200,000 sq.ft.).” He reiterates the problem that Grade A stock will continue to fall so that rents will edge up in early 2012.

In fact the new lettings are an important indicator of the market situation with the Law Society likely to move its Midlands headquarters to the 5,110 sq.metres (55,000 sq.ft.) 2 Colmore Square developed by Nurton; accountants Grant Thornton expected to take half that amount in Colmore Plaza and another accountant, Boomer Heaven, moving to Rutland House. Note that they are all professional service organisations. International players such as Hines have experience of when to move into markets.

In the case of Birmingham its Pan-European Core Fund has bought the 3,998 sq.metres (43,040 sq.ft.) One Eleven Edmund Street from IVG for an undisclosed sum. It also owns Brindleyplace and Two Snowhill through other vehicles.
Derby has also improved with a number of new developments. Tesco plans a large store at Allanton while at Sandiacre it will go for a mixed use scheme including a store. But the largest development is on a 15 acre site of the Derby Royal Infirmary for a Morrisons supermarket, hotel, offices and 400 homes.

Lively Telford

2011-10-03T02:51:00.000-07:00

i2r Packaging, through Bulleys, has bought the 5,479 sq.metres (58,977 sq.ft.) former UK Greetings facility at Hortonwood 30. i2r manufactures a range of wrinkle wall and smooth wall semi rigid aluminium foil containers used throughout the food industry and have relocated to Hortonwood from Stafford Park.

This is the second deal by Bulleys recently and follows the letting of the 6,712 sq.metres (72,245 sq.ft.) Premier House, Hortonwood 7 to the logistics company AMCO Services. Barry Lumsden of AMCO said: “Our partnership agreement with Force Protection Europe Limited has enabled us to finally put down firm roots in the Telford area, bringing new employment and establishing another AMCO 3rd party logistics facility.”

Bulleys also acted for Prospect Estates in the first sale at its Epic Park, Halesfield Industrial Estate, where Western Power Distribution has taken 1,950 sq.metres (20,990 sq.ft.). Prospect bought the former Plastic Omnium premises and divided it into a separate industrial estate. Bradbury Commercial are joint agents. Matthew Tilt of Bulleys said: “We are discussing with a number of enquirers seeking large properties in Telford and we are optimistic that we will be in a position to report further good news in the near future.”

All gone

2011-10-03T02:48:00.000-07:00

At a time when many cities, including Birmingham, are seeing a decline in Grade A offices, the last speculatively built big shed in the UK has been let to Amazon.

This is Gazeley/Met Life’s 65,030 sq.metres (700,000 sq.ft.) shed at G-Park, Rugeley, Staffordshire which was taken by the on line retailer on a 15 year lease. Known as Flair, it has been available since 2008.

Such has been the pace of Amazon’s expansion that it has leased a number of large sheds in the UK at Doncaster and Peterborough as well as a massive warehouse in Dunfermline, Fife.

It comes at a time when, said Colliers International, average prime and secondary rents in the Midlands have been static for 12 months. Colliers’ Simon Norton said: “I have a distinct feeling of dejavu reading the statistics. They are no different from 2010.”

But he believes they are likely to increase now that the take up of prime space has eaten into supply. “The lack of speculative development due to the scarcity of funding and the general lack of confidence due to the recession have exacerbated the situation.

For the first time in years, landlords are beginning to feel that they may have the upper hand and are holding out for better rental terms.” At the heart of the decline was the fall in land prices. For example, in the West Midlands lot sizes of 10 acres or more averaged £484 an acre this year compared with £221 in 2006.

Where land is available for expansion, developers are increasing the size of existing estates, such as Hortons at Hollymoor Point, Rubery where it will build a new unit for NVC (Manufacturing) China’s largest lighting manufacturer, who already occupy a unit there, making a total occupied of 8,454 sq.metres (91,000 sq.ft.) at Rubery.

Typical of many estates, Target Park, Redditch only has two units available after the sale of a 1,134 sq.metres (12,209 sq.ft.) warehouse to Heartbeat Manufacturing.

Highcross Invests

2011-10-03T02:45:00.000-07:00

One development that has started is the second phase of Highcross’ 3,406 sq.metres (36,665 sq.ft.) refurbishment of Livery Place. It is the largest refurbishment, costing £1 million, in Birmingham in 2011 and will bring the property up to Grade A status. This follows the first phase which cost £3 million on the 5th and 7th floors and common parts.

Highcross is having real success with the property. The company’s Joe Curlett said: “Randstad, the human resources firm, has taken a floor of 836 sq.metres (9,000 sq.ft.), soon after Packt Publishing has taken further space. We will be offering a boutique suite soon.” CB Richard Ellis’ Theo Holmes said: “Tenants are turning their attention to good quality refurbished Grade A space, which generally can be acquired for up to £10 a sq.ft. cheaper than new space in the city centre.” CB Richard Ellis has been chosen as the sole letting agent by Ballymore and Hines for the 29,170 sq.metres (314,000 sq.ft.) in the second phase of Two Snowhill.

The law firm Wragge & Co, will occupy virtually half of the scheme. CBRE is now also marketing 4,180 sq.metres (45,000 sq.ft.) in the Mailbox, recently bought by Brockton Capital. Brockton’s David Zimmerman said: “We have a significant capital budget allocated to maximise the potential of the Mailbox as a key destination in Birmingham. We are continuing our strategic review of the asset, the results of which will be the basis fordeveloping our overall vision for its future.”

Still buying

2011-10-03T02:44:00.000-07:00

CB Richard Ellis (CBRE) makes the point that 77% of the take up in the first six months of the year was in second hand space. At the same time, the imbalance in supply worsened as second hand space took a larger proportion of the 259,293 sq.metres. CBRE’s Will Ventham said: “It is unlikely that, apart from Two Snowhill, any new speculative space will come to the market in the foreseeable future, albeit Goodman may be reviewing options at Eastside.” On the other hand, the appetite for investments is undiminished.

CBRE’s Justin Marshall commented: “The appetite for larger, prime assets in the central business district from the UK and overseas funds should continue, while the stabilisation of rents and incentives should see the return of a number of funds and property companies to the market for more asset intensive buildings.”

Timing

2011-10-03T02:40:00.000-07:00

Mike Slade of Helical Bar is renowned for the timing of his deals that catch the market on the move in either direction, up or down. So Helical Retail’s purchase of a 53,000 sq.metres site at Reddings Lane, Birmingham from Eaton Electric is a positive point for the city. This company is a joint venture of Helical Bar and Oswin Developments of Solihull. Helical Retail plans a 6,976 sq.metres (75,092 sq.ft.) Asda supermarket and a similarly sized retail park.

This is part of a large (£50 million) regeneration plan which includes an industrial scheme being developed by Mucklow.

Look ahead

2011-10-03T02:36:00.000-07:00

Now is the time to move away from the stifling worry about the economy and look ahead to a healthier situation of growth, That would seem to be the message from Birmingham where the council is going for a Big City Plan for future development in 2,000 acres of the city centre with one of the government’s new enterprise zones.

Of course, the city has been pursuing an enlightened urban renewal programme for years, including using funds from the European Union for some projects. It is now applying for £20 million from the European Development Funds (ERDF) to help the development of business accommodation, office and industrial projects.

There are a host of private sector developments in the pipeline, many of them stalled by the fragile economy. A new scheme is from Sahlia Investments of Kuwait for a mixed use scheme costing £150 million in the Beorma Quarter and is adjacent to the Selfridges store and the Bullring Shopping Centre. Sahlia is seeking funding for the scheme from Barclays Corporate for the 60,199 sq.metres (648,000 sq.ft.) which will have a 200 bedroom aparthotel and a 27 storey 31,603 sq.metres (340,183 sq.ft.) office block together with a refurbished cold store.

The improvement in the urban areas are also a priority, hence the work on Church Street public realm in Colmore Business District (CBD). This high quality designed area will bring wider and new pavements, landscaping, trees and other associated works.

CBD which is one of four business improvement districts in the city centre is contributing £250,000 towards the total cost of £750,000 for the project. Gary Cardin, Chair of CBD said: “The new square will add to the public realm improvements promoted by us across the commercial heart of Birmingham and be a showcase for high quality, pedestrian friendly open spaces.”

These improvement plans come at a time when the city centre office market is only in moderate health, although the second quarter take up was 14,678 sq.metres (158,000 sq.ft.) mainly due to several large lettings, such as the Ministry of Justice for 3,530 sq.metres (38,000 sq.ft.) at Axis, But the Grade A stock has now fallen again, continuing the three year long process. Craig Satchwell of Colliers International said: “Grade A stock is now at its lowest level for three years.

Worryingly, there is just one scheme with a speculative element currently on site, Hines and Ballymore’s Two Snowhill, which will not be completed until 2013.” He predicts that there will be an increase in refurbishment of existing properties together with pre lets for speculative schemes.

Milton sells in Redhill

2011-10-01T16:16:00.000-07:00

In the largest deal in Redhill this year, Surrey County Council has bought the 3,833 sq.m. Consort House from the Milton Group. William Gelder of Hurst Warne, who acted for Milton Group, said the council will be relocating staff from existing premises in Reigate.

While the office market in Redhill and the surrounding towns has been quiet this year, it can look forward to the major mixed use plan for 9,290 sq.m. scheme (including a Sainsbury store) in the future when the existing lease runs out in 2014.Gelder said: "There is the prospect of lettings in the town when the current sub leases at 3 Princess Way expire in 2014, with occupiers such as Santander and Lombard being forced to relocate. There are a number of historic leases in the town that were agreed in the late 1980s and 1990s that are coming to an end in the next few years and occupiers are faced with the choice of either negotiating new deals with their existing landlords on tiring buildings or taking the opportunity to relocate to new or refurbished accommodation whilst the market is still in the tenants’ favour. This is likely to be the case in other similar office markets throughout the UK."

Showing the way

2011-10-01T16:14:00.000-07:00

As politicians struggle with the closure of the massive Pfizer research base at Sandwich, now renamed Discovery Park, they will surely take a long look at the examples of Kent Science Park (KSP) and Kings Hill.

Each of these is a model of intensive and focused management together with the benefits of long term investors, La Salle Investment Management at KSP and Liberty Property Trust at Kings Hill. The problem at Sandwich is the sheer scale of the site with 278,700 sq.m. of laboratory, storage and office space. Enterprise Zone status will help but CBRE still faces a mammoth task.

In the case of KSP, the former Shell facility has been turned into a science park with a range of high technology companies in 55 acres of landscaped grounds serviced by a range of amenities such as a café and shop, gym and swimming pool together with meeting rooms and a lecture theatre. There is planning permission to expand on an adjoining site which will allow for future growth. That is the focus of Site Director, James Speck, and his experienced staff. "The expansion of Sheerness and the location of the Vestas wind turbine factory there will put pressure on the infrastructure, as will the regeneration of Sittingbourne town centre."

That will lead to upgrading of the transport and power supplies, he says, including the vital link to the M2 motorway which will become more important as Sheerness and KSP grow. That link could come from the northern relief road for Sittingbourne. Speck says simply: "The future is bright. Never forget that we have some big businesses in this area and we are a jumping off point for continental Europe."

Another important pointer to the future is that Speck has fostered relationships with universities, including Greenwich, Imperial, University College London (UCL) and Kent. Another peg for the future plans is closer ties with France to foster cross channel business activity.

Given the nature of the occupiers, such as the recently arrived Toximet, a product of the University of Greenwich, it is not surprising that KSP has an advanced broadband network. "We are looking at the idea of clustering that would link small operators and we have the facilities to foster that, including speculatively built laboratories to suit individual needs," said Speck. His success shows with the steady rise of the occupancy rate which is 77% now and will reach 82% by the year’s end.

Fundable deal

2011-10-01T16:13:00.000-07:00

Another Sainsbury supermarket, this time in Woolwich, has also been sold recently. Woolwich Properties, advised by Lawson & Partners, sold the 3,809 sq.m. property to a private investor for £9.7 million, a yield of 5.5%.

Darryl Stevenson of Lawson said: "This is a very fundable deal that allowed the investor to acquire a long dated secure income from a sought after tenant within Greater London. The price is at a discount because the building has a long
leasehold with a longer rent review pattern than is normal."

New JV Buys in Tonbridge

2011-10-01T16:08:00.000-07:00

One financial organisation that has been taking advantage of the decline of the property market is Palmer Capital.

It continues to follow its route into joint ventures in different parts of the UK, mainly through funding successful developers who understand their local market. The new £25 million joint venture is, however, with a financial organisation.

Fleming Financial Services is a UK financial adviser with a high net worth international client base, with a particular focus on Africa and the Far East. The fund has completed its first deal in acquiring a Sainsbury store in Tonbridge, Kent where the deal was struck at a yield of 5.25%. The JV will concentrate on properties in the price range of £1 million to £10 million.

Green Light in Brighton

2011-10-01T16:06:00.000-07:00

Most towns in the south east are struggling to keep regeneration moving ahead but in Brighton plans for a mixed use scheme at the railway station have progressed.

The city council’s planning committee has given the green light to the scheme of Square Bay Properties for a hotel, offices and homes on a site known as ‘Block J.’ This is part of a programme to make access to the station easier and will, for example, bring an extension of the ‘Greenway’ route of a traffic free cycle and pedestrian link between the station and New England Road.

The scheme for a 94 bedroom hotel, 147 homes and offices is described as low carbon which includes rooftop allotments. There will also be a new public square. This development is the last of the so called New England Quarter to receive planning permission. The former railway goods yard has been developed in stages since a master plan was accepted in 2003.

Astellas buys in Chertsey

2011-10-01T16:05:00.000-07:00

Astellas Pharma Europe, which is currently based in Staines, has bought the 9,303 sq.metres building in Hillswood Business Park, Chertsey, from Electronic Arts. Advised by Knight Frank, (DTZ for Electronic Arts), Astellas paid £16 million for the Sir Norman Foster designed building, which is set in landscaped grounds of 7.54 acres and with an adjacent development site of 6.13 acres. Hillswood consists of three headquarter buildings, the other two let to Samsung and Regus. At the moment Astellas occupies three properties in Staines so it will refurbish Building 2000 at Hillswood before moving in mid 2012.

Industrial dominates

2011-10-01T16:03:00.000-07:00

Judging from the Locate in Kent (LIK) figures, the market is holding up reasonably well, being on target for inward investment in the first half when it pulled in 40 occupiers. What was noticeable is that demand for industrial property
increased to 60% in 2010-2011 from 39% in the previous year.

Peter Symons of LIK said that a planning application for the Vestas wind turbine factory at Sheerness was going in before the end of the year and "the consultation process has been positive." But he suggested more government support was needed for the industry.

Tough going

2011-10-01T15:55:00.000-07:00

Normally the commercial property market in the counties close to London reap the benefit of the performance of the capital city, which has been enjoying a strong run in the past two years or so. But this is not happening at the moment and in the three counties agents agree that the market is tough going.

This view is echoed in the market survey by the Royal Institution of Chartered Surveyors that said: "Improvements in the market seen in the first half year faltered during the third quarter as occupier demand fell back for the first time in 12 months."

Even London was less buoyant which may be one of the factors that is making it harder work in the three counties. The main barrier is a lack of confidence as agents and developers digest the flow of gloomy predictions.

As far as the industrial market is concerned, Charles Binks of Knight Frank said: "Market activity was subdued in the first half year in London and the south east. We anticipate a general weakening over the next 6 to 12 months as deteriorating consumer confidence and public sector austerity measures ultimately impact upon logistics demand."

That is not preventing deals and continued development, such as at Kings Hill in Kent where the steady process of improvement continues as Liberty Property Trust takes the long view. A similar view applies to Kent Science Park, Sittingbourne.

While the Kent Property Report paints a reasonably optimistic picture with the stronger performance of 2010 continuing into 2011, it does say that "take up in (business parks) has been subdued in the first half year." The report noted the high occupation rate at Kings Hill and that in north Kent "Crossways continues to draw in major occupiers."

That applies to offices and industrial, where Schooner Park, Crossways has attracted a steady stream of new tenants, such as Milton Keynes Paint & Equipment. Broadly speaking, yields have fallen for office properties.

Hayes' gem solid

2011-09-30T15:34:00.000-07:00

A further indicator of the improving Thames Valley market is that Jones Lang LaSalle has sold the ten acre Hyde Park Hayes Business Park for £30.1 million to Melford Special Situations for a yield of 8.2%.

The deal follows an extensive refurbishment of the Art Deco gem, which is strategically located close to the motorway network and Heathrow. LaSalle’s Gary Player commented: “We bought the property to the market in March 2011 and it attracted strong interest from a wide range of institutional and value added funds, showing that there remains a significant demand for the right type of office properties in the south east.”

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Milton Park's purple patch

2011-09-30T15:33:00.000-07:00

MEPC’s Milton Park, one of the UK’s largest science and business estates, is having a purple patch with a host of new companies and its new status as an enterprise zone. In a one month period in the summer the innovation centre on the estate attracted eight new companies while three organisations relocated within the centre and a further three graduated to other premises. James Dipple of MEPC said: “Start up businesses are given support to succeed and expand to other offices on the estate.” The estate has become part of the Science Vale Gateway Enterprise Zone which is now within the Oxfordshire Local Enterprise Zone. Ansys, an engineering software company, is one of the growing companies at Milton Park and it has now expanded its facility to 1,134 sq.m. (12,203 sq.ft.).

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Manufacturing sets the pace

2011-09-30T15:31:00.000-07:00

The message from many parts of the region is that manufacturing is leading the way in the improvement in the industrial market.

That is what the government wants to hear, but it has come naturally without the help of the public sector. It is hard to know how far this trend can advance but it is certainly highlighted by DTZ in its research on the UK market with the comment that “manufacturing has been at the heart of much of the positive news during the quarter.” While that applies to the wider UK, other comments from the Thames Valley bear that out.

Tunde Adegbemile of DTZ said: “The Heathrow and West London markets tend to provide a good indicator for Greater London and the south east, and there are some signs of confidence becoming more established with some speculative developments likely to commence in the second half of the year.” Adegbemile added that “from a logistics perspective, demand continues to be dominated by the food retailers, although there are signs of improving activity from the health and pharmaceutical sector.” One of the largest deals for manufacturing capacity is by Albion Land, advised by Jones Lang LaSalle and White Commercial, for Goodrich CTG, a leading carbon fibre technology firm, to take 12,774 sq.m. (137,500 sq.ft.) at Network M40, Banbury.

The £9 million facility will allow Goodrich, part of the US Goodrich Corporation, to expand extensively and develop new products. This follows Albion Land pre letting the slightly smaller nearby property to First Line and forward selling it to a pension fund client of Whitmarsh Holt Young for £8.65 million. Simon Parsons of Albion Land commented: “We identified the site as one of the few locations between London and Birmingham able to accommodate these large units. On the strength of demand we are keen to consider other opportunities along the M40.”

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Sun Park available

2011-09-30T15:28:00.000-07:00

Sun Park, close to Junction 4a of the M3 motorway, is one of the largest office complexes to come onto the market for years, The 264,217 sq.m. former Oracle Office Park, which is in a 38 acre landscaped site, is now owned by a joint venture of Delancey and Landid and has the space for 3,000 people in three buildings as well as room for 1,351 cars. Trevor Silver of Landid said: “We anticipate that sectors such as pharmaceutical, IT, energy and research & development may be interested.”

There is also planning consent for a further two buildings totalling 14,186 sq.m. At Basingstoke’s Kingsland Business Park, SEGRO has let a refurbished office building of 1,234 sq.m. to ECI Telecom, a supplier of networking infrastructures.

SEGRO’s Chris Davies said:“This is the second building to let at Kingsland Business Park since the beginning of the year and achieved in just over four weeks.”

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Head of steam

2011-09-30T15:27:00.000-07:00

The industrial sector has picked up steam which has been highlighted by the pre let of a large shed on the Suttons Business Park, Reading to Brakes Group, a food supplier, the largest of its type ever in the town.

The deal, through Haslams and Lambert Smith Hampton (LSH), means Standard Life Investments will develop the 19,230 sq.m.distribution and storage unit as a chilled warehouse. Philip Hunter of LSH commented: “This deal alone equates to more than 60% of the total industrial space transacted in Reading last year. For large industrial occupiers, the shortage of big sheds poses a very real challenge when it comes to acquiring new premises.”

Haslams’Neil Seager said: “Brakes’ acquisition of this new facility is an important transaction, both for Reading and the wider Thames Valley industrial market. Not only does it mark the largest deal of its type, but it sees the arrival of a major new occupier to the town.”

Another major scheme in Reading sees Royal Mail seeking a developer to buy a 69,675 sq.m. mixed use scheme on the 6 acre site of a former sorting hub. Royal Mail has planning permission for a scheme which would have 370 homes, offices, shops, restaurants and a hotel. Martin Gafsen of Royal Mail commented: “We have a strong track record in using theproceeds from the disposal of surplus property to invest in the mail operation.” Meanwhile, the office take up in Reading recorded a 116% increase to 17,191 sq.m. in the first half year compared with the same period of 2010, reports Stephen Head of Hicks Baker. He added that: “There are concerns that continuing economic uncertainty and fragile business confidence is slowing the rate of deals in the pipeline and this means the market may struggle to match the total take up of 2010.”

Head notes that the outcome will depend on the major enquiries in the market, such as Reading Borough Council and ING. He added that: “The market is relying on at least one of these ‘trophy deals’ coming to fruition in the next few months. We have to consider this (the take up in 2011) in context and remind ourselves that 2010 was already a considerable improvement on and 150% up on 2009.” The council’s decision should come in October. ING is looking for around 8,361 sq.m, more than it occupies in Reading at the moment where the lease ends in 2014.

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Optimism to the fore

2011-09-30T15:25:00.000-07:00

Colliers International has looked ahead to what the figures for take up in the third quarter could achieve and has put it above 46,450 sq.m.etres (500,000 sq.ft.) That reverses the poor showing in June-September. Guy Grantham of Colliers said: “Above all it remains the technology, media and telecoms (TMT) sectors that are leading the recovery in both take up and demand.”

“The main driver has been demand from software companies who have accounted for 31% of TMT transactions. Networking and data storage providers have been one of the most active subsections,” Grantham added.

In his view there is “much to be optimistic about.” That is true of Ealing where Redwire DC Ltd has signed a deal with the council for an innovative scheme in the West London borough that will have a 1,617 sq.m. (17,400 sq.ft.) data centre alongside a Premier Inn 165 bedroom hotel. The £45 million development will be on the site of the council’s former regulations office. The original plan was to incorporate an office but the economic stagnation since 2007 has ended that part of the scheme.

What is noticeable about the West London market is that most office centres are experiencing increasing rents. That applies to Chiswick, which has the highestat £403.50 a sq.m. (£37.50 a sq.ft.), to Uxbridge and Hammersmith.

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More space at Chiswick

2011-09-30T15:23:00.000-07:00

Chiswick Park, which Blackstone bought for £480 million from the Chiwich Park unit trust in March, has shown how demand for space is healthy enough. It is currently talking to SOS, the security company, about a letting of 4,645 sq.m, giving it the incentive to embark on a new phase of development at the park. Blackstone proposes to invest £70 million to increase the size of the park to 130,060 sq.m.

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Companies are cash rich

2011-09-30T15:21:00.000-07:00

While politicians bemoan the slowing of the economy, companies have been prudently piling up the cash in their balance sheets. What is preventing them from spending the money on mergers, better properties or machinery, is a lack of confidence throughout the global system. That will change in due course and they will go for growth. That particularly applies to the technology sector, the lifeblood of the Thames Valley. So it is encouraging that a number of major companies are now seeking space, such as Huawei, Nokia, ING, BP and Hasbro.

Their total requirements could be 35,302 sq.m. (380,000 sq.ft.) to which should be added substantial requirements from Centrica and an electronics manufacturer. That should be compared with the latest analysis from Jones Lang LaSalle with a poor second quarter take up of less than half that of January-March, giving a six months’ total of 52,210 sq.m. (562,000 sq.ft.). But there has been a surge in requirements to 297,280 sq.m. (3.2 million sq.ft.), which is 17% up on the same period of 2010; a healthy pointer to the future.

JLL’s James Finnis commented: “Grade A supply is being erodedand the development pipeline, which remains at a record low, is failing to replenish it. We are forecasting a point in 2012 where, assuming current levels of demand, rents will increase markedly for the best areas.” Another indicator of a healthier market is that Finnis reports 1.8 million of office inspections in the second quarter, well up on January-March.

Experience varies from town to town with Simon Fryer of Fryer Commercial reporting that “July and August were quieter than usual. Fortunately, we have been much busier in September.”

He notes the fierce competition between landlords to keep tenants and do new lettings. Fryer points to the start of Bracknell Regeneration which will bring in retail facilities, notably a new Waitrose supermarket. As far as the office market is concerned, a letting of one of the large buildings available (there are four totalling 46,450 sq.m. would be a real boost to confidence.

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Still building ships

2011-09-29T14:34:00.000-07:00

As the long term transformation of the River Clyde proceeds, there is still a reminder of its great history as the world’s shipbuilding centre with three Type 45 destroyers being fitted out and a section of the new Queen Elizabeth aircraft carrier sitting on a barge.

In contrast, the new Clyde riverside is being built around the shipyard with the Riverside Museum, BBC centre, hotels, shops, houses and offices. Eleanor McAllister of Clydebank Re-built said: “It is important to have a long term plan for the Clyde corridor of at least 20-25 years. There are problems to overcome such as contamination from the shipbuilding but we are stitching the Clyde into the city centre.”

Although cuts in government spending are on the cards, McAllister wants “everybody to hold their nerve and continue with regeneration.” That particularly applies to Clydebank which has the “benefit of a good board and local partners,” she added. Mark Barton of Clyde Waterfront points out that the regeneration of the Clyde is one “of the largest in the UK with 68 projects under construction, including the massive NHS Southern General Campus costing £842 million as well as two other hospitals.”

The breadth of the plans is considerable and includes the Scottish Hydro Arena concert venue which will open in 2013. The expectation is that this will have a similar impact to the O2 in London. David Rooney of Glasgow Regeneration Agency said: “We have introduced residential accommodation to the banks of the Clyde and built two new bridges which have opened up the southern side of the city. This means the area has been linked to the International Financial Services District, opening up areas for further development and providing access to jobs.”

Rob Pryce, also of Glasgow Regeneration Agency, added that “it is important to bring the local population and businesses into the process of regeneration so that they stay in the area and grow their activities.” This is also helping the expansion of tourism “where the Glasgow brand has changed in the past few years to that of a business centre.”

It is worth remembering that Glasgow has a number of world class museums and art galleries, including the new Riverside Museum on the Clyde designed by Zaha Hadid. This houses Glasgow’s transport collection.

Selling regeneration The extensive waterfront regeneration in Glasgow and other Scottish cities is the main reason why it will host the 8th WaterfrontExpo in November.“This shows our commitment to regeneration in the cities,” said Derek McCrindle of Scottish Enterprise,” and we have a suitable location for it at the Crown Plaza Hotel, SECC Glasgow.” It will be held on the 2nd and 3rd of November. The event will break new ground by concentrating on the actual experience and progress of seven major cities in turning their waterfront regeneration plans into reality - and the new investment opportunities this has created. McCrindle said: “The conference will address the shortcomings of how master plans and economic aspirations have turned out in practice by offering a combination of speakers and guided tours of the Glasgow and Edinburgh waterfronts as well as city workshops.”

New business park Regeneration, together with the extension of the M74, has brought immediate rewards with two UK development companies planning to invest £14 million in the Clyde Gateway East Business Park. Scot Sheridan will develop industrial space of 5,340 sq.metres while MEPC, in its first major scheme in Scotland outside Hillington, will build 13,006 sq.metres. The site has been undeveloped for 40 years and the two schemes will support 700 jobs. Clyde Gateway East is a new business park of 12 hectares with a capacity for industrial space of 37,160 sq.metres.

MEPC’s Rick de Blaby commented: “It is an important strategic acquisition for us, where we hope to replicate and deliver a modern Hillington Park. The infrastructure that Clyde Gateway has committed to this area of Glasgow is enormous and we are happy to invest alongside that.” Another new scheme in the Clyde Gateway area is the £38 million headquarters for the Strathclyde Police, less than one mile from the site of the Commonwealth Games.

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Lightening up

2011-09-29T14:32:00.000-07:00

The mood has lightened in Edinburgh as the office market experiences a stronger performance. As a result there is a growing appetite for new developments, as shown by Gladedale seeking a funding partner for the next stage of its £450 million Quartermile project at the 19acres of the former Edinburgh Royal Infirmary site.

When completed, it will have 900 homes, two hotels, retailing, leisure, 7 acres of landscaped gardens and 35,515 sq.metres (350,000 sq.ft.) of offices. Another major site has come onto the market with Lloyds Bank putting the 13 acres of the former Scottish & Newcastle Brewery next to Edinburgh’s Exchange District on the market. It has planning permission for a mixed use scheme of residential, leisure, student accommodation and retailing.

Jasper Masters of CBRE, who is reviewing funding options, said: “A lot of investors will want a trophy site within the UK.” The difficulty of finding suitable investments in London means “it makes sense to look further to places that are still internationally recognised and doing well, such as Edinburgh.” Stewart Taylor, also of CBRE, said of the Edinburgh office market that “despite the largely unchanged levels of new build stock, the indicators are encouraging following a good first quarter in terms of take up and an increasingly tangible schedule of demand.”

“The availability of mid market large floor plates, good quality accommodation on flexible terms has proved attractive to occupiers such as Amazon.”

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Salmon Flys

2011-09-29T14:30:00.000-07:00

A joint venture between Salmon Harvester & Frogmore Developments is planning a major new HQ building and hotel on a prime 10 acre site next to Edinburgh Airport. The

JV behind the £300m proposal has claimed it could generate £4.4bn for the Scottish economy and create 3,600 jobs within 20 years. Salmon Harvester is also planning a mixed use scheme with NF Mutual at 50 Argyle Street in conjunction with the adjoining Punch Taverns. The scheme will have a new retail unit and a pub to replace the Cairns Public House together with a hotel on the upper parts. The end investment value is estimated at £12m.

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Good credentials

2011-09-29T14:28:00.000-07:00

Credential Holdings is one of a number of solid privately owned property companies in the UK which has quietly and steadily built up a diverse portfolio. Its latest deal is to lease 1,858 sq.metres (20,000 sq.ft.) in Tay House, Bath Street, Glasgow to Barclays Bank. Earlier, RBS and a government department had quit the building near Charing Cross leaving 3,716 sq.metres (40,000 sq.ft. vacant). That allowed Credential to upgrade the facilities at the popular office block.

The other major office property in Glasgow owned by Credential is Doges, Templeton on the Green, a fascinating former carpet factory which has been subject to a mixed use

refurbishment. This has the advantage of being close to the new M74 extension, main bus routes and railway station. It is also important for the future Commonwealth Games in 2014 as it houses Sportscotland (the administrative body) and is close to the site of the games. Within the complex there are modern tech offices, studio suites, a gym, nursery, micro brewery and restaurant and a hot food takeaway.

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Selling shops

2011-09-29T14:26:00.000-07:00

One of the odd things about the commercial property market this year has been the buoyancy of the investment market for shopping centres and retail parks. The oddity is because the retail sector has been having a hard time. At the front of the queue to buy has been LaSalle Investment Management which has now paid £4.85 million for the 11,148 sq.metres (120,000 sq.ft.) Artizan Shopping Centre, Dumbarton, on behalf of pension clients, from Ireland’s National Asset Management Agency. This gives a yield of 13.6%, but the centre is 54% vacant by leasing area.

LaSalle said it would invest substantially to reinvigorate the centre to raise the standard for consumers. This is the seventh shopping centre purchased by LaSalle since 2009. LaSalle’s Andrew Bull commented: “This purchase demonstrates that value within the secondary market is beginning to come through and we have put together a solid business model to take the asset forward.”

In another retail transaction, Morgarth Group, through Colliers International and Morton Fraser, has paid £12 million for St Catherine’s Retail Park (South), Perth on behalf of an overseas investor. The yield of 6.82% reflects that it has strong medium term growth potential and a good range of retailers including Wickes, Pets at Home and JJB Sports.

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Soar away Aberdeen

2011-09-29T14:24:00.000-07:00

As long as the oil price remains high, so the office market in Aberdeen is designed to set the pace in Scotland.

That is the message from the first half when take up soared to 38,535 sq.metres (414,804 sq.ft.), substantially exceeding the total for each of the previous two years. Added to this, rents sit at £333.68 a sq.metre (£31 a sq.ft.), which is above that for all UK regional cities.

As an indicator of future growth, only 8% of the 77,315 sq.metres (832,242 sq.ft.) of available stock is newly completed Grade A. The clear message is that if you want new space, then go for a pre let.

Mark McQueen of CBRE said: “The office market is in extremely good shape at the moment due to some significant transactions in the first quarter. It is very encouraging (that 2010 figures were exceeded in the first half) in the light of the challenges of recent years.

The market will remain buoyant for the remainder of the year.” The industrial market is also buoyant. Allied International, a distributor and stock manager of fittings, has leased a 1,342 sq.metres (14,446 sq.ft.) unit with head tenant Iron Mountain on the Altens Industrial Estate, Minto Avenue, Dyce.

Craig Watson of Jones Lang LaSalle, who acted for Iron Mountain together with FG Burnett commented: “It is clear that supply is tight in Aberdeen and occupiers have limited choice. This sub letting was achieved early on in the marketing process at the passing rent, helping Iron Mountain to significantly reduce their ongoing liabilities as part of their relocation to the north of the city.”

Also in Aberdeen, MWB Group Holdings, has done a sale and leaseback deal on its Malmaison hotel development for £16.1 million. The property has been sold and will be leased back from CIP Property on behalf of Citibank International as trustees for Aviva Investors Property Trust. Malmaison will run the hotel on a 35 year lease.

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Inverness performs

2011-09-29T14:23:00.000-07:00

Inverness, and the area around it, has been an active market in the past year. The latest office deal, the largest in Inverness this year is the 465 sq.m. let in Oykel House, Cradlehall Business Park to the telecommunications company Highnet. Sandy Rennie of agent J&E Shepherd said: “As the largest office transaction in Inverness so far this year, the deal confirms the buoyancy of demand in the competitive market.” J&E Shepherd also acted for Mapeley in the sale of the 427 sq.m. Phoenix House, an office building at Wards Road, Elgin. It is 75% let to government agencies.

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Anchoring Maxim

2011-09-29T14:21:00.000-07:00

The financial restructuring of Maxim Office Park, Lanarkshire has brought a swift success with the anchor letting to the Scottish Environment Protection Agency (SEPA). It has leased 5,574 sq.metres (60,000 sq.ft.) in the Maxim 6 building, which allows the agency to bring staff under one roof and provide a laboratory to complement the one it has in Aberdeen.

David Gebbie of Arisaig Property Partners who are the new asset managers of Maxim said the financial changes allowed “both parties to achieve a leasing deal that previously couldn’t have been achieved.”

The importance of the new facility was emphasised by Scotland’s Environment Secretary, Richard Lochhead, who said: “The move will help develop closer working between partners within Scotland’s public sector. The new facility will house another first class laboratory and achieve excellent standards of energy efficiency and environmental performance.”

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Mixing Business and nature

2011-09-29T14:19:00.000-07:00

Hillington Park has become the first estate of its kind to be awarded a Biodiversity Benchmark by the Wildlife Trusts. This is an accolade for MEPC, the majority landlord at the 75 year old estate on the Glasgow and Renfrewshire boundary, because it has pursued a policy of environmental improvements which recognised the potential for encouraging wildlife to thrive in the park. Peter Dorans of the Wildlife Trust said: “Only a handful of organisations have achieved the standard of site management which meets the requirements of the Biodiversity Benchmark.”

There are small green sites dotted throughout the park, which have been used to support various wildlife activities, including a wetland and protective nesting boxes for small birds. MEPC’s Grant Edmondson said: “This is a tremendous endorsement of the work which has been led by our marketing and customer manager, Alison Clark.“ Clark added that, “we have been working on this project since 2008.”

At the Pegasus Business Park, Hillington, St Modwen has let 2,044 sq.metres (22,000 sq.ft.), most of which was to the furniture retailer Morale Furnishings. St Modwen’s Michael Hosie said: “There is great potential for further development here and the opening of the M74 extension has increased the site’s appeal.”

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Swinging Edinburgh's way

2011-09-29T14:16:00.000-07:00

The swing of the pendulum between the Scottish cities appears to have moved favourably for Edinburgh but less so for Glasgow while Aberdeen powers ahead on the crest of an oil wave. Even so, the level of activity remains weakened by the recession that started in 2007 and has hit confidence hard throughout the UK.

That is only part of the picture. The other is of a more resilient industrial sector and the impact of such improvements as the regeneration of the Clyde and the new M74 link.

According to the Registers of Scotland, commercial property transactions are down to the level of 2007 with a total of £890 million in the first half, which is £200 million below January-June 2010. David Melhuish of the Scottish Property Federation said: “Generally the market is bumping along the bottom.” As far as investment is concerned, in the first half it totalled £165 million, down from £180 million in the preceding six months. Half of this was accounted for by Glasgow and Edinburgh.

Campbell Docherty of CB Richard Ellis said: “There is still good demand from UK institutions and significant interest from overseas investors, specifically German open ended funds, in the prime regional office market although a severe lack of investment products and a shortage of development pipeline is hampering deal volume.” The CBRE report on the market highlights the stronger performance of industrial property compared with offices so far this year. Ryden’s Alan Gilkison said: ”The mid sized market, up to 3,716 sq.metres (40,000 sq.ft.), has been quiet while the smaller sector as well as larger sheds has improved.”

He noted that there had been a shift in demand for space from distribution to manufacturing. “The level of requirements is encouraging and we expect deals in the larger space to improve in the next few months.” What is clear from Gilkison and other property professionals in Glasgow is that the new M74 extension, which completes the ring road, is having a significant impact on business including opening up brownfield sites for development.

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Tennis tournament property aces

2011-09-28T14:54:00.000-07:00

More than 30 property professionals in Hampshire have battled it out in the 9th annual Solent Property Tennis Tournament.

The fiercely-contested event, held on 22nd September at the Hampshire Tennis & Health Club, by the Rose Bowl stadium near Southampton, was organised by Russell Mogridge of Hughes Ellard.

Sponsorship was provided by developers City Estates, chartered accountants CW Fellowes, solicitors Paris Smith and office fit-out specialists DMW, with backing from Southampton Property Association.

Taking part were commercial property agents, developers, lawyers, financiers and accountants. Russell Mogridge from Hughes Ellard, said: “Once again the tournament proved a big draw to property professionals in and around Southampton and Portsmouth. It was also a chance to share market intelligence in an informal, fun environment.”

Winners of the men’s doubles were Tim Clark, the retail specialist with Hughes Ellard, and James Daniels, a property taxation analyst with property tax consultants E3. Andy Goodridge, of property development and investment company City Estates, and Lucy Horne, a commercial property solicitor at legal firm Paris Smith, took the honours for mixed doubles.

The wooden racquet - the tournament’s equivalent of the wooden spoon - was presented to David McGougan of commercial property agency Lambert Smith Hampton for a comically haphazard smash.

Winchester wins

2011-09-28T14:52:00.000-07:00

Old established market towns and old established cities in the UK have often avoided the worst of the economic downturn. That appears to be true of Winchester which, said Goadsby’s Annelies Culley, “is still proving to be fairly resilient.”

She notes the “steady demand for city centre offices.” In particular she mentions the refurbished Athenia House, Trafalgar House and St Swithuns as being in demand. “There has been a lot of excitement regarding the proposed Silver Hill development in the city centre. The mixed use scheme will include high quality offices, retail and residential accommodation. The industrial market is still seeing a good level of enquiries for premium space.” Goadsby has also recently analysed the market in another market town, Romsey where it has seen “a positive start to 2011 with a number of office lettings.” Goadsby’s Ben Welch said: “The market town of Romsey offers an attractive working environment and good access to Winchester and Southampton.”

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SEGRO success

2011-09-28T14:48:00.000-07:00

The steady letting of property on SEGRO’s developments in Portsmouth and the M27 corridor is a good indicator of the performance of the region’s industrial market. At the Railway Triangle earlier this year Fraser Freight took a 10,460 sq ft warehouse/ production unit to add to its existing head office and warehouse space elsewhere in the city.

In May, SEGRO let a 50,000 sq.ft. production/warehouse unit at its Unit 1 Trilogy scheme, Segensworth, to Contego Packaging on a fifteen year lease. The Trilogy scheme is now fully let. SEGRO has also let a 10,667 sq.ft. industrial unit to Snows Group, a motor dealership, on a twelve year lease, at Mitchell Way, Portsmouth.

On Voyager Park, SEGRO has let an 8,775 sq.ft. unit to Transas for a new training facility. The company is a developer of software, integrated solutions and hardware technologies to the marine and aviation industries.

It has also let a slightly smaller unit to existing occupier, Stone Bridge Global. SEGRO has now sold or let 75% of the Explorer and Discovery phases at Voyager Park, which total 1,487 sq.metres (160,000 sq.ft.). Lambert Smith Hampton’s Adrian Whitfield highlights the strength of the south coast industrial market. He said: “With a general lack of available property, this year has seen landlords in a stronger position and in some instances it has led to the reduction in the level of incentives.” But rents remain static and while the market is tough due to the economy it is mainly a result of a lack of stock. “There are a number of requirements which could be the catalyst for a developer to build a speculative scheme. However, pre let, design and build occupier led deals are more likely,” Whitfield added.

Ross Moyler from Vail Williams commented “that we have seen steady levels of industrial take up over the last 6 - 12 months which is encouraging bearing in mind the backdrop of the current economic uncertainty. We have seen a handful of larger transactions which have further reduced the available stock of bigger buildings.“

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Industrials set the pace

2011-09-28T14:46:00.000-07:00

The buoyancy of the industrial market has spurred investment deals, in particular in the business parks and estates around Southampton. For example, Axa Real Estate Investment Managers has sold the 4,645 sq.metres (50,000 sq.ft.) Solent Gate Industrial Estate, Fareham through Lambert Smith Hampton to Threadneedle Property Unit Trust for £3.82million, or a yield of 8.2%. Axa’s Ian Pollard commented: “The sale crystallises the value we have created and allows us to look for new investments where we can add value for our client.” In Eastleigh, Oceanic Estates has paid Craigard Eastleigh LLP £3.8 million for the 9,290 sq.metres (100,000) Avalon warehouse in Parham Drive.

The warehouse is sublet to the Jamie Oliver Group and was an off-market transaction. Jerry Vigus, from Lambert Smith Hampton commented: “We have stayed close to this property, knowing that it could potentially be bought. We indicated that a quick decision had to be made and therefore approached Oceanic Estates, knowing that the business had the resources available to buy the property and move quickly. We were then able to negotiate terms and purchase the unit within 14 days of agreeing a price.”

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High for Highcross

2011-09-28T14:45:00.000-07:00

Although city centre office lettings in the region are slow, the out of town business parks have really performed. Lakeside on the former IBM factory at Portsmouth has experienced a spate of lettings culminating in the Southern Co-operative taking 1,593 sq.m. The park now has 70 companies employing 4,500 people, including IBM which is still located there. Russell Mogridge of Hughes Ellard said: “The 130 acre park has attracted more than half of the lettings in the Solent corridor since January.

There are a further four deals totalling 11,148 sq.m. at various stages of completion.” The business parks may be where the action is now but Southampton City Council is pushing hard to make the city centre more attractive for business. It has welcomed the plan by Arcadian Estates, part of the London & Henley Property Group, for the redevelopment of the East Street Shopping Centre. It will be demolished and a Morrisons’ food store constructed on the site in partnership with Centros. As part of the scheme, there will be new access between East Street and Evans Street. In turn that will help, said John De Stefano of London & Henley, “our nearby Capital House office building.”

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MAG builds more at airport

2011-09-28T14:43:00.000-07:00

MAG Developments has the determination to undertake significant development at its UK airports even if Manchester is far and away its most important facility.

At Bournemouth, it has a 10 year programme and has submitted a plan for 41,991 sq.metres (452,000 sq.ft.) at its Aviation Business Park. The majority of this will be warehouse and industrial space on the 35 acre site.

It is part of a phased plan to expand the capacity at the airport, where it has recently invested £45 million. David Roberts of MAG commented: “These plans provide a clear long term strategy for the business park and will complement existing stock on the estate. That will attract investment through development opportunities.” It has proved its point with Aviation Business Park where there is an occupancy of around 95% after two lettings totalling 2,320 sq.metres (24,967 sq.ft.), one of which was to Talard Thai which relocated from nearby Christchurch. The company supplies a wide range of foodstuffs and flowers from Thailand.

The other letting was to the specialist aerospace interiors manufacturer, AIM Aviation. The two lettings follow a 3,279 sq.metres (35,295 sq.ft.) pre let to City Link. City Link’s Steve Jones said the relocation from a nearby property would allow the company to expand its operations in the Bournemouth area. “The demands of our customers have changed dramatically. They are very different from 10 years ago and we have to accommodate that,” Jones added.

Aviation Business Park currently provides 139,350 sq.metres (1.5 million sq.ft.) of mixed use business space and is home to 140 businesses with a working population of over 2,000.

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Developing Southampton

2011-09-28T14:41:00.000-07:00

Three developments in Southampton, one completed, one with planning permission and the other in the planning stage, continue the improvement to the city. Planning permission has been granted for a new 9,290 sq.metres (100,000 sq.ft.) arts complex, retail space and restaurant units in a joint venture between the council and Grosvenor.

There will also be 29 flats on the site which is around the Guildhall Square. Councillor Royston Smith commented: “Another key development in the Cultural Quarter is coming to fruition. It will be a place where all the arts can thrive and draw in hundreds of thousands of visitors every year.” The second new scheme is a 155 bedroom Premier Inn at West Quay which Cllr. Smith said “is a key element of the West Quay development, which is part of the city’s renaissance plan.” The third project is a plan for Southampton’s tallest building. The residential scheme at Ocean Village with 28 storeys is being developed by Allied Develeopments.

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High in Eastleigh

2011-09-28T14:39:00.000-07:00

Eastleigh has been one of the best performing towns in the region with all the markets benefiting from the fine transport system of the M27 and M3 motorways, fast rail connections and the airport. In the office sector, occupancy remains high, said Ben Welch of Goadsby, helped by “affordable accommodation.”

Welch cites the success of Eastleigh Borough Council in disposing of their properties, such as the Black Horse Building where only a small amount of space is vacant. It is a similar picture for industrial property, typified by the council’s Shakespeare Business Centre which is almost fully occupied. Paul Ramshaw of Eastleigh Borough Council said: “The town centre continues to go from strength to strength, such as the arrival of the Cheque Centre which has brought new jobs and helped maintain the high level of high street occupancy.“

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Fair wind for Weymouth

2011-09-28T14:37:00.000-07:00

While many parts of the UK have experienced trying commercial property markets, the south coast has bucked the national trend with a period of improvement.

That applies from Hampshire to Dorset. The major urban areas have benefited from their broadly based economies, taking in services and manufacturing, but it is noticeable how Weymouth, not noted for either of these two activities, has become more dynamic. Of course that is mainly due to it being the host for the 2012 Olympic yachting events but the hope must be that it has been given a new lease of life that will break the log jam of development.

It is clearly apparent how the town now buzzes with activity, helped by a new main road. At the moment it appears that Weymouth is a star performer for the regeneration lobby. The market in the core area of Southampton and Portsmouth, (the Solent corridor) has been solid and even retailing has not been as poor as in many parts of the UK. Russell Mogridge of Hughes Ellard said: “The office level of take up in the region is above pre-recession levels at the end of the third quarter, reaching 32,515 sq.m. compared with the 10 year average of 23,225 sq.m.“ A significant part of this has been at Highcross’ new business park, Lakeside in Portsmouth. This has reached a 65% let in building 1,000 by achieving 9,290 sq.m. of lettings this year. Phase two of the development will begin soon.

Among the trends noted by Mogridge are companies relocating to single floor plates to aid team performance and staff morale as well as improving their working environment. “We have seen movement in the professional service sector, such as recruitment, legal and accountancy,” he added. Nik Cox of Hughes Ellard said: “We are hoping that the out of town activity will percolate to the Southampton city centre, which has seen a limited office take up, probably reflecting the lack of Grade A space available.” Cox also noted that the manufacturing sector had been active and reflected the diverse economy from shipbuilding, defence and high tech. Jones Lang LaSalle’s Jason Webb said: “There are still significant opportunities for occupiers to obtain costs savings on the M27 but the lack of speculative office development means that the pipeline will remain severely limited and as Grade A supply reduces further, the window of opportunity for tenants is expected to close.”

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Asians Buying

2011-09-28T01:15:00.000-07:00

The foreign buying of property in London covers commercial and residential and it is significant that Asian buyers were responsible for 60% of the new build deals in the six months to April. They have been active across London, such as in the mixed use scheme at Kings Cross which was extensively marketed in the Far East. This helps to fuel the enthusiasm for new residential schemes, such as at Kings Reach Tower, SE1, where CIT Group and Jadwa Investments have a mixed use project with 173 flats.

Nearby, the refurbished Sea Containers House will become an hotel run by the US group, Morgans. In the City, there is strong opposition to the conversion of office buildings to hotels or residential led by Planning Chief, Peter Rees, who has asked Secretary of State Eric Pickles to exempt the city from planning changes that encourage switching from offices to homes. The City of London receives around 10 enquiries a week on conversion of properties to residential use.

Summer Break

2011-09-28T01:12:00.000-07:00

After a buoyant recovery comes the adjustment as the UK economy slows and the office market comes up against the shortage of Grade A space. The question at the moment is whether the slowing of the momentum will last for a lengthy period or whether it merely reflects the current market and economic realities, particularly as worldwide confidence has dived.

Many of the fundamentals still signal growth, such as the fact that the economy in London is bucking the national trend and growing at a reasonable rate. Also there remains demand for offices in all sub markets. For example, Colliers reports that availability in central London has declined to a 30 year low and Grade A space is down 17%.

Another way of looking at it is that net absorption in the West End in the first quarter of the year was at the fastest rate since 2005. Mike McKeith of Colliers commented: “Competition for Grade A space will remain the key driver of rental uplift during 2011. Absorption appears to have peaked in the city and is close to doing so in the West End. We expect to see increased absorption of good quality second hand space as Grade A becomes scarcer.” Tony Joyce of GVA notes that the “market has been quiet for some months although there are lots of requirements.”

Even so, the serviced office market continues to perform strongly with officebroker.com reporting a 20% increase in deals in April-June compared with the same period a year ago. That can be evaluated against figures from Capita Symonds that take up in the second quarter in central London was below average, with the City down 36% on the same period of 2010 and the West End down 9%. Another shift in the balance of the market is the increased amount of prime residential development which cost consultant EC Harris calculates at £21 billion over the next nine years in a total of 9,000 units.

Industrials to the fore

2011-09-28T00:35:00.000-07:00

Confidence is coursing through the commercial property market throughout the region led by a buoyant industrial sector. This has been enhanced by the widespread backing for the Solent Local Enterprise Partnership from the major companies, universities and the public sector.

In Southampton substantial new developments have been given the green light and the strength of the market has persuaded developers to ready new plans. This indicates a healthier situation for pre lets. The economic improvement highlights the natural advantages of an area with major ports, a highly skilled workforce and good communications. Adrian Whitfield of Lambert Smith Hampton (LSH) said: “There has been a high take up of industrial space since mid 2009 but in the current year this could be down because of a shortage of stock. There is a lack of development on a speculative basis.” That has led to more design and build schemes spurred by the shortage of sites.

Another effect is that landlords have been able to rein in the length of rent free periods to about 1 year on a 5 year lease. Andrew Hodgkinson of Goadsby commented “It would not be a surprise to see rents in this sector begin to rise in the second half of 2011.” The central problem is that the shortage could mean that occupiers will look outside the region for their properties, although that situation has not been reached yet. For example, one major site being developed is the 140 acre former power station site of Oceanic Estates’ Marchwood Industrial Park, Southampton. This is being marketed by Adrian Whitfield (LSH) and Matthew Poplett of King Sturge who said: “Marchwood is a unique industrial estate offering opportunities for a variety of occupiers.”

The buoyant industrial market suits SEGRO very well and it has achieved a host of transactions. At Vista Park, Nursling, Pneumax has bought a 1,247 sq.metres (13,427 sq.ft.) unit and SEGRO has also sold two sites on its Voyager Park, Portsmouth. Wernick Group, a hirer of portable and modular accommodation, has bought a 2.5 acre site for a regional depot and Landscaping Supplies has purchased a 1 acre site. SEGRO’s Chris Davies said: “This represents real progress achieving our strategy of selling serviced land parcels at Voyager Park North.”

Leading the way in Southamption

2011-09-28T00:23:00.000-07:00

The improvement in the commercial property market is being underpinned by the determination of some local authorities to push the green button for regeneration. What will gratify the government is the emphasis on manufacturing and industry, whether established businesses or start ups. A good example of this is a new maritime and marine innovation quarter at the former Vosper Thornycroft shipyard at Woolston, Southampton.

The South East England Development Agency (SEEDA) has linked with Southampton City Council, with the backing of private finance, to drive this
forward on the site of Centenary Quay. Together with 1,600 residential units, shops and offices, there will be buildings for marine businesses to encourage
new products and innovation through access to top research.

According to SEEDA, manufacturers have expressed considerable interest in participating in the new marine quarter. SEEDA’s Chief Executive, Pam Alexander, said: “We will see a thriving hub of marine manufacturing emerging, linked closely to the higher education strengths of the city.” The development will be helped by the creation of the Solent Local Enterprise Partnership which has been driven by the local business community and is supported by the four universities in the area together with the local authorities. The area has a population of 1.3 million and 50,000 businesses. Doug Morrison of Associated British Ports said: ”The port is at the heart of the vitally important maritime sector and ABP welcomes this initiative of a business led LEP that is focused on putting the business community at the core of economic growth in the Solent area.” On top of this, Morgan Sindall Investments (MSI) has been appointed by Southampton City Council as the preferred developer for the £450 million Royal Pier Waterfront scheme. MSI’s Ernie Battery said: “This key site provided the opportunity to position Southampton at the forefront of internationally recognised waterfront schemes.”

Another major scheme in Southampton is Admiral Quay, Ocean Village, where Allied Developments has bought the site for a major mixed use scheme of residential and leisure from Barratt Homes. Confidence is coursing through the commercial property market throughout the region led by a buoyant industrial sector. This has been enhanced by the widespread backing for the Solent Local Enterprise Partnership from the major companies, universities and the public sector. In Southampton substantial new developments have been given the green light and the strength of the market has persuaded developers to ready new plans. This indicates a healthier situation for pre lets. The economic improvement highlights the natural advantages of an area with major ports, a highly skilled workforce and good communications. Adrian Whitfield of Lambert Smith Hampton (LSH) said:
“There has been a high take up of industrial space since mid 2009 but in the current year this could be down because of a shortage of stock. There is a lack of development on a speculative basis.”

That has led to more design and build schemes spurred by the shortage of sites. Another effect is that landlords have been able to rein in the length of rent free periods to about 1 year on a 5 year lease. Andrew Hodgkinson of Goadsby commented “It would not be a surprise to see rents in this sector begin to rise in the second half of 2011.” The central problem is that the shortage could mean that ccupiers will look outside the region for their properties, although that situation has not been reached yet. For example, one major site being developed is the 140 acre former power station site of Oceanic Estates’ Marchwood Industrial Park, Southampton. This is being marketed by Adrian Whitfield (LSH) and Matthew Poplett of King Sturge who said: “Marchwood is a unique industrial estate offering opportunities for a variety of occupiers.”

The buoyant industrial market suits SEGRO very well and it has achieved a host of transactions. At Vista Park, Nursling, Pneumax has bought a 1,247 sq.metres (13,427 sq.ft.) unit and SEGRO has also sold two sites on its Voyager Park, Portsmouth. Wernick Group, a hirer of portable and modular accommodation, has bought a 2.5 acre site for a regional depot and Landscaping Supplies has purchased a 1 acre site. SEGRO’s Chris Davies said: “This represents real progress achieving our strategy of selling serviced land parcels at Voyager Park North.”

Space shrinks

2011-09-27T15:05:00.000-07:00

Bristol’s industrial and distribution market performed strongly in 2010 with 193 transactions totalling 213,670 sq.metres, the highest total since a peak in 2007. The driving forces were improved manufacturing and distribution space for retailers.

Chris Miles of King Sturge, Chairman of the Western branch of the Industrial Agents’ Society, said: “The industrial and distribution market in Bristol remains relatively buoyant. It is very encouraging to note that the UK manufacturing sector finished strongly and indeed the last quarter of 2010 saw it record its best trading conditions for 16 years.” DTZ’s Simon Lloyd said: “The South West continues to have the lowest availability of stock in the UK with a limited amount available to occupiers.

The market was, however, buoyed by a number of larger transactions in retailers Morrisons and the Co-op but these were land acquisitions.” Avonmouth is the key location for distribution which is why the Co-op wanted a distribution facility here. This is now being funded by AXA Real Estate Investment Managers. The 40,412 sq.metres scheme is being developed by Stoford and Gallan Group. Stoford’s Dan Gallagher said: “In the current economic climate, forward funding is one of only a few forms of development capital available and we are pleased to work with AXA and continue our long term relationship with the Co-op Group.”

Big sheds dominate

2011-09-27T15:03:00.000-07:00

Major distribution facilities are at the heart of a vibrant industrial sector which has emerged strongly from the recession. That is because geographical necessity plays a significant role. That applies to Swindon where the Japanese car firm Honda performs so well and could play a bigger role in the immediate aftermath of the earthquake in the home country.

Its key location brought DIY firm B&Q into a massive 74,007 sq.metres (796,649 sq.ft.) shed on Gazeley’s G Park, South Marston, which was completed two months early. That is a change from the phased occupation that was originally planned. The site has the capacity for two more large sheds, although smaller than B&Q’s, at 40,876 sq.metres (440,000 sq.ft.) and a quarter of that size.

Gazeley’s Charles Blake commented: “Deliverability is the key. The buildings have planning permission and the roads are going in because of B&Q.” In this case the DIY firm bought the freehold. Another substantial development is by UBS Triton Property Fund which has demolished the former Woolworth shed and, working with Graftongate, is seeking planning permission for a 41,805 sq.metres (450,000 sq.ft.) facility although it might opt for a solar photovoltaic park. Also at South Marston, RO Developments (ROD) has sold a 384 sq.metres (4,136 sq.ft.) unit at South Gate for £340,000. Richard Bourne of ROD said: “RO24 Swindon continues to prove popular with local businesses and private investors. We only have 5 units remaining and we expect these to go soon.”

Meanwhile, there has been an improvement in the office market in Swindon, said Kenington’s Jeremy Sutton, with an increase in enquiries in the first quarter and more buildings going under offer. “There are opportunities in lease renewals and companies are now looking to move to better space. This is mainly smaller occupiers although there are some more substantial enquiries in the market.” He expects the totally rebuilt Station Square office property, which at 4,645 sq.metres(50,000 sq.ft.) is one of the largest in town, to do well.

Creating jobs

2011-09-27T15:01:00.000-07:00

While sentiment in manufacturing is stronger than for over a decade, there is some hesitation among economists about its effect on employment. In the case of Bristol, Oxford Economics expects employment to be negative for 2010 and 2011, mainly because of the loss of public sector jobs.

The argument is that the service sector is not picking up fast enough to help with employing people who have been made redundant by the government. Oxford Economics looks for a solution in expanded consumer spending and investment.

This might be too gloomy a picture for a region like the South West where a combination of high technology companies, top educational establishments and good environment bring their own impact on the economy.

Law firm pre lets

2011-09-27T14:59:00.000-07:00

The demand for space from law firms is confirmed by Cameron McKenna taking 2,449 sq.metres (26,328 sq.ft.) in Crest Nicholson’s 2 College Square, Harbourside.

That is the largest pre let in three years and confirms the top headline rent at £296 a sq.metre (£27.50 a sq.ft.).

Crest Nicholson’s Ian White made the point that the rent free period was in line with other recent schemes but (more importantly) Bristol is not over supplied. Construction on the new office, which allows the law firm to move from a smaller property, is due for completion by the end of the year. The developer now has only 6,503 sq.metres (70,000 sq.ft.) of offices to complete on the site.

Brunel would like it

2011-09-27T14:57:00.000-07:00

The first stage of the regeneration of the historic area around Temple Meads station has been completed by TCN with Bristol & Exeter House (B&E House).

Originally the headquarters of the Bristol and Exeter Rail Company, the Jacobean style property has become a boutique office aimed at catering for a mix of start ups, young and entrepreneurial companies that require a high level of service. Although small at 1,394 sq.metres (15,000 sq.ft.), its attraction is shown by the early leasing of close on 25% to Amonite, a film company, and Cross Country Trains.

Richard Pearce of TCN commented: “The vibrant brand profile that B&E House creates will attract a wider audience of office and leisure tenants to the site facilitating our vision for the whole scheme.”

Pearce created TCN in 2006 in partnership with TCN Urop of the Netherlands. The expansion moved up a gear when it bought Express Parks Development the following year and it started the policy of introducing the European model of developing and managing innovative real estate projects in conjunction with private and public partners.

Aerium sees the chance

2011-09-27T14:56:00.000-07:00

Far from being in the doldrums, Bristol is attractive enough to pull in a major investment dealfrom a European fund. Aerium, the European fund manager, has paid the Administrators, PWC, £83 million for One Glass Wharf, Temple Quay. The property, completed in 2010 is a sizeable 20,083 sq.metres (216,172 sq.ft.) of prime offices on five floors and is 81% let to the law firm Burgess Salmon for 20 years. Provide the top quality buildings, and investors will buy.

The empty space is subject to a seller’s guarantee of over 5 years. Now DTZ and Alder King will market this space. FranckRuimy of Aerium said: “This is a significant purchase outside the central London market of a very high quality, trophy asset. All core UK business markets are beginning to show a reduction in the supply of prime stock coming onto the market, which still further supports the underlying demand for space in this type of asset and therefore steady rents.” The fund is backed by Middle Eastern investors.

Winning Design?

2011-09-26T15:47:00.000-07:00

A reminder of the quality of the new developments in Salford Quays has come with the short listing of the MediaCity footbridge for an award by the Institution of Structural Engineers. The structure is a cable swingbridge providing pedestrian access over the Manchester Ship Canal into the heart of MediaCity.

According to the organisers of the award for structural and engineering excellence, the footbridge has been designed to respond to the particular geometrical constraints of its location. It anticipates future redevelopment of Trafford Wharf to the south and in conjunction with the existing Lowry Bridge enhances pedestrian links for the area as a whole. The results of the competition for the award, which has been in operation since 1966, will be announced in November.

The impact of MediaCity on Greater Manchester has been highlighted by Property Secrets, an investment organisation. It listed a number of positive points for the city, namely: The movement of thousands of BBC personnel from London is having an impact on the residential market and a range of media and creative organisations; A 2.7% increase in the turnover of retail businesses in the year to March, according to the data organisation CityCO; A 12.8% rise in passenger numbers at Manchester Airport between February and March; A report by Knight Frank dubbing Manchester as one of the UK’s best cities with the strongest investment potential. Alan Forsyth of Property Secrets said: “Demand for new properties in prime locations is experiencing strong growth and increased job opportunities, such as in Manchester, has meant an increased number of people buying properties in the city.”

A similarly upbeat analysis of the impact on the local office market has come from officebroker.com. It reports increased demand from local businesses for office space in the area through the impact of 2,500 employees moving into MediaCity. Jim Venables of officebroker.com said: “As a company we have witnessed an increase in demand in and around Salford Quays since the beginning of the year, a rise which is reflected in the personal experiences of many local providers we work alongside.” Mark Canning of Canning O’Neill said: “Our experience backs up the optimistic views of Salford Quays where, for example, half the Metro building has now let with Insight taking 1,672 sq.metres (18,000 sq.ft.).” The impact of MediaCity has brought a host of lettings at Digital Park and Digital World Centre. For example, Swiss Post has taken Unit 3 at Digital Park as an extension to its existing facility. Canning said of another new scheme, the Soapworks development, that “we are seeing considerable interest from potential occupiers.”

Looking to the future

2011-09-26T15:38:00.000-07:00

Two major projects are leading the way in the economy of the region, offering a focus for future growth. The attraction is that Peel’s MediaCity and expansion plans for Manchester Airport are in sectors that offer extended growth and the use of technology.

Indeed, the scale of both projects is exceptional for a regional city. MAG Developments has selected Jones Lang LaSalle and Drivers Jonas as leaders of planning and commercial delivery of Airport City, the Enterprise Zone project, the initial stages of which were worked up by Urban Strategies of Canada. MAG’s John Atkins commented: “This will not be one development but a place making project over a 10 to 15 year period. It is imperative that we ensure that Airport City is of the highest quality and international standing.”

The development has already received occupier enquiries. At the moment the main demand is expected from logistics, freight forwarders, advanced manufacturers, research and development and health related users. Bob Dyson of Jones Lang LaSalle said: “It can evolve into an integrated business district in its own right providing a comprehensive range of commercial facilities, services and revenue streams.” Charlie Cornish, MAG Chairman, said Airport City could create 7,000 jobs as well as create revenue for re-investing in Greater Manchester. The development is taking place on land between the airport and Wythenshawe, to the north of the airport. Important connections are to the University Hospital of South Manchester (UHSM) Mediapark initiative and the regeneration of the town centre. It will require considerable investment in the infrastructure, which will help the whole of south Manchester. But it has the advantage of the airport’s international network.

This connectivity can be seen with the all inclusive package which MAG has launched, aimed at attracting small and medium sized enterprises (SMEs) and start up businesses to newly refurbished offices. The property is 308 Avro Way where suites up to 186 sq.metres (2,000 sq.ft.) are being offered at an all inclusive price of £215.20 a sq.metre (£20 a sq.ft.). Will Kennon of letting agent CB Richard Ellis, joint with Regional Property Solutions, said: “Locations such as the airport are becoming more popular for providing a combination of amenities, an established public transport system and extensive car parking.”

Invest til you drop

2011-09-26T15:29:00.000-07:00

One interesting aspect of the investment market is the amount of money going into shopping centres even though consumer spending is flat. That could be a sign that institutions are taking a long term view of a revival in spending in the UK where the building of new shopping facilities has eased considerably over the past few years.

In Bristol, HSBC European Active Real Estate Trust has paid £50.2 million for the Galleries Shopping Centre from the Mall Fund, of which Capital & Regional has a 16.7% shareholding. British Land is one of the companies taking a positive view on shopping centres with two deals in the South West in the past few months, giving it a total of 12 centres. It is buying the leasehold interest in the 12,000 sq.metres’ Green Lanes Shopping Centre, Barnstaple for £30 million. This is a very successful mall with 5.5 million shoppers a year and is over 99% full with all the High Street names such as Bhs, (the anchor), Mothercare and Wilkinson.

A few months earlier, British Land paid £240 million for the 52,953 sq.metres (570,000 sq.ft.) Drake’s Circus Shopping Centre in Plymouth which was a good deal for the developer because it gave a yield of 8%. Multi Development was also in the market to sell its half share in the 42,734 sq.metres (460,000 sq.ft.) SouthGate, Bath which it developed with Aviva Investors, who hold the other half share. A price of £150 million to give a 5% yield was envisaged. However, this has now been suspended. DTZ’s view of the investment market is that it is cautious characterised by inactivity for a large slice of 2010.

Another indicator is that institutions have narrowed their view, at least in the regional markets, of what is prime property. The agent argues that opportunistic investors have taken their profits from the market upturn and investors are for the most part sitting on their assets and paying down debt. Furthermore, it points out that yields are near their long term average and the outlook is, therefore, flat over the next year “with upside risks to 2011.” The question that hangs over this gloomy view is what will be the effect of the dead development situation with few new assets being built in the UK, apart from London.

Keeping it going

2011-09-26T15:16:00.000-07:00

After a year which beat expectation, the hope is that
the pace can be maintained although there are some
concerns in the region that 2011 will ease back again.
There appear to be many reasons for this view, including the national problem of a fast declining stock of Grade A space. The cautious approach is understandable given the global problems engendered by the earthquakes and the future of government spending cuts. With the nearby areas stretching through Southampton and Portsmouth doing well, notably in industrials, the suspicion must be that the South West is likely to perform more strongly. Jeremy Hughes of BNP expects a “harder year in the market with the dynamics affected by the lack of prime stock. If the building is right, it will go and the larger companies can afford to move.”

The rationalisation of distribution so that companies are under one roof continues to be a major trend, which can be seen in his case with the interest from occupiers in the 8,918 sq.metres (96,000 sq.ft.) property Hughes is marketing in Trowbridge. Another major deal by BNP and King Sturge is the Scottish company WH Malcolm taking 23,225 sq.metres (250,000 sq.ft.) at Western Approaches in the ever popular Avonmouth to satisfy a distribution contract.

DTZ also sounds a cautious note. ”Current requirements suggest that subdued transaction volumes are likely in early 2011 and the annual total is unlikely to reach that of 2010. ”On the other hand,” it said: ”we anticipate an increasing proportion of Grade B take up, following a return from the mid sized professional and media sectors. Bristol also has a reputation for its clustering of firms in the sustainability sector and take up from these types of companies could make some net subtractions from availability.” Ben O’Connor of GVA said: “Life has improved since the end of 2010 and we have had more viewings, bringing cautious optimism, although these are mainly for small offices. But there are a handful of larger deals in the pipeline.” The final point of optimism is that only the new 10,219 sq.metres (110,000 sq.ft.) Bridgewater House will be completed this year so there could be a long wait for any speculative space. Landlords hope this will allow a real improvement in the rent free periods they give.

Cambridge builds for student boom

2011-09-26T15:05:00.000-07:00

As part of a mixed use scheme on 26 acres around Station Road, Cambridge, Powell Williams, the project management firm, is to manage the £40 million construction of student accommodation.

Student housing has been one of the growth sectors for the property industry in the current period of hard economic times. In the case of Cambridge, it will be 511 bedrooms in three buildings for Anglia Ruskin University. Andrew Marshall of Powell Williams commented: “The growing requirement for high quality student accommodation shows no sign of waning and demonstrates how this one area of the market is booming, while others are suffering. Such schemes are offering one of the only streams for new build investment opportunities in the current market.”

The key to this is that such schemes can raise private capital; in this case forward funding from LaSalle Investment. John Yeend of LaSalle said: “This project offers a unique opportunity to participate in the reinvigoration of this part of Cambridge through the development of new facilities for Anglia Ruskin University, alongside the wider development of new homes, hotels, shops, offices and public space.”

The scheme has been designed by TP Bennett Architects and is designed to meet the BREEAM excellent sustainability rating, which is an increasingly important requirement on new buildings. According to Mike Ayton of Juniper Estates, the Cambridge office market continues to be active and the first half take up, together with deals in the pipeline, indicates that the total for the year will be over 37,160 sq.metres. “Companies like Jagex and Arm are expanding and we are getting to the point when developers need to go for speculative schemes. The vacancy rate for good buildings is only 3.5%.”

More space for Amazon

2011-09-26T14:56:00.000-07:00

Amazon continues on its massive expansion which has led to a series of large industrial lettings in the UK. The latest deal is that the online bookseller is negotiating with Murphy & Sons for a 43,200 sq.m. shed, “Mammoth,” in Hemel Hempstead which was partially destroyed by the Buncefield oil depot explosion.

Murphy acquired the site from Blackstone Real Estate Partners in 2009. To understand the scope of Amazon’s expansion, this follows it taking the 65,030 sq.m. Flair building on Gazeley and Metlife’s G.Park, Rugeley and it is negotiating with Prologis for a much larger shed at the Widnes Freight Park, Cheshire.

Spreading a little happiness

2011-09-26T14:48:00.000-07:00

West London has benefited from the market improvement in the capital which could bolster growth along the Thames Valley. That has led to rental increases in such centres as Hammersmith where Grade A space is now £339 a sq.metre and a return of the development cycle. Ever quick to spot a development opportunity, Stanhope is negotiating with the Irish National Asset Management Agency (NAMA) to buy the former headquarters of Gillette. The 10.5 acre site was owned by Bonnington Group who had a plan to build a 500 bedroom hotel and offices after paying £30 million for the Grade II listed Art Deco building. Stanhope is bidding £15 million for the Isleworth site.

Another Art Deco gem is due for refurbishment with Cathedral Group and Development Securities buying the London Business Park, Hayes, Middlesex from JER Partners, Blackstone and Resolution. The new owners intend to spend £250 million on the park, which was the former headquarters of EMI, the music Group. The estate was designed by one of the most successful designers of Art Deco buildings, Wallis, Gilbert & Partners, who were also responsible for the Hoover Building and the Firestone Factory, now demolished, both in West London, and Victoria coach station. Sadly many of the buildings, said Cathedral, have been forgotten and the park is “a special place that had not been recognised by its previous owners.” Cathedral‘s Richard Upton said: “This site is part of the magic of the UK‘s industrial and architectural history, but it has been hidden and forgotten for decades.” So his crusade is to uncover the park‘s heritage and restore its full glory. As part of the development, the amount of commercial space will increase from the current 69,675 sq.metres.

Long road to recovery

2011-09-26T14:43:00.000-07:00

The Thames Valley office market is ratcheting up steadily as the recovery broadens and speculative activity is renewed. That brought a strong first three months of the year with a surge to a record performance, said King Sturge (who have now
merged with Jones Lang LaSalle). It calculated a 37,996 sq.metres (409,000 sq.ft.) take up, which
beat the five year average and was a 37% rise on the same period of 2010.

The encouraging change for long term growth is that total availability declined by 10% compared with a year ago to 641,010 sq.metres (6.9 million sq.ft.). Piers Leigh of Jones Lang LaSalle commented: “Due to the slow progress of large transactions, we are still forecasting a slightly below average take up for the year of 139,350 sq.metres (1.5 million sq.ft.).” He noted Grade A supply could fall to a critical level in west London which means rents will rise. For the future “we have seen a significant rise in speculative development with four key schemes within the M25 under construction or due to start within the next six months.”

Knight Frank highlights the dominance of manufacturing and pharmaceuticals which account for a third of total demand. It also noted that active demand declined in the first quarter by 14% to 472,119 sq.metres (508,201 sq.ft.) after a number of requirements were satisfied. While the agent welcomes the rise in speculative development it believes that it will be limited and confined to prime locations. According to Knight Frank, Maidenhead had four deals in the first quarter, the largest being 4,645 sq.metres (50,000 sq.ft.) to Adobe in Market Street in the centre of the town which only completed in the final three months of 2010.

As far as the M25 market is concerned, the agent cautiously predicts a 5% increase to 213,670 sq.metres (2.3 million sq.ft.) this year compared with 2010 but expects little change on the total for the M4 and even a 15% decline in the M3 take up.

Sheffield City Region takes off

2011-09-26T14:32:00.001-07:00

A test of the government’s new policies of promoting regional regeneration and economic growth could come in Yorkshire with Doncaster winning £18 million funding for its scheme. There was stiff competition for the government’s seed capital of £450 million and Doncaster got the cash for its Gateway to the
Sheffield City Region project. It fits with past success in pushing regeneration and continues the policy of boosting economic growth and becoming a catalyst
for attracting investment. Part of the project is the
construction of the Finningley and Rossington Regeneration Route Scheme (FARRRS) which is
the infrastructure needed to unlock the project.

Peter Dale of Doncaster Council commented: “This is tremendous news for Doncaster and the Gateway has the potential to deliver approaching 24,000 jobs in the area. The fact that we have received double the average successful bid of £9 million clearly demonstrates the confidence the Government has in Doncaster to deliver such an important scheme.”

One of the vital parts of the Gateway project is the expansion of Robin Hood Airport. Nigel Brewster, Doncaster Chamber President and Local Enterprise Partnership Board Member, said: “Improving access to the airport will have a transformational effect on the whole City Region. We must now capitalise on this
by encouraging local businesses to trade internationally and encourage new investors to locate on the airport business park and other key sites within the City Region.” Brewster said a particular objective of the chamber was to “create significant positive momentum for economic growth in the area.”

The airport, which is owned by Peel, is considered to have considerable potential for increasing freight traffic and as a location for business parks. Howard Gannaway, also of the Chamber, said: “The next
opportunity for the City Region will be around Enterprise Zones; we hope this announcement will
dovetail neatly with any proposals to create additional opportunities for the area.”

Cleaning up to Success

2011-09-03T14:58:00.000-07:00

A tired industrial estate of 24 units at Carter’s Yard, Kiln Farm, Milton Keynes has been transformed by the property group Kindale after advice from agent Douglas Duff and had immediate success with new lettings.

The estate had suffered from high vacancy rates until Douglas Duff’s Graham Young produced a comprehensive improvement plan. Kindale director Peter Hughes said: “He gave us chapter and verse about what was needed to turn the situation around and I am delighted to say he is being proved right.”

So far, 5 of the smaller units have been taken. Young said: “If you make the environment attractive not only does it appeal to new tenants, but existing tenants begin to take pride in their surroundings.” All the units have had their external cladding cleaned, landscaping has been refreshed and additional car parking created. Internally, the refurbishment has transformed the appearance and facilities of the units.

Quintain has vision of Wembley

2011-09-03T14:56:00.000-07:00

The massive regeneration of Wembley has taken another step forward with Quintain getting planning permission for the 157,930 sq.metres (1.7 million sq.ft.) Wembley City North West scheme.

It will be built around the new civic centre with 1,300 homes, a new shopping street with 30 units and a department store together with the upgrade of the Olympic Way, the pedestrian route into the stadium.

The £500 million development will be built in tandem with the existing plan for a mixed use scheme of 594,560 sq.metres (6.4 million sq.ft.) surrounding the sports stadium. An interesting point about the planning permission for the North West sector is that Quintain is required to provide only 15% of the housing for social tenants.

Adrian Wyatt, Chief Executive of Quintain, believes Wembley will benefit from the strong growth of the London economy over the next 15 years at a faster pace than other major cities in the world, said PwC.

Evidence of this growth is apparently provided by the take up figure for offices in London over the past few years, which was over 510,950 sq.metres (5.5 million sq.ft.) in the first six months.

Wyatt sees Wembley as another nodal point for London with a travelling time of only 10 minutes to Marylebone. He is not alone in his bullish view of Wembley because St Modwen is engaged in a £90 million development around the central railway station and high street for 12,542 sq.metres (135,000 sq.ft.) of retailing, together with offices, an 86 bedroom hotel and 24 flats.

The sheer scale of the development in Wembley will probably carry the area forward, as it is likely to do in Stratford with the vast new Westfield Shopping Centre, which has just opened, and the Olympic sports facilities. Apart from the opening of the shopping centre, this scheme has moved forward with Jones Lang LaSalle and BNP Paribas Real Estate being appointed by Lend Lease and London & Continental Railways to market the 371,600 sq.metres (4 million sq.ft.) International Quarter Stratford City campus. Construction of the £1.3 billion scheme on 500 acres will start in 2013 and is expected to benefit from the publicity generated by the Olympic Games.

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Third time lucky

2011-09-03T14:55:00.000-07:00

Councillors in Watford will be hoping that it is third time lucky for the redevelopment of the town centre. They had been faced by the second choice developer, London & Regional, pulling out of the project because apparently it wants “to concentrate on the core business.” They had taken over from Capital Shopping Centres for the 37,160 sq.metres (400,000 sq.ft.) Charter Place scheme.

Now the baton has passed to Henry Boot Developments as the council’s joint venture partner. This has been a real problem for many towns throughout the UK as the decline in the economy hit home and developers pulled out of shopping centre schemes. The one comforting piece of information at the moment is that the increase in the number of empty units in shopping centres has, according to the latest surveys, halted although still leaving some centres with athird of the shops empty.