Rents to rise at Heathrow

An increase in rents for industrial and warehouse space for Heathrow and the Western Corridor is predicted by Jones Lang LaSalle for 2011. The agent expects key Grade A sites at Heathrow to rise to £150.64 a sq.metre (£14 a sq.ft.). JLL’s Bridget Outtrim said: “The immediate vicinity of Heathrow’s cargo terminal is an exceptional location where, to date, there has been no premium stock available to set rents but there are two key sites coming through for development which could push up pre let rents.” While food and drink are the key occupiers in the logistics market, JLL notes “recycling and waste disposal businesses have emerged in 2010 and their need for large sites and open storage land, away from residential areas, possibly with railway access, will persist.”

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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.

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.

Yorkshire scores in job creation

On the face of it Leeds and other towns and cities in Yorkshire have a problem in overcoming the effects of the recession. The effect can be most clearly seen in the case of Leeds where, said Jeff Pearey of Jones Lang LaSalle, take up was only 26,941 sq.metres (290,000 sq.ft.), below the ten year average. In other cities, notably Sheffield, the market difficulties have been increased by the government spending cuts.

Yet there is another side to the picture. A report from the Centre for Cities gives a glowing report on the prospects for growth in Leeds and also gives star status to Hull and Doncaster for being in the top spots (with Northampton) in reducing the claimant count in unemployment between March and November 2010. Alexandra Jones, Chief Executive of the centre, commented: “Buoyant cities like Leeds (and Bristol), which have been fast growing and have lots of private sector jobs are best placed to lead the UK’s recovery.” She suggests that these places should have new financial freedoms such as full control over the local business rate, and new powers to raise money as well as benefiting from London style mayors.

Pearey points to the healthy start up sector as well as the firmer start to the year after the tough 2010. We have had more viewings and there is a healthy level of enquiries for city centre and out of town offices.” The public sector accounts for only 10% of the Leeds office market, so the spending reductions will have less impact. “On the basis of recent evidence, we expect to have a better year in 2011, particularly as companies know this is a good opportunity for better deals,” said Pearey. A typical deal in Leeds last year was JLL letting 660 sq.metres (7,104 sq.ft.) In Evans Abstract Limited’s Capital House to Synapse Learning for its first office in Yorkshire and ninth in the UK. Evans’ Harlan Pollitt said, “I am confident this letting will kick start further activity both in this building and in our newly refurbished Minerva House (next door).”

SEGRO gets Harrods

After a lengthy period searching for a new warehouse, Harrods looks to have chosen the former Guinness Brewery site at SEGRO’s Park Royal for the 30,657 sq.metres (330,000 sq.ft.) facility. The site has been renamed Origin Park and if the deal is completed, it will be the first there since Brixton (later taken over by SEGRO) bought it in 2007. It has planning permission for over 46,450 sq.metres (500,000 sq.ft.) of commercial space as well as a data centre.

Road lifts Bedford

Economic and development prospects in Bedford have been considerably improved by the completion of the A421 road linking the M1 and A1. This has enhanced the attractions of the industrial and business parks, allowing vehicles to go round the town. Further improvements, such as links between the A428 and A421 and between the A428 and A6, will bring more gains.

Douglas Duff’s Andrew Clarke said: “We are already seeing more enquiries and the knock on effect of the road looks like bringing higher quality offices and industrial space to the town.” The new bypass makes the main commercial estates and the flagship Priory Business Park more accessible. He added that “the Bedford Borough Council has been very pro active and helpful to businesses and the economic development unit has highlighted ‘22 Strategic Sites for Business.’ The new road should encourage developers to look at Bedford.”

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.