Hayes' gem solid

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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Good credentials

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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Inverness performs

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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Long road to recovery

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.

Hemel and Watford set the pace

After a lengthy period of quiet activity there has been an improvement in some key areas of the region as companies move from a watching brief to more active participation. This is the theme for Hemel Hempstead and Watford, while Milton Keynes continues to perform steadily and Cambridge remains buoyant.

The improvement in Watford is particularly apparent. Peter Brown of Brasier Freeth lists a whole series of lettings in the office core of the town. These were all to blue chip companies, such as TK Maxx taking 929 sq.metres (10,000 sq.ft.) and the big construction company Vinci slightly less. Ivico has also taken space, as have others in Grade A offices.

Brown said: “It has been a reasonable period but the reality is that we happened to have done a number of deals in a period of a few months and fundamentally the office market is still relatively quiet.”

He also feels the market has benefited from the 5 year cycle of lease renewals and is not completely confident about the performance for the rest of the year. In fact rental levels and incentives have not changed much. Some areas close to London are also experiencing a rise in activity, such as Wembley, where Quintain has a major project and St Modwen has a town centre scheme based on the railway station.

Clearly this will make Wembley a nodal point for London since the Quintain scheme is so large and a bet by Chief Executive Adrian Wyatt on the health of the London economy. But he has shown in other places, such as Greenwich Peninsula, that his instincts pay off.

Another area with long term potential is Dagenham where the dramatic changes in the UK’s industrial base have meant the potential for massive development, the latest being the Sanofi pharmaceutical plant which is due to close in 2013.

The interesting point about Dagenham is that the closure of Sanofi to join Ford brings a lot of land onto the market at a time when the government argues that a shortage of sites is holding back the economy, so the

planning laws must change.

Minting it at Minto

The pace of new development in Aberdeen has been maintained and has generally surpassed other parts of Scotland.

For example, Knight Property Group has now completed the second phase of the 11 acre Minto Commercial Park, Altens scheme and will move onto the final phase on Site 6. So far, Knight has invested £20 million over a three year period in Minto. Knight’s Howard Crawshaw said: “Being involved in a regeneration project such as this has been extremely satisfying.”

Elsewhere at Minto, Brinker Technology (represented by J&E Sheppard) has leased the 1,115 sq.metres (12,000 sq.ft.) Renewable Energy Centre, a warehouse and office property. Graham & Sibbald acted for the landlord.

Also being developed is Stockland Muir’s Aberdeen Gateway Business Park as part of a 45 acre mixed use scheme of industrial units and offices. Stockland Muir commented: “We will capitalise on a strong occupational market and an apparent shortage of good quality industrial stock. As the oil price has risen above $100 a barrel our marketing agents have experienced a significant increase in enquiries for properties in the 929-1,394 sq.metres (10,000-15,000 sq.ft.) range.

The geographical spread of developments around Aberdeen is impressive with a speculative scheme for houses, a waste recycling centre, technology units and business centre at Alford, a village outside the city. Also, ten miles from the city centre, two new detached office pavilions have been completed on the Kingseat Business Park and are being marketed through Knight Frank and DM Hall.