Backing technology

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.

Crowing King's Norton

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.”

Companies are cash rich

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.

CLICK HERE TO VIEW COMMERCIAL PROPERTIES IN THE THAMES VALLEY AREA.

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.”

Persistence brings reward

Peter Symons of Locate in Kent, the inward investment agency, has been unwavering in his efforts to get a major wind turbine manufacturing facility in the county.

His arguments have always been that the Kent coast is a logical place to manufacture wind turbines for the growing number of turbine farms in the North Sea and around the coast of the UK.

This has paid off handsomely with the world leader in this technology, the Danish company Vestas, choosing Sheerness for its manufacturing plant. This follows the German company Siemens locating an £80 million turbine manufacturing factory in Hull.

Symons said: “The Vestas plant will build on the county’s already excellent credentials, its two existing wind farms and another under construction, (London Array) which, once complete, will be the world’s largest.”

He views the wind energy industry as a key growth sector for the UK and has been aware for some time that Kent has a particularly important role to play. This long term commitment meant Locate in Kent starting talking to London Array six years ago and Vestas in 2010. “The Kent coastline has several ports and harbours with excellent facilities to support both construction and operations and maintenance activities,“Symons said.

“Sheerness Port is part of the Medway Superhub, which offers more than 200 hectares of development land.” Other factors that help the arguments for Kent are its position between the English Channel and the North Sea and the good links to London, the rest of the UK and the continent. As part of this initiative, the Swale Skill Centre is being aligned to the offshore wind industry and DONG, which has a 50% stake in the London Array, is supporting 8 apprenticeships. Symons’ aim now is to attract other wind turbine manufacturers to the county as well as ancillary suppliers. The Vestas plant should be in full production by 2015.

Data centres funding

Encouragement for the government policy of creating new enterprise zones, which have been so successful in Yorkshire, has come from Highbridge raising £263 million to fund its Cobalt Data Centre Campus near Newcastle. Highbridge will use the money to build two data processing centres of 5,760 sq.metres (62,000 sq.ft.). The money has been raised by Taurus Asset Finance and Harcourt Capital through two Limited Liability Partnerships.

Guy Marsden of Highbridge commented: “We look forward to delivering two facilities as part of our long term strategy to develop quality and competitive data centres at Cobalt Park.” In the past, former coal mining areas, such as the Dearne Valley, have been given a new lease of life through becoming enterprise zones and they could be the model for the next tranche, bringing in new investment and creating employment. Marsden said finance is available for the right projects.

High tech race

The most ambitious project, which is already underway, is to create a high technology highway stretching from Shoreditch into the East End. There are already a number of corporate clusters and the government has seen the potential and is pushing it hard as part of the Olympic development.

The Olympic Park Legacy Company (OPLC) is talking to the US group Cisco about it taking space within the media centre. The government said Cisco was discussing the project with the OPLC about creating an innovation centre which has been enhanced by commitments from Google and Intel for such a centre.

Facebook is also in on the act with a plan for headquarters for the Developer Garage programme. BT has already committed to a super fast broadband system for the area and Loughborough University wants to construct an Institute of Sport and Health at the park. Meanwhile, the OPLC is seeking an operator for the 377 ft ArcelorMittal Orbit tower, which is known as the “mutual trombone” and is designed by Cecil Belmond of Arup and sculptor Anish Kapoor. That is merely the start of the process because the organisation will also seek operators for the aquatics centre, arena and management of the park.

Hull gets major investment

For Hull the year has opened in splendid style with Colliers International doing a deal for Siemens for a site to manufacture wind turbines in Alexandra Docks. This is a highly prized inward investment that many parts of the UK were hoping for and is a large facility costing £80 million and, of huge local significance, it will create 10,000 jobs.

Past experience shows that such a new high technology manufacturing facility will act as a catalyst for other companies, notably equipment suppliers for the wind turbines, which will be for offshore and farm installations. Locating in Hull makes total sense because Siemens intends exporting the turbines to other countries in North West Europe.