Attracting investors

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.”

Optimism to the fore

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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Brunel would like it

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.

Northern M25 lags

In a steadily improving office market in the three areas of the M25, there was a rise in the vacancy rate in the northern section in the first quarter of the year. Indeed there was a near 25% increase in the availability in size of 4,645 to 9,290 sq.m. while the smaller spaces had only small increases, reports Colliers International.

The vacancy rate in the area is now a record 20%. Broadly speaking, rents in the northern section are lower than in the Thames Valley with, for example, Milton Keynes and St Albans at around £226 a sq.m. Colliers’ Philip Papenfus said of the M25 market:”It is a positive sign that we are now seeing some resurgence in speculative office development and funding. The technology and media sectors continue to see healthy growth.”

Major scheme for Weybridge

One of the largest office developments in Surrey is planned by Rockspring and Exton Estates with a 9,596 sq.metres (103,296 sq.ft.) scheme at the Arrows, Weybridge. The Grade A project named Velocity is on a site which Rockspring UK Value Fund bought from Mercedes for £4.25 million in January. It will have 370 car parking spaces. Rockspring’s Richard Bains commented: “We are confident that, in selected locations, now is the right time to bring newproducts to the market, putting us ahead of anticipated competition.”

Also in Weybridge, Verint Systems has leased a 1,918 sq.metres (20,648 sq.ft.) office from the Merseyside Pension Fund through agent Hurst Warne. There is a long rent free period and the rent is £247.48 a sq.metre (£23 a sq.ft.).

Cambridge on the up

The demolition of an existing building on Station Road, Cambridge ahead of a new 7,153 sq.metres (77,000 sq.ft.) building being developed by Brookgate for Microsoft Research is a symbol for this thriving university town.

Apart from anything else, it is such a prominent site that it casts a spell over the area, where there is already some refurbishment occurring. On top of this it is the first new office block in Cambridge for 25 years and the rent of £317.42 a sq.metre (£29.50 a sq.ft.) beats most parts of the UK apart from central London. Underlining the force of the scheme is that Orchard Street Investment Management has bought it for £37 million. Orchard Street’s Gary Felce added to the arguments for Cambridge by saying: “It sets a new tone and standard for the next wave of development to follow.” The student blocks, which are part of the scheme, have also been sold in a £40 million deal with LaSalle Investment Management.

An upbeat view of the market comes from Duncan Quig of Lambert Smith Hampton who points to “the imbalance between demand and supply and the increasing rental tone for offices which is allowing speculative construction.” An example of this is Pace Investments’ 4,831 sq.metres (52,000 sq.ft.) Botanic House, Hills Road where rents could touch £349.70 a sq.metre (£32.50 a sq.ft.) when it is completed in a year’s time. But the top rent could be achieved before then because Pace is apparently negotiating for floor by floor lettings. In any case there are potential

occupiers seeking new space, such as the law firm Mills & Reeve.

Static rents

Static headline office rents in Leeds could affect the timing of new development. At the moment they are set to stay at £258.24 a sq.metre (£24 a sq.ft.) for the rest of 2011, said Knight Frank. This is below the peak of 2009 because of a decline in demand illustrated by the 45% drop in take up last year, said KF’s Alex Munro. Even so, an interesting pointer to the future in Leeds will be when BAM decides to go ahead with its 10,684 sq.metres (115,000 sq.ft.) building adjacent to IVG’s No1 Leeds, which is slightly larger.

King Sturge has joined Knight Frank in letting this property. The firm’s Richard Thornton said: “The building offers large floor plates as well as part floors and is ideally placed to capitalise on various occupier break clauses and lease expiries we have identified this year.” Also being launched is the mixed use property, Indigo Blue, located at the junction of Crown Point Road and Hunslet Lane. It has residential units and 945 sq.metres (10,173 sq.ft.) of offices. It has been developed by Merlin Properties and is being marketed by WSB Property and Sanderson Weatherall.