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Thames Valley Commercial Property News - Thursday, November 7, 2024

Issue #65

Gathering PACE

With Brexit becoming a reality, the mood in the property industry and economy generally has lightened and a more optimistic view has developed.

For the technology companies of the Thames Valley, that should mean a surge in business as companies move to invest in new equipment as well as new buildings.

An indicator of this trend came in a survey by Together, a finance specialist.

It found that small and medium sized businesses (SMEs) planned to expand premises and employ more staff. Indeed 27% of owners and executives in these companies plan to move to new premises as apprehension over the UK leaving the European Union ebbs away.

Andrew Charnley of Together commented: “The investment taps can now be turned back on with SMEs expected to pump more than £1.7 billion into the national economy. The south east region scored the second highest level of planned investment after London at £337 million”.

At the same time there is something of a geographical shift, according to flexible workspace company Regus, with businesses increasingly opening in the suburbs of major cities, transforming the make up of local economies.

Mark Dixon of Regus said: “When people commute into major cities, their wallets travel with them. This study shows that providing opportunities for people to work closer to home can have a tremendous effect, not just on them, but on the local area too”.

Colliers International notes that the south east office market in the third quarter of 2019 saw some increase in occupier expansion and that take up for the first nine months of theyearwas firmat185,587sq.metres (2 million sq.ft.).

The notable feature of the office market was the increase in the proportion of lettings in the 1,858- 4,647 sq.metres (20,000-50,000 sq.ft.) bracket to 47% of the total.

While the vacancy level has declined to 7.94% from 8.84%, prime rents have remained strong and mostly unchanged. Meanwhile, investment in the third quarter soared by 78% compared with April-June.

One interesting statistic that has emerged recently is that the most expensive area to employ skilled tradespeople is Newbury at £47 an hour, followed by Reading and Bracknell Forest. In comparison, it is £23 an hour in Hull.

As has been the case for some time, the industrial sector out performed other property sectors, driven by strong rental growth in London and key south east locations, said Colliers International. It added that “strong market fundamentals are expected to push the sector forward in 2020 as occupiers focus on streamlining supply chains”.

Andrew Ferranti of Colliers International said: “Supply has increased and stands at around 3.34 million sq.metres (36 million sq.ft.) and the market is well balanced in terms of supply and demand”.

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TOP performers

In the case of Basingstoke, there is a perceptive and active council supporting commercial development, as shown by a deal with St Modwen to develop an 11 acre site at Viables Business Park for 16,722 sq.metres (180,000 sq.ft.) of industrial and warehousing units.

This will be a joint venture with the site owner, the US company ITT Industries and St Modwen, with the plan for three large warehouses and two smaller retail pods. As part of the deal the council will own one of the new logistics warehouses.

Basingstoke and Deane Borough Council has also launched a five storey office building of 3,716 sq.metres (40,000 sq.ft.) called Neon onto the market. Located within the Basing View Enterprise Zone, the building will have showers, changing and drying facilities and electric charging points in the adjacent car park.

Local agents, BDT incorporating Woodford & Co, estimate office availability at 62,986 sq.metres (678,000 sq.ft.) while take up in 2019 was 28,334 sq.metres (305,000 sq.ft.), more than half of which were in Basing View.

Council Leader, Ken Rhatigan, said: “The borough is already home to 7,700 businesses and we are committed to attracting more to be part of our growing story of success”.

Another aspect of this policy is to partner housebuilder Barratt on a policy known as beds and sheds to develop the former Nestlé chocolate factory in Hayes for housing and sheds. Construction will start this year.

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InBrief #1

In its annual report, Christie & Co said that despite the decline in transactions and deal count, “domestic and overseas investor appetite for UK hotels remains strong”.

A small new community of 300 homes and space for small businesses is to be built at East Woodstock overlooking the palace at Blenheim, home to the Duke of Marlborough. In opening the development, Witney MP Robert Courts said: “Park View is great example of how historic landowners like Blenheim can help address the urgent need for new, high-quality and inclusive housing.”

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Soaring RENTS

When it comes to the growth of the property market in a buoyant economy, then Oxfordshire comes near the top of the table in the UK, illustrated by office rents soaring by 24.3% in the past year.

They are now at an all time high of £468 a sq.metre (£43.50 a sq.ft.) in a market where tech companies are seeking 102,190 sq.metres (1.1 million sq.ft.) of office and laboratory space with available space around half that amount.

David Williams of Bidwells commented: “Ensuring the world’s best flourish in Oxford is critical to our region’s economy but ensuring an adequate supply of correctly located offices and research labs is equally important. There are major new campuses in development such as Oxford North and the regeneration projects in the city centre. There is no lack of interest in Oxford”.

A key factor in future growth is the government’s green light for the Arc’s east west rail route between Oxford and Cambridge, helping to link many technology clusters.

Almost in a Victorian railway building sense, the line will feed off areas of dynamic growth, such as the new Oxford North Innovation District in a scheme by Thomas White Oxford, the development company of St John’s College. It will have an impressive range of facilities such as: 87,000 sq.metres (936,120 sq.ft.) of business and commercial space; shared workspace in the Red Hall for freelancers and start ups with a capacity of 300 people; 2,500 sq.metres (26,900 sq.ft.) of shops, restaurants and bars; 480 new housing units; 23 acres of open space including three new parks; New cycle paths, performance space, a nursery and 180 bedroom hotel.

William Donger of Thomas White said: “We believe this project will be truly transformational and a positive addition to one of the world’s greatest cities. It will deliver high quality workspace and investment in infrastructure for all forms of transport”.

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AIPUT LOVES Heathrow

Traditionally Heathrow is one of the main centres of growth in the region and the latest deals by Aberdeen Standard’s AIPUT Fund adds to that script.

The fund has been on top of demand at the airport for warehouse facilities and now has planning permission for a new 2,579 sq.metres (27,760 sq.ft.) for Black Arrow, a speculative warehouse at Blackthorne Point Industrial Estate, Poyle.

It is across the M25 from Terminal 5 and will, said AIPUT, incorporate a number of new environmental initiatives, such as air source heat pumps and photo voltaic panels bringing a 30% reduction in CO2 emissions over building regulation requirements.

Fraser Green of AIPUT said: “This new addition delivers on our long term vision to facilitate the continued growth of our high quality air cargo portfolio at key locations serving Heathrow”.

The letting follows a successful refurbishment of units at Blackthorne Point and the arrival of new occupiers. Among the high profile occupiers are UPS and Horizon International. New developments are vital if Heathrow is to reach its target of handling 3 million tonnes of cargo by 2040.

Another of AIPUT’s facilities now has a pre let to one its largest customers, dnata, of a 10,684 sq.metres (115,000 sq.ft.) warehouse at City East. It is designed to operate with the existing larger warehouse that handles Virgin Atlantic Cargo and Delta Cargo’s air freight at Heathrow.

As a result dnata has Heathrow’s largest off airport cargo handling operation.

AIPUT’s Nick Smith said: “Our partnership with dnata sets a new benchmark for airport industrial property investment in terms of both scale and the environmental credentials of the buildings.”

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PROPERTY profile

Reading RG2 0TG Location: The property is well located only half a mile from J11 M4, 29 miles from Heathrow Airport, with Central London only 45 miles away.

Description: The property is a newly refurbished detached warehouse/production unit of steel portal frame construction with offices.

Specification: Large secure yard 5 Level access loading doors 6.7m eaves height 24/7 on site security EPC Rating C (55) 46,786 sq.ft. (Can be extended to 55,000 sq.ft. Subject to Planning Permission) For further details and viewings, contact joint agents: Haslams 0118 921 1515 Lambert Smith Hampton 0118 959 8855

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InBrief #2

Tungsten Properties has pre let a development of an 11,613 sq.metres (125,000 sq.ft.) property for Certikin International, a manufacturer and distributor of swimming pool equipment for a new headquarters and warehouse.

The site has in the past been owned by a consortium of leading house builders. The first phase of the 24 acre scheme will total close to 46,450 sq.metres (500,000 sq.ft.).

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MAKING HISTORY -100 years of SEGRO

Few companies can match the long and successful history of SEGRO which has become an international force in the property industry since it started with the Slough Trading Estate in 1920.

The story gathered pace following the 1914-18 Great War when the site was used to repair military vehicles, which had played an ever increasing role in that conflict.

Now SEGRO is the UK’s largest property company with an £12.2 billion portfolio of warehouse space across the UK and continental Europe.

The story starts with Lord Percival Perry, Redmond McGrath and Sir Noel Mobbs paying £7 million for the 2.7 sq.km. of land and 167,220 sq.metres (1.8 million sq.ft.) of buildings as well as the 17,000 military vehicles stored there.

It took another five years to repair and sell the vehicles so that the company could rent the buildings out, and this in an area that was increasingly becoming a location for manufacturing new products, such as electrical goods and motor components.

For example, Mars started there in 1932 and later, between 1964 and 1969, Ford manufactured the record breaking GT Model, which won four Le Mans motor races.

Proving its corporate strength, Slough now has the largest industrial estate in Europe under single ownership, with 500 businesses and incredibly, it is the home of the second largest data centre cluster in the world, only behind Silicon Valley.

Perhaps the most impressive point about SEGRO would be the way that the business has been successful, but in a responsible way by placing customers, employees and the communities in which it operates at its heart. There are many examples to illustrate this over the last 100 years.

Throughout its early years it had grown as a traditional property company with holdings in office and retail property as well as industrial. The bold decision was made in 2011 to concentrate on the industrial portfolio and dispose of the other sectors.

Given its sheer size and expertise, it now plays a wider role in the UK economy, such as publishing a report, Keep London Working in 2017, on the need to protect the capital’s industrial land in the face of the need to build homes (a problem throughout the UK). An example of this co-operation is the 86 acre SEGRO Park Newham where a 113 room Travelodge has opened recently.

` The park is an investment of £34 million within the wider programme of the East Plus programme for east London, creating 4,000 jobs. SEGRO’s Alan Holland said: “The transformation of SEGRO Park Newham from redundant wasteland to a thriving business hub is a significant milestone in our ten year East Plus partnership with the Greater London Authority. We’re helping to maintain valuable, strategic industrial land in the capital and attracting a diverse mix of businesses to the area”.

Another aspect of this policy is to partner housebuilder Barratt London on a policy known as beds and sheds to develop the former Nestle chocolate factory in Hayes for housing and sheds. Construction will start this year.

Due to its financial muscle, SEGRO can undertake large schemes that would be beyond the capacity of smaller companies.

An example of this is the 700 acres inland port of the East Midlands Gateway at Castle Donnington which will have 557,400 sq.metres (6 million sq.ft.) of warehouse space for major companies such as Amazon.

Also in the Midlands, it has bought 450 acre site adjacent to Coventry Airport for Gateway South, Coventry, a 343,730 sq.metres (3.7 million sq.ft.) of industrial and warehouse space.

Innovation has long played a central role at SEGRO, such as the development of multi storey warehouses, an example of which is the 62,986 sq.metres (678,000 sq.ft.) Air 2 Logistique in Paris, occupied by IKEA. S EGRO believes the problems of a shortage of land will inevitably mean more development of multi storey warehouse units in the future.

The company has also been a responsible employer with pioneering employment policies and financing the Slough & District Recreational and Institutional Fund.

Observers of the UK economy might wish that more of the pioneering companies of a century ago were still in business and had advanced in the way that SEGRO has.

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Harwell GROWS

Harwell is also proving to be one of the growth points in the region where construction has started on the new 2,973 sq.metres (32,000 sq.ft.) Zeus building.

It is the first of a planned group of multi occupier hybrid buildings that will further expand Harwell’s scope for R&D, offices and laboratories. It even has a high profile architect, Allies and Morrison.

William Cooper of the Harwell Campus Partnership said: “We’ve invested in the design, unusually putting it out for architectural competition, to ensure we continue to deliver an innovative and exciting environment”.

Underlining the national importance of Harwell Campus, Carter Jonas has secured planning for two large science buildings totalling 14,864 sq.metres (160,000 sq.ft.) on behalf of the Science and Technology Facilities Council and MACE.

The first building of 4,170 sq.metres (44,885 sq.ft.) is for the government funded Rosalind Franklin Institute which undertakes research on life sciences.

The other, and larger property, is for a new National Satellite Test Facility in response to the UK Space Agency’s need for a central location in the UK. It will enable UK companies to develop the next generation of launch technologies to allow the construction of satellite to deliver payloads into orbit.

Nicky Brock of Carter Jonas said: “Access to co-located world class facilities at the National Satellite Testing Facility will enable British industry to bid competitively for more national and international contracts”.

Carter Jonas is also marketing Glenmore’s 3,915 sq.metres (42,140 sq.ft.) Stanley Court, Witney with 34 self contained units available as leasehold or for sale freehold.

Robert Gibbons of Carter Jonas commented: “Across Oxfordshire light industrial, warehouse and office accommodation are all in relatively short supply. Witney is a rising commercial hub within the region”.

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HEART OF Brooklands

With its strategic location close to two motorways and Heathrow, Weybridge has a firm commercial property market.

At RO Property’s 3,667 sq.metres (39,471 sq.ft.) Dakota building, agent Vail Williams has let two units totalling 1,164 sq.metres (12,528 sq.ft.) to Robert Half, a recruitment company, and Yooserv, which markets co-working space.

Elliot McNish of Vail Williams said: “The quality of space at Dakota makes for an appealing proposition."

The building is in the heart of the historic Brooklands racing circuit.

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Positive THINKING

As the property market wakes up to a more optimistic tune after the battering of the Brexit debate, Mark Clancy of London Clancy forecasts a year of increasing confidence and positivity for the M3 and Solent corridor market.

The optimistic talk needs “to convert to action and clear signs of increased take up and investment. In our region, this would build upon an already impressive level of transactions last year which was, once again, led by the industrial/warehouse sector."

Clancy believes that total commercial property returns will improve over the next twelve months but will be tempered by the restructuring of retail as it continues its battle with online and the need to re-purpose surplus space.

Although the industrial sector is leading the way, Clancy suggests the office market activity will be maintained together with increased demand for managed and serviced accommodation. Additionally, headline rents, which are £290.52 a sq.metre (£27 a sq.ft.) in the upper M3 area will move up.

“Occupiers and investors are now able to frame their property decision around some level of certainty rather than the stifling deadlock of the past three years,” Clancy added.