Milton Keynes the growth centre

Milton Keynes continues to be one of the liveliest places in the country for commercial property with a steady flow of deals. It remains an attractive place for new investment with one of the largest recently being Aviva Investors funding a 22,296 sq.metres (240,000 sq.ft.) retail park which will be anchored by a large Marks & Spencer store.

The development will be around the Milton Keynes football stadium with a planned completion in 2012. The deal has been transacted by the club’s Chairman Pete Winkelman who plans to spend some of the money on expanding the stadium seating capacity. The strong point about Milton Keynes is the number of companies that are growing organically and adding to their properties. For example, Pfeiffer Vacuum has satisfied its space requirements at 16 Plover Close in the nearby Newport Pagnell, which benefits from the performance of Milton Keynes. Douglas Duff acted for the UK subsidiary of the German company whose Peter Knight said: “The new premises are ideal and convenient in being close to where we were well established.”

Also at Newport Pagnell, Buck-Biz is to transform a former food manufacturing plant on a 3.5 acre site into a home for a variety of offices and industrial units for over 70 medium sized businesses. Planning permission has been granted by Milton Keynes Council, which includes a new access road. Joe Muscat of Buck-Biz, which operates seven business centres across the area, said: “Even before completion of the Interchange Business Centre we have a number of companies planning to move in.”

One of the largest transactions in MK is the British Standards Institution (BSI) leasing 5,202 sq.metres (56,000 sq.ft.) at Solaris Court on a 15 year lease from the owner Arab Investments. BSI’s Chief Executive, Howard Kerr, commented: “The new premises will provide our staff with a very modern and efficient environment. We have ambitious growth prospects and see this move as a catalyst for realising this.” BSI will move staff in from other properties in MK and Hemel Hempstead.

One sign that the pressure of the recession is easing is that two major towns are likely to get major new shopping facilities. Basildon Council is pushing ahead with the big mixed use scheme in the town centre now that the Barratt/Bowden Wilson joint venture has been appointed to carry it out. This will have 51,979 sq.metres (559,520 sq.ft.) of retailing and leisure and slightly more than that for offices. There will also be 1,900 residential units together with enhanced civic facilities and infrastructure improvements.

A spokesman for the developers said: “Basildon is a good place to invest, with great potential for growth.” In Luton, British Land is expected to take over the stalled £200 million PowerCourt retail development from Ballymore, which owns around 40% of the site, the rest being with the council and the Environment Agency. The plan is expected to have 46,450 sq.metres (500,000 sq.ft.) of retailing and 200 homes.

RBS takes control

A further example of the management of the banks’ property debt is Royal Bank of Scotland expected to take control of the 28,427 sq.metres Friars Square Shopping Centre in Aylesbury. It would take over from Brookfield and the likelihood is that Grosvenor would be appointed to manage the mall and advise on its future development. Aylesbury is also in line for a major industrial development by Arla Foods. The company plans to spend £250 million on the world’s largest dairy in a scheme on an adjacent site around 92,900 sq.metres of industrial warehousing in two sheds. In addition there will be five units for small and medium sized companies.

Maidenhead launch

Commercial Estates Group (CEG) is re-launching the 7,669 sq.metres Prospect Park, Hurley, near Maidenhead. One of the largest offices in Maidenhead, it is set in 11 landscaped acres, and will be re-branded as Horizon with marketing by Lambert Smith Hampton (LSH) and Hanover Green. CEG acquired it from the Administrators for Kenmore. LSH’s Cliff Jackson commented: “One of the scheme’s major selling points is its larger floor plates that allows improved internal communications and team collaboration which is a universal pressure for business.” The marketing will target large occupiers in the Thames Valley and those seeking to relocate there. The agents are looking particularly at the pharmaceutical, technology, media and telecoms sectors. The offer is for part floors or the whole building.

Investors back Reading

A major boost to confidence has come with the arrival of Benson Elliot, a private equity real estate firm, and British developer Stanhope acquiring a majority stake in a massive town centre scheme in Reading. They have bought a majority holding in Sackville Properties’ 157,930 sq.metres (1.7 million sq.ft.) Station Hill scheme. Sackville, which is owned by entrepreneur Sir John Madejski, who has taken the opportunity of a deal in order to pay back debt to Lloyds Banking Group. Sackville will retain a minority stake in the £400 million scheme and a share in the profits.

Having taken on Stanhope as a development partner it was seeking increased financial backing. This deal confirms the view of Reading in a more central role within the Thames Valley for offices; Sackville acquired most of the site from Land Securities in 2005 and was aware it would need a development partner for such a sizeable project. This deal ensures sufficient finance and development muscle. Inevitably, the new owners will rephase the scheme in the light of the Thames Valley market which has been, until now, slow to emerge from the recession. That said, the new owners have shown confidence with Marc Mogull of Benson Elliot saying that Station Hill “will be the new commercial core of Reading. “ He added that “we don’t know what the world will look like in a few years’ time but this is a great piece of dirt given how little space is being delivered in the regional office market.”

The increased role of town centre offices is illustrated with the letting at One Reading Central of 2,097 sq.metres (22,590 sq.ft.) to the software company Pegasystems, where it joins Yell, the international directories business. What is impressive is that the rent agreed through Lambert Smith Hampton for a 10 year lease is £322.80 a sq.metre (£30 a sq.ft.). The development is a joint venture of Kier Property and Invista Real Estate and at 20,252 sq.metres (218,800 sq.ft.) is the largest development in Reading. Kier’s Gillian Scarth said: “Throughout all stages of its development we have acknowledged the top requirements for corporate occupiers of proximity to a mainline railway station and large floor plates being high on the list. Only two floors remain available.” The railway station is being upgraded to handle more trains and help towards faster journey times.