New Road drives industrial demand

After a steady performance in 2010, the industrial market in Bedford is likely to benefit substantially from the new bypass around the town which links the M1 to the A1. “The road has become a real plus point for the town,” said Andrew Clark of Douglas Duff, ”and we hope the general expansion of manufacturing in the region will add to this positive trend.”

There has been an expansion of “demand for large industrial buildings and those suitable for trade counters. We are currently hoping to achieve the letting of a property of 12,449 sq.metres (134,000 sq.ft.).” The majority of the deals are around 1,858 sq.metres (20,000 sq.ft.) in a market which topped 69,675 metres (750,000 sq.ft.) in 2010. That is well ahead of the previous year although down on the 111,480 sq.metres (1.2 million sq.ft.) of 2009.

James Haestier of Colliers International said: “The market has been tough, but, because there has been some quality stock available, there have been deals. However, supply has dried up in the past 18 months. Now, occupiers will struggle to find a building of 18,580 sq.metres (200,000 sq.ft.) or more.”

The problem lies in the lack of speculative building which is due to the government’s empty rates legislation as well as developer caution in the face of a slow economic expansion. Even so, Bedfordshire is likely to see some sizeable schemes soon, driven by pre lets. Gazeley, with ICP Asset Management, for example, has a 32 acre site at Boscombe Road, Dunstable that could take a 69,675 sq.metres (750,000 sq.ft.) shed. Haestier says the bulk of the demand for larger sheds is coming from food and discount retailers.

An analysis by Capita Symonds highlights a resurgence of the small and medium enterprises (SMEs) in the manufacturing sector on the back of a competitive rate for the pound.“These smaller more nimble enterprises are competing on a global scale with both speedier delivery and lower costs,” it said. It notes that such companies are spread throughout the country and are not always in the strongest established industrial areas, helping rural areas and other industrial markets, a point made by Andrew Clarke of Douglas Duff for Bedfordshire.

Rail stations spark deals

Another major scheme adjacent to a railway station is by Solum Regeneration, a joint venture of Network Rail and Kier Property around Walthamstow Central Station. The £20 million project will create a new station square together with a hotel and shops.

There will also be 69 residential units and improved access to the station which serves 2,500 stations throughout the UK. This includes a new pedestrian link towards Queens Road Station. Peter Hughes of Solum commented: ”We are beginning to deliver what are often complex regeneration sites.

This is our second project to secure approval and work is well underway on our first scheme in Epsom. We are advancing plans for a number of other station sites.”

Plans for the regeneration of the sanofi-aventis site in Dagenham have moved forward with the appointment of Savills as advisers on the scheme. This is a major project on

108 acres and Mark Bass of sanofi-aventis said: “Our focus throughout the process of creating a lasting legacy has been to work with proven experts in regenerating commercial/scientific premises in an effort to transform the site into a facility that offers long term benefits to the people of Dagenham.”

Savills’ Neil Rowley commented: “Our master planning expertise will deliver a planning consent that enables such a legacy to be delivered.” Overall management of the regeneration (the existing operation ends in 2013) is with SOG Ltd. Another company, ARCADIS, has already commenced the routine clean up of the manufacturing site.

A master plan for the regeneration process is being drafted with an emphasis on creating new jobs and new business opportunities. Multiple uses are under consideration including office space, laboratory/research & development facilities, manufacturing, warehousing, retail, health and leisure. Once a major manufacturing area dominated by Ford, Dagenham has widened its business horizons. For example there are large sheds for the logistics business. Wolseley, the plumbing business, leased a 13,011 sq.metres (140,000 sq.ft.) shed in Choats Road recently. Driven by the upcoming Olympic Games, there has been considerable development in the area. Another scheme is for a Creative Industries Quarter on an industrial site close to Barking town centre on Abbey Road.

This will have a mix of residential and commercial space developed in two phases around a series of courtyards and riverside spaces that have direct links both to the existing urban developments to the east and the future sites to the west. The plans also encompass the proposed East London transit bus route and a new bridge over the River Roding.

The development, which is designed by Cartwright Pickard Architects, is due to go on site this year. It will have four blocks of 272 units of residential housing together with commercial/office, retail and creative industries uses, new ublic amenity space and a riverside walk.

Ransted takes space

The expansion of the recruitment business has become one of the new growth points for the commercial property market. One of the more aggressive of these recruitment companies appears to be Randstad which has centralised its operations in Hertfordshire into Rosanne House, Welwyn Garden City, Randstad’s Rudi Verhaak said: “The position and configuration of Rosanne House provided the ideal centralised facility for consolidating a number of newly acquired companies into the group structure. It will provide a platform for developing our established businesses locally.” Rosanne House now has only a small amount of space available following the refurbishment by Eagle Welwyn LLC advised by Brasier Freeth and Davies & Co.

In another deal Randstad has taken space in Imperial Court, Luton, a 1,533 sq.metres (16,500 sq.ft.) property which Valad has now sold to Kingston Estates. Valad’s Rob Howe said: “The sale of the last two units brings the development project to a conclusion for us.

Industrials beat offices

In Watford the market for offices is confined to the smaller sizes, while demand in the industrial sector is more broadly based. That is the experience of Peter Brown of Brasier Freeth. The agency has recently let two 929 sq.metres (10,000 sq.ft.) offices in 41-43 Clarendon Road, the type of deal that is the staple diet of the market.

Brown said: “There is more activity but the supply of Grade A offices is declining. The industrial market is more active and we have recently sold September Properties’ 5,853 sq.metres (63,000 sq.ft.) Eclipse after refurbishment which is now fully let.”

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.