Hayes' gem solid

A further indicator of the improving Thames Valley market is that Jones Lang LaSalle has sold the ten acre Hyde Park Hayes Business Park for £30.1 million to Melford Special Situations for a yield of 8.2%.

The deal follows an extensive refurbishment of the Art Deco gem, which is strategically located close to the motorway network and Heathrow. LaSalle’s Gary Player commented: “We bought the property to the market in March 2011 and it attracted strong interest from a wide range of institutional and value added funds, showing that there remains a significant demand for the right type of office properties in the south east.”

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Milton Park's purple patch

MEPC’s Milton Park, one of the UK’s largest science and business estates, is having a purple patch with a host of new companies and its new status as an enterprise zone. In a one month period in the summer the innovation centre on the estate attracted eight new companies while three organisations relocated within the centre and a further three graduated to other premises. James Dipple of MEPC said: “Start up businesses are given support to succeed and expand to other offices on the estate.” The estate has become part of the Science Vale Gateway Enterprise Zone which is now within the Oxfordshire Local Enterprise Zone. Ansys, an engineering software company, is one of the growing companies at Milton Park and it has now expanded its facility to 1,134 sq.m. (12,203 sq.ft.).

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Manufacturing sets the pace

The message from many parts of the region is that manufacturing is leading the way in the improvement in the industrial market.

That is what the government wants to hear, but it has come naturally without the help of the public sector. It is hard to know how far this trend can advance but it is certainly highlighted by DTZ in its research on the UK market with the comment that “manufacturing has been at the heart of much of the positive news during the quarter.” While that applies to the wider UK, other comments from the Thames Valley bear that out.

Tunde Adegbemile of DTZ said: “The Heathrow and West London markets tend to provide a good indicator for Greater London and the south east, and there are some signs of confidence becoming more established with some speculative developments likely to commence in the second half of the year.” Adegbemile added that “from a logistics perspective, demand continues to be dominated by the food retailers, although there are signs of improving activity from the health and pharmaceutical sector.” One of the largest deals for manufacturing capacity is by Albion Land, advised by Jones Lang LaSalle and White Commercial, for Goodrich CTG, a leading carbon fibre technology firm, to take 12,774 sq.m. (137,500 sq.ft.) at Network M40, Banbury.

The £9 million facility will allow Goodrich, part of the US Goodrich Corporation, to expand extensively and develop new products. This follows Albion Land pre letting the slightly smaller nearby property to First Line and forward selling it to a pension fund client of Whitmarsh Holt Young for £8.65 million. Simon Parsons of Albion Land commented: “We identified the site as one of the few locations between London and Birmingham able to accommodate these large units. On the strength of demand we are keen to consider other opportunities along the M40.”

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Sun Park available

Sun Park, close to Junction 4a of the M3 motorway, is one of the largest office complexes to come onto the market for years, The 264,217 sq.m. former Oracle Office Park, which is in a 38 acre landscaped site, is now owned by a joint venture of Delancey and Landid and has the space for 3,000 people in three buildings as well as room for 1,351 cars. Trevor Silver of Landid said: “We anticipate that sectors such as pharmaceutical, IT, energy and research & development may be interested.”

There is also planning consent for a further two buildings totalling 14,186 sq.m. At Basingstoke’s Kingsland Business Park, SEGRO has let a refurbished office building of 1,234 sq.m. to ECI Telecom, a supplier of networking infrastructures.

SEGRO’s Chris Davies said:“This is the second building to let at Kingsland Business Park since the beginning of the year and achieved in just over four weeks.”

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Head of steam

The industrial sector has picked up steam which has been highlighted by the pre let of a large shed on the Suttons Business Park, Reading to Brakes Group, a food supplier, the largest of its type ever in the town.

The deal, through Haslams and Lambert Smith Hampton (LSH), means Standard Life Investments will develop the 19,230 sq.m.distribution and storage unit as a chilled warehouse. Philip Hunter of LSH commented: “This deal alone equates to more than 60% of the total industrial space transacted in Reading last year. For large industrial occupiers, the shortage of big sheds poses a very real challenge when it comes to acquiring new premises.”

Haslams’Neil Seager said: “Brakes’ acquisition of this new facility is an important transaction, both for Reading and the wider Thames Valley industrial market. Not only does it mark the largest deal of its type, but it sees the arrival of a major new occupier to the town.”

Another major scheme in Reading sees Royal Mail seeking a developer to buy a 69,675 sq.m. mixed use scheme on the 6 acre site of a former sorting hub. Royal Mail has planning permission for a scheme which would have 370 homes, offices, shops, restaurants and a hotel. Martin Gafsen of Royal Mail commented: “We have a strong track record in using theproceeds from the disposal of surplus property to invest in the mail operation.” Meanwhile, the office take up in Reading recorded a 116% increase to 17,191 sq.m. in the first half year compared with the same period of 2010, reports Stephen Head of Hicks Baker. He added that: “There are concerns that continuing economic uncertainty and fragile business confidence is slowing the rate of deals in the pipeline and this means the market may struggle to match the total take up of 2010.”

Head notes that the outcome will depend on the major enquiries in the market, such as Reading Borough Council and ING. He added that: “The market is relying on at least one of these ‘trophy deals’ coming to fruition in the next few months. We have to consider this (the take up in 2011) in context and remind ourselves that 2010 was already a considerable improvement on and 150% up on 2009.” The council’s decision should come in October. ING is looking for around 8,361 sq.m, more than it occupies in Reading at the moment where the lease ends in 2014.

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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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More space at Chiswick

Chiswick Park, which Blackstone bought for £480 million from the Chiwich Park unit trust in March, has shown how demand for space is healthy enough. It is currently talking to SOS, the security company, about a letting of 4,645 sq.m, giving it the incentive to embark on a new phase of development at the park. Blackstone proposes to invest £70 million to increase the size of the park to 130,060 sq.m.

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