Showing the way

As politicians struggle with the closure of the massive Pfizer research base at Sandwich, now renamed Discovery Park, they will surely take a long look at the examples of Kent Science Park (KSP) and Kings Hill.

Each of these is a model of intensive and focused management together with the benefits of long term investors, La Salle Investment Management at KSP and Liberty Property Trust at Kings Hill. The problem at Sandwich is the sheer scale of the site with 278,700 sq.m. of laboratory, storage and office space. Enterprise Zone status will help but CBRE still faces a mammoth task.

In the case of KSP, the former Shell facility has been turned into a science park with a range of high technology companies in 55 acres of landscaped grounds serviced by a range of amenities such as a café and shop, gym and swimming pool together with meeting rooms and a lecture theatre. There is planning permission to expand on an adjoining site which will allow for future growth. That is the focus of Site Director, James Speck, and his experienced staff. "The expansion of Sheerness and the location of the Vestas wind turbine factory there will put pressure on the infrastructure, as will the regeneration of Sittingbourne town centre."

That will lead to upgrading of the transport and power supplies, he says, including the vital link to the M2 motorway which will become more important as Sheerness and KSP grow. That link could come from the northern relief road for Sittingbourne. Speck says simply: "The future is bright. Never forget that we have some big businesses in this area and we are a jumping off point for continental Europe."

Another important pointer to the future is that Speck has fostered relationships with universities, including Greenwich, Imperial, University College London (UCL) and Kent. Another peg for the future plans is closer ties with France to foster cross channel business activity.

Given the nature of the occupiers, such as the recently arrived Toximet, a product of the University of Greenwich, it is not surprising that KSP has an advanced broadband network. "We are looking at the idea of clustering that would link small operators and we have the facilities to foster that, including speculatively built laboratories to suit individual needs," said Speck. His success shows with the steady rise of the occupancy rate which is 77% now and will reach 82% by the year’s end.

Fundable deal

Another Sainsbury supermarket, this time in Woolwich, has also been sold recently. Woolwich Properties, advised by Lawson & Partners, sold the 3,809 sq.m. property to a private investor for £9.7 million, a yield of 5.5%.

Darryl Stevenson of Lawson said: "This is a very fundable deal that allowed the investor to acquire a long dated secure income from a sought after tenant within Greater London. The price is at a discount because the building has a long
leasehold with a longer rent review pattern than is normal."

New JV Buys in Tonbridge

One financial organisation that has been taking advantage of the decline of the property market is Palmer Capital.

It continues to follow its route into joint ventures in different parts of the UK, mainly through funding successful developers who understand their local market. The new £25 million joint venture is, however, with a financial organisation.

Fleming Financial Services is a UK financial adviser with a high net worth international client base, with a particular focus on Africa and the Far East. The fund has completed its first deal in acquiring a Sainsbury store in Tonbridge, Kent where the deal was struck at a yield of 5.25%. The JV will concentrate on properties in the price range of £1 million to £10 million.

Green Light in Brighton

Most towns in the south east are struggling to keep regeneration moving ahead but in Brighton plans for a mixed use scheme at the railway station have progressed.

The city council’s planning committee has given the green light to the scheme of Square Bay Properties for a hotel, offices and homes on a site known as ‘Block J.’ This is part of a programme to make access to the station easier and will, for example, bring an extension of the ‘Greenway’ route of a traffic free cycle and pedestrian link between the station and New England Road.

The scheme for a 94 bedroom hotel, 147 homes and offices is described as low carbon which includes rooftop allotments. There will also be a new public square. This development is the last of the so called New England Quarter to receive planning permission. The former railway goods yard has been developed in stages since a master plan was accepted in 2003.

Astellas buys in Chertsey

Astellas Pharma Europe, which is currently based in Staines, has bought the 9,303 sq.metres building in Hillswood Business Park, Chertsey, from Electronic Arts. Advised by Knight Frank, (DTZ for Electronic Arts), Astellas paid £16 million for the Sir Norman Foster designed building, which is set in landscaped grounds of 7.54 acres and with an adjacent development site of 6.13 acres. Hillswood consists of three headquarter buildings, the other two let to Samsung and Regus. At the moment Astellas occupies three properties in Staines so it will refurbish Building 2000 at Hillswood before moving in mid 2012.

Industrial dominates

Judging from the Locate in Kent (LIK) figures, the market is holding up reasonably well, being on target for inward investment in the first half when it pulled in 40 occupiers. What was noticeable is that demand for industrial property
increased to 60% in 2010-2011 from 39% in the previous year.

Peter Symons of LIK said that a planning application for the Vestas wind turbine factory at Sheerness was going in before the end of the year and "the consultation process has been positive." But he suggested more government support was needed for the industry.

Tough going

Normally the commercial property market in the counties close to London reap the benefit of the performance of the capital city, which has been enjoying a strong run in the past two years or so. But this is not happening at the moment and in the three counties agents agree that the market is tough going.

This view is echoed in the market survey by the Royal Institution of Chartered Surveyors that said: "Improvements in the market seen in the first half year faltered during the third quarter as occupier demand fell back for the first time in 12 months."

Even London was less buoyant which may be one of the factors that is making it harder work in the three counties. The main barrier is a lack of confidence as agents and developers digest the flow of gloomy predictions.

As far as the industrial market is concerned, Charles Binks of Knight Frank said: "Market activity was subdued in the first half year in London and the south east. We anticipate a general weakening over the next 6 to 12 months as deteriorating consumer confidence and public sector austerity measures ultimately impact upon logistics demand."

That is not preventing deals and continued development, such as at Kings Hill in Kent where the steady process of improvement continues as Liberty Property Trust takes the long view. A similar view applies to Kent Science Park, Sittingbourne.

While the Kent Property Report paints a reasonably optimistic picture with the stronger performance of 2010 continuing into 2011, it does say that "take up in (business parks) has been subdued in the first half year." The report noted the high occupation rate at Kings Hill and that in north Kent "Crossways continues to draw in major occupiers."

That applies to offices and industrial, where Schooner Park, Crossways has attracted a steady stream of new tenants, such as Milton Keynes Paint & Equipment. Broadly speaking, yields have fallen for office properties.