UK Commercial Property News: November 2010

Monday, 1 November 2010

SEGRO scores again

SEGRO is having marked success with its Gatwick Distribution Centre (GDC) and has let 2,787 sq.metres (30,000 sq.ft.) to Bosmere Products, a gardening products company. It has moved from Portsmouth where it has been based for 30 years in another SEGRO property, following a change of ownership. It will take three units at GDC. Bosmere’s Tony Dedman said: “We were looking to relocate to Crawley to bring our operations closer to our parent company in Kingston. These new units mean that we can bring all our picking and packing under one roof and maximises space.” SEGRO has also launched Gatwick Links which has brought all the company’s investments in the area under one portfolio, including new properties resulting from its acquisition of Brixton last year. The Links has three estates and is aimed at helping customers to move and expand in the area with SEGRO. Gatwick International Distribution Centre is on Manor Royal and close to the airport and M23 motorway. It has 29 units.

The Kent, Surrey and Sussex Commercial Property Register

The Commercial Property Register for Kent, Surrey and Sussex is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space, Serviced Offices and Commercial Property in Kent Surrey and Sussex. You can also find the latest commercial property news for this region.

The economy has continued to grow in Yorkshire, although it has slowed recently, but the office market in the main centres remains in the doldrums. On the other hand the outlook for the big shed market is favourable. At the moment the office market in Leeds appears to be the laggard among the big provincial cities with only 18,580 sq.metres (200,000 sq.ft.) let in the first nine months, many of the deals being small, said Richard Thornton of King Sturge. 12,600 sq.ft. of that total was let at 10 South Parade. Letting agents on the scheme are DTZ, Knight Frank and WSB. “It has been an odd year,” Thornton added, ”but should improve now the general election and the spending review are out of the way.

There are still a number of sizeable requirements in the market, such as for KPMG, and around 46,450 sq.metres (500,000 sq.ft.) of lease renewals between 2012 and 2016.” Leeds has a high dependence on the financial services industry as well as the public sector, where a decline in numbers must have an effect as it will in other Yorkshire cities such as Sheffield. Thornton said that the out of town business parks had seen a similar pattern to the Leeds city centre and had a comparable level of take up. As far as the economy is concerned, the latest report from the Yorkshire & Humberside PMI by Markit revealed continued growth which has now lasted 15 months in the private sector. The index declined from 57.1 in July to 54.9 in August with a central problem being the rise in output charges.

Patrick Bowes, Chief Economist of Yorkshire Forward, said: “While it is evident that demand has softened in August compared with July, the rate of new order growth remains robust and among the strongest in the UK.” A number of towns and cities remain, however, determined to continue with their programmes of refurbishment, notably Doncaster. Another positive factor is that the appetite for investments remains healthy with a number of sizeable deals this year.

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

London Property News in Brief 2

According to CB Richard Ellis take up of 325,150 sq.metres in the third quarter was 12% above the long term average.
There was a large fall in second hand space and rents rose by 19.2%; in the West End by 8.5% and by 4.2% in Docklands.

On 22nd of September, Holy Trinity Church in Claygate was packed to overflowing with 500 City people to honour the
life of Angus Walker of GVA, aged 52, who passed away on the 08/09/10 following a heroic battle against cancer. Angus who was part of the fabric of the City can be remembered for so many good reasons. His integrity, his concern for his friends and colleagues, his incredible support of his wife Liz and his four sons, and for his sense of humour and especially the twinkle in his eye. He is sadly missed.

The London Commercial Property Register

The London Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space in London, Serviced Offices in London and commercial property in London. You can also find the latest commercial property news for the London region.

London Property News in Brief

Office occupancy in the UK will increase by almost 2 million sq.metres (185,897 sq.ft.) despite the government spending cuts, said DTZ. The vacancies caused by the loss of government jobs will be more than compensated for by new employment in the private sector.

The London Commercial Property Register

All Good New in the London Commercial Property Market

The strong recovery in the central London office market has reached an interesting stage with major developments going ahead as vacancy rates fall.The buoyancy of London clearly belies the doomsayers who had forecast a steady decline in the UK capital’s top role in the panoply of global financial centres. That has not happened, despite all the huff and puff about China running the world. From this follows a number of questions:

Can London keep the pace going and maintain that global leadership?
Will the dynamic of London’s improvement work its way around the country and help the major provincial cities to their own sustained recovery, as usually happens?
Will the government’s spending cuts undermine this improvement?
Can the infrastructure in London cope with continued expansion since it is already showing signs of inadequacy?

One clue to the future course of events is provided by CB Richard Ellis’ report that revealed London’s dominance in the cross border investments in 2009 and the first half of 2010 when it accounted for 27% of the total.

In fact the recovery had, not surprisingly, been substantially lower than during the boom periods in the market with an overall decline in investment of 70%.London emerged as the world’s most international market with buyers from 27 different nationalities. A few major cities dominated the international investment scene.

As far as the UK national scene is concerned, research form Colliers International shows that the amount of vacant retail floor space in London is almost five times lower than the rest of the UK with a two tier market in which London outperforms the rest of the country. Colliers’ Sarah Banfield commented: “We believe that the Central London vacancy rate is likely to continue to fall over the next six months and it will maintain its resilience in the face of the upcoming challenges.”

The London Commercial Property Register

Burlington Arcade Sells for £104m

The foreign hunger for London property appears to be boundless and, also, varied. The real estate investor Meyer Bergman and Thor Equities of the US have teamed up to pay £104 million for the 3,437 sq.metres Burlington Arcade. The joint venture brings Thor for the first time into the UK. The deal gives Thor the option of increasing its initial shareholding of 20% in Burlington Arcade, which claims to be the oldest shopping arcade in the world, to 50%. It is certainly the most expensive retail location in Europe but the joint venture believes it can strengthen it further. Markus Meijer of Meyer Bergmann said: “The acquisition of Burlington Arcade represents a unique opportunity to acquire one of London’s most iconic retail assets.”

The London Commercial Property Register

Property Development in the City

An important point in the new wave of development which is starting to come through in the City is that it will mean a further improvement in the quality of the structures. The obvious point is that an increasing number of tall buildings are about to start construction to add to the two that are already under way, the Heron Tower on Bishopsgate and the Shard at London Bridge and soon the Walkie Talkie building. The joint venture of Land Securities and the Canary Wharf Group will be funded by sovereign wealth funds from Qatar and China together with Morgan Stanley, all shareholders in Songbird which is the parent company of Canary Wharf, the 150 metres high Walkie Talkie building of 64,101 sq.metres (690,000 sq.ft.) will start construction in early 2011 onn Fenchurch Street and has a development value of £500 million.

The particular point about the decision to proceed is that it comes at a time of caution when the norm has been to start only when there is a pre let. In this case there are two powerful developers and well heeled investors who are prepared to back the view that rents will continue to rise on the back of a shortage of Grade A offices.

Tony Joyce of GVA Grimley said: “The situation of a limited supply of prime offices is getting worse. We are now seeing record rents in this phase of the cycle of close to £645.60 a sq.metre (£60 a sq.ft.).” Incentives are easing with rent free periods shortening and, said Joyce, landlords are more bullish and resisting early lease breaks of three or five years. Irvine Sellars’ Shard of Glass has shown that a bold move to start construction can pay off and he has even capitalised on the upswing by buying out the lease of Transport for London to achieve a higher rent in the new circumstances.

The next tower to go ahead will be British Land’s so called Cheesegrater in Leadenhall Street which is also likely to be built with a foreign investor. It would appear that that there are enough sizeable requirements, such as the insurance giant Aon, to fill these large properties.

The London Commercial Property Register

Falling Yields in London

Another test of the market is the yield being achieved on prime properties. That is where the offer by Invista Real Estate Management and Delancey of the 24,628 sq.metres Rolls Building, EC4 is so interesting. That is because they are seeking £320 million for the property on Fetter Lane for a yield of 4.5%, which is nearly back to the boom years. In contrast prime city yields are around 5.5%. Mike Edwards of CB Richard Ellis said: “It is a rare animal in the City/Midtown with a long lease to the government.” Meanwhile, Beltane Asset Management has bought the 3,499 sq.metres St Paul’s House, Warwick Lane from Grange Hotels, close to the Stock Exchange, for about £12 million. Beltane plans a complete refurbishment now that accountants Moore Stephens have relocated to 150 Aldersgate Street. Beltane has already bought Pellipar House, Cloak Lane at the end of June.

Beltane’s Jonathan Chenery said: “Two purchases in less than two months demonstrate our continued appetite for City property and our financial firepower and acumen to get deals done quickly.”

The London Commercial Property Register

End of Year Property Boom

In its analysis of the central London office market in the third quarter, Knight Frank noted a 29% increase in take up and predicted a significant volume of space let in the final three months. What is encouraging is that availability has continued to fall as second hand space was absorbed while prime space remains thin. And development activity remains constrained. The improvement is across the board in all business districts with, for example, the vacancy rate in Docklands declining to 7.3%, or a total of 148,640 sq.metres. Docklands also has the lowest prime rents at £387.36 a sq.metre. The investment market has stable yields across the City and West End in a third quarter where foreign buyers dominated. The vacancy rate in the City and West End are higher at 9.2% and 8% respectively.

The London Commercial Property Register

Kings Cross Ready for Development

Kings Cross also features in the widening scope of London’s business district with a £2 billion development plan. After withdrawing from negotiations, BNP Paribas is back talking to Kings Cross Central Limited Partnership about taking 37,160 sq.metres (400,000 sq.ft.) and moving from its slightly smaller headquarters close to Marylebone Railway station. In this case the attraction for the French bank is the high speed rail link to Paris. KCCLP consists of Argent, Hermes, London & Continental Railways and DHL. At the moment there are a number of companies negotiating to take space in the big Kings Cross scheme, including Sainsbury who have been talking about moving from Holborn for some time. As it happens, Veolia Environmental Services is to lease 2,176 sq.metres (23,420 sq.ft.) in Castlemore’s 201 Pentonville Road, Kings Cross.

The London Commercial Property Register

Land Securities Develops Residential Property Instead of Commercial Offices

There is a greater flexibility about the recovery in the market with more of an open mind from developers as to how to use buildings. For example, Land Securities is planning to convert its 26 storey Portland House, Victoria into high worth residential accommodation instead of offices. It is seeking designs from architects for residential use in the 27,870 sq.metres (300,000 sq.ft.) property. Land Securities has already tasted success with the conversion of Wellington House, Buckingham Gate into 59 flats designed by john McAslan and Partners which have been pre sold to investors in the Far East. Apart from anything else, this proves the continued demand for central London residential properties which has been such a strong feature of the recent recovery of commercial property markets.

Apart from more residential use, conversion into hotel use has been popular for some time. The latest is Soho Estates’ plans to turn the Queens House, Leicester Square into an 84 bedroom Premier Inn for Whitbread in a £6 million plan. In fact the property was built in the 1890s as a hotel and currently has a casino, restaurant and nightclub. These will be retained. The hotel will open in 2012 and fits with Westminster Council’s policy of improving the area. Soho Estates is owned by the family of the late nightclub tycoon, Paul Raymond.

The London Commercial Property Register

London Commercial Property News - London Midtown Commercial Property Demand Growing

Rarely will all the London sub markets perform well together in a recovery but this is the case now with Midtown, for example, having only a small amount of vacancies after a strong letting performance. Two quick deals on space in UK & European’s 9 Kingsway, WC2 are, said Charlie Thompson of Farebrother: “Further evidence that Midtown’s development pipeline is drying up. To date there has been only one office start in 2010, despite take up in the first half year of 34,373 sq.metres (370,000 sq.ft.).” That means rents have to rise in the next couple of years as supply tightens further. UK & European’s Joe Lewis commented: “Available space in the area , whether new or refurbished, amounts to only 2.1% of total stock, the best in any of London’s sub business districts. The prospects of a return to normal levels of construction in this cycle are remote and we believe that Midtown is resilient and continues to provide good returns on refurbished schemes and has further potential.”

The two companies that took space in 9 Kingsway were the tv channel “At the Races” and Global ethics. Once the two major schemes at 100 Fetter Lane and St Martins Courtyard are finished there is nothing to be completed until UK & European’s scheme at 1 Kingsway in mid 2011. But at least developers are now going for new schemes, as witness Premier Property Group (PPG) putting in planning for 38,275 sq.metres (412,000 sq.ft.) at Plumtree Court, EC4, currently occupied by PricewaterhouseCooper in half that amount, who will move out at the end of 2011. PPG will provide large trading floors and hopes to have planning permission by December so it can go for a pre let. Mark Lethbridge of Drivers Jonas Deloitte said: “This is clearly a sign of increased confidence among developers. The market will breathe a sigh of relief to see the first major office planning application in the City/Midtown in many months.”

The London Commercial Property Register

Doncaster and Rotherham hold their nerve

It is encouraging that Doncaster and Rotherham are continuing with major development schemes that will bring widespread benefits locally. In Doncaster, the £300 million Civic and Cultural Centre has been given the planning green light and is the key to transforming the Waterdale area of the town. At the heart is a 14,585 sq.metres (157,000 sq.ft.) civic building to house the council’s 1,400 staff. This will overlook the first civic square in Doncaster and will bring the council’s staff in from several buildings.

Dan Needham of Muse Developments, who are developing the scheme, said: “When complete, it will act as a catalyst for the ongoing regeneration of the Waterdale area by allowing the redevelopment of the vacated office buildings in the future phases, which will further enhance Doncaster’s offer and help attract new investment and new occupiers to the town.” The long term plans for the area include a new hotel, performance venue, new library, swimming pool and leisure facility together with housing and offices.

One major Doncaster building in the pipeline for redevelopment is the 7,432 sq.metres (80,000 sq.ft.) Denison House, the GII listed building which housed Doncaster carriage works and is being sold by Sanderson Weatherall. Glenn Levison of Sanderson Weatherall said: “The development options are vast and having played such a historical part in the region’s railway industry, the potential is there to transform the premises into a museum or tourist attraction similar to the National Railway Museum in York. Other uses could include a hotel, gym or offices.” Colliers International has been appointed to study the leisure and retail requirements of Rotherham for its next Local Development Framework, examining the town’s future needs. Meanwhile, Oak Holdings has been given the go ahead by the government for the £350 million Yes! leisure scheme in Rotherham on a 327 acre site which will centre around a 14 storey building.

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

Preserving History

The property industry has been successful over the past few decades in converting some of Yorkshire’s historic industrial buildings, usually woollen mills, from modern use. The latest of these is Sunny Bank Mills in the centre of Farsley, a family owned mill which is being extensively renovated for small and medium sized businesses. In a short period it has four new tenants, Powerhouse Digital Photography; travel agents, Uncover the World; Yorkshire Physiotherapy Network and Richard Moran Photography who have taken 1,022 sq.metres (11,000 sq.ft.). John Gaunt of Edwin Woodhouse, the owners, said: “I think the pedigree of business reflects the quality of the refurbishment and even in the teeth of the recession, Sunny Bank Mills and Farsley can succeed in its mission of being a creative space for business.” The mill stopped textile production in 2008 having opened in 1912. In Halifax, St James is developing the historic Shaw Lodge into 10 small office suites. The company’s Oliver Quarmby commented: ”In the longer term we are looking to fulfil our dream of an urban village on this unique site, but we believe it is in everyone’s interest to proceed carefully as the property market begins to recover from the deep recession.” There are already 15 tenants on the 10 acre site, many of them in the creative industries and education. As with Sunny Bank mill, the last loom fell silent in 2008. Another historic building, the ARTTS International training centre, Bubwith, which has planning permission for conversion to residential and offices is on the market for £1 million.

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

Another Shed Goes

South Yorkshire continues to thrive as a locale for distribution and logistics with the latest major deal the letting of a 15,236 sq.metres (164,000 sq.ft.) warehouse at Quattro, the final phase of the West Moor Park scheme at Doncaster. The joint venture of Valad and Shepherd Developments has let the shed to Scotts Miracle Gro Company, the world’s largest marketer of branded consumer lawn and garden products. Shepherd’s Richard Squire commented: “West Moor Park is now well established as a prime location in the Doncaster area and epitomises the renaissance of south Yorkshire over the past decade.” At Century Park Networkentre, Rotherham there have been five recent lettings in the workspace and office scheme developed by Network Space, a joint venture of Langtree and the Homes and Communities Agency, totalling 1,580 sq.metres (17,000 sq.ft.). The 5,388 sq.metres (58,000 sq.ft.) scheme has 28 small office suites and workspace units. In Sheffield, Property Alliance has completed the first phase of the refurbishment of the Ecclesfield 35 Industrial Estate which it bought in 2009. The £1 million improvements include an enhanced power supply and café area. The industrial and warehouse units range up to 4,645 sq.metres (50,000 sq.ft.). Property Alliance’s Lee Charnley said: “We are delighted with the enquiry level since completing the first phase and look forward to adding to the quality tenant list.” Opus North is one of the most active developers in the region and has recently let 6,178 sq.metres (66,500 sq.ft.) at Opus 36 Business Park, Goole to HCK the catering equipment and supplies group. This is the largest property deal in Goole this year with HCK relocating from another site in the town. Andrew Duncan of Opus North said: “The two remaining refurbished units are attracting interest and there is certainly pent up demand in the region.” Another Opus North scheme is a supermarket and mixed use scheme with Lidl in Barnsley, close to the new Gateway Plaza development.

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

Selling Kilmartin

Properties from another bankruptcy came onto the market in Scotland through Knight Frank acting for Lloyds Banking Group and the Administrators, PricewaterhouseCoopers to Kilmartin. The office block at Castle Street in Edinburgh, John Smith Hall, a student residence, 200 St Vincent Street, a Glasgow office and Inshes Retail Park in Inverness have all been sold for a total of £51,100,000 million, well above the asking price of £45.5 million. Another former Kilmartin holding that has been sold is a 90 acre site at Stoneywood, Aberdeen.

The Scotland Commercial Property Register

The Scotland Commercial Property Register for Sctoland is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Offices Space, Serviced Offices and Commercial Property in Scotland . You can also find the latest commercial property news for Scotland.

Investment Thrives

Cushman & Wakefield has joined Knight Frank in marketing the 11,473 sq.metres (123,500 sq.ft.) No1 Leeds which was developed by BAM Properties on behalf of the IVG Institution Fund. The development potential is considerable because it has planning permission for a total of 55,554 sq.metres (598,000 sq.ft.). At the moment the Leeds office market is typified by the Public and Commercial Services Union leasing 587 sq.metres (6,315 sq.ft.) in Town Centre House which has been refurbished by Town Centre Securities and is now 95% let. While it is clear that the current phase is for small deals, the investment market is thriving. Knight Frank Investors, for example, on behalf of Lancashire County Council has paid MEPC £20 million for the 6,689 sq.metres (72,000 sq.ft.) Benson House, which is let to PricewaterhouseCoopers. The yield is 7.33%. Matthew Atkinson of Jones Lang LaSalle, in reviewing the second survey of investor confidence, said: “Activity in the second quarter was relatively strong with £60.3 million deals transacted, a rise of 9% on the same period of 2009. With several assets brought to the market in the same period this suggests a strong out turn for the third quarter but we expect capital values to remain relatively stable.”

The Yorkshire Commercial Property Register
The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

Another Bruntwood Refurbishment

The call for refurbishment will be magic to the ears of Bruntwood, who have built a substantial portfolio on the basis of improving tired office buildings. Its latest purchase in Leeds is the 12 storey 11,148 sq.metres (120,000 sq.ft.) City House, which is above Leeds central railway station and is now
in shell condition after being stripped out by the previous owners. In other words this is a classic Bruntwood situation which it will restore in consultation with Network Rail and Leeds City Council. It already owns over 20% of the office stock in Manchester city centre and now as 35,302 sq.metres (380,000 sq.ft.) in Leeds. Illustrating its skills, the portfolio is 95% let in Leeds. Bruntwood’s Chris Burrow commented: “With extensive experience in Manchester, Liverpool and Birmingham we’re confident that we can revitalise the building, enhancing the building’s infrastructure and, without doubt, a fantastic location in Leeds city centre.” He added that the company was still buying properties in Leeds and that it “believes in the fabric of the cities we operate in and wherever possible, we recycle
buildings instead of knocking them down and starting again. This is part of the company ethos to avoid waste and help create sustainable cities.”

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.

Shortage Looms

Because of the slowing economy and the decline in speculative office development there is a potential shortage of quality office space in Leeds. Theanswer, suggests Jones Lang LaSalle in a research report, is for the gap to be met by refurbished and repositioned Grade B offices.

According to JLL, Leeds currently has 128,202 sq.metres (1.38 million sq.ft.) of offices available, or 11.1% of total stock. In this case the priority for landlords is
for income preservation rather than refurbishment. But with only a small amount of Grade A being built, the shortage will bite next year, said JLL. The firm’s Jeff Pearey commented: “There is a growing awareness from occupiers and developers about the potential shortage of Grade A space that we forecast will emerge in Leeds in 2012 although continued funding constraints means we do not anticipate any major construction starts in the next 12 months.” He
added that upgrading Grade B stock seems logical and a relatively low risk strategy to bridge any supply gap.

The Yorkshire Commercial Property Register

The Yorkshire Commercial Property Register is a leading UK business property publication from Martin Austen Publishing. The aim of the publication is to offer a simple and effective means of finding Office Space in Yorkshire, Serviced Offices in Yorkshire and industrial commercial property in Yorkshire. You can also find the latest commercial property news for the Yorkshire region.