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Commercial Property News For The Northern Home Counties - September 2011
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To view our extensive range of commercial Office and Industrial properties that
are available to buy, lease and rent in the Northern Home Counties area click here:
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Hemel and Watford set the pace
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| After a lengthy period of quiet activity there has been an improvement in some key areas of the region as companies move from a watching brief to more active participation. This is the theme for Hemel Hempstead and Watford, while Milton Keynes continues to perform steadily and Cambridge remains buoyant. The improvement in Watford is particularly apparent. Peter Brown of Brasier Freeth lists a whole series of lettings in the office core of the town. These were all to blue chip companies, such as TK Maxx taking 929 sq.metres (10,000 sq.ft.) and the big construction company Vinci slightly less. Ivico has also taken space, as have others in Grade A offices. Brown said: ?It has been a reasonable period but the reality is that we happened to have done a number of deals in a period of a few months and fundamentally the office market is still relatively quiet.? He also feels the market has benefited from the 5 year cycle of lease renewals and is not completely confident about the performance for the rest of the year. In fact rental levels and incentives have not changed much. Some areas close to London are also experiencing a rise in activity, such as Wembley, where Quintain has a major project and St Modwen has a town centre scheme based on the railway station. Clearly this will make Wembley a nodal point for London since the Quintain scheme is so large and a bet by Chief Executive Adrian Wyatt on the health of the London economy. But he has shown in other places, such as Greenwich Peninsula, that his instincts pay off. Another area with long term potential is Dagenham where the dramatic changes in the UK?s industrial base have meant the potential for massive development, the latest being the Sanofi pharmaceutical plant which is due to close in 2013. The interesting point about Dagenham is that the closure of Sanofi to join Ford brings a lot of land onto the market at a time when the government argues that a shortage of sites is holding back the economy, so the planning laws must change.
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More space for Amazon
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| Amazon continues on its massive expansion which has led to a series of large industrial lettings in the UK. The latest deal is that the online bookseller is negotiating with Murphy & Sons for a 43,200 sq.m. shed, ?Mammoth,? in Hemel Hempstead which was partially destroyed by the Buncefield oil depot explosion. Murphy acquired the site from Blackstone Real Estate Partners in 2009. To understand the scope of Amazon?s expansion, this follows it taking the 65,030 sq.m. Flair building on Gazeley and Metlife?s G.Park, Rugeley and it is negotiating with Prologis for a much larger shed at the Widnes Freight Park, Cheshire. |
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R&D for Dagenham
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| A Cheshire based company, SOG, has been set the task of converting a pharmaceutical plant in Dagenham into a multi occupancy centre with businesses across a broad spectrum. The plant is currently operated by Sanofi and will close in 2013. It believes the future lies as a research and development facility for science based companies. SOG?s Tim Metson said: ;There are thousands of square feet of specialist manufacturing and laboratory facilities on the Dagenham site that would cost millions of pounds to recreate. Our plan is to retain these buildings and offer them to other scientific businesses where they can be adapted to a multitude of R&D projects. |
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Timing
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| London & Stamford Property, the REIT which has a shrewd ability to time its moves into the property market to catch the trend, has bought a distribution unit in Harlow for £23 million, a yield of 7.5%. The 25,372 sq.m. distribution warehouse is leased to Tesco and has 12.5 years to run. It is one of the supermarket group’s key distribution points for stores in London and the south east. The acquisition will become part of the joint venture portfolio held with Green Park Investments and means that London & Stamford’s equity commitment is likely to be less than £5 million. London & Stamford has now built its assets up to £1.5 million in a relatively short period. The deal comes at a time when the development of big sheds has slowed considerably, which in the long run should point to an increase in values. |
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In Brief #1
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| The Royal Association for Deaf People (RAD) has leased a 368 sq.metres (3,968 sq.ft.) office in LaSalle Investment Management’s Century House, Riverside Office Centre, Colchester, the second deal in the property. The South African investor Redefine International has bought the St George’s Leisure and Shopping Centre, Harrow from Propinvest for £60 million. The 20,492 sq.metres (220,580 sq.ft.) centre, which has a Vue Cinema and Fitness First gym as well as shops, was built in 1996. |
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Bouncing back after Buncefield
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| Hemel Hempstead has experienced a significant increase in industrial and warehouse activity this year, reversing a period of slow trading. One reason for the stronger performance,“ said SEGRO’s Chris Davies, ”is the town’s wide industrial and logistics base, from local businesses to national distribution companies, as well as a broad range of available units from small sizes to 37,160 sq.metres (400,000 sq.ft.).” Of particular importance was the letting by SEGRO of 8,198 sq.metres (88,250 sq.ft.) to Gyron Internet, the specialist data centre provider at 150 Maylands Avenue, which, together with Boundary Way, forms the heart of the industrial market in Hemel. Brasier Freeth and CB Richard Ellis acted for SEGRO. One of the reasons for the deal was SEGRO’s specialisation in power, fibre and security needs of the industry. This has led to the property company becoming one of the largest providers of data centre properties in the UK. To cope with Gyron’s needs, SEGRO has provided an enhanced resilient 8MVA power supply to meet specialist requirements as well as refurbishment to make the property suitable for a high tech company. While 150 Maylands Avenue is the centre piece of the Maylands Woods Estate, there has also been increasing demand for purpose built units on SEGRO’s adjoining Vision site in the past year, with units let to Maritrans , South Midlands Hire and Centre Stage. Davies said: “Activity in Hemel Hempstead has remained robust this year, despite the difficult economic environment. The significant letting to Gyron highlighted SEGRO’s knowledge and expertise in delivering highly specified requirements for data centre occupiers, but also reflected the increasing strength of the local market.” Two other deals reflect the improvement in Hemel. Through Lambert Smith Hampton, Kaiser & Kraft have leased an office at Zodiac 5 and the Serviced Office Group has taken on 3,041 sq.metres (32,735 sq.ft.) at Westside in Apsley. Lambert Smith Hampton’s Claire Madden said: “As demand for space continues we are confident that Westside will attract a lot of interest from office occupiers.”
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Cambridge builds for student boom
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| As part of a mixed use scheme on 26 acres around Station Road, Cambridge, Powell Williams, the project management firm, is to manage the £40 million construction of student accommodation. Student housing has been one of the growth sectors for the property industry in the current period of hard economic times. In the case of Cambridge, it will be 511 bedrooms in three buildings for Anglia Ruskin University. Andrew Marshall of Powell Williams commented: “The growing requirement for high quality student accommodation shows no sign of waning and demonstrates how this one area of the market is booming, while others are suffering. Such schemes are offering one of the only streams for new build investment opportunities in the current market.” The key to this is that such schemes can raise private capital; in this case forward funding from LaSalle Investment. John Yeend of LaSalle said: “This project offers a unique opportunity to participate in the reinvigoration of this part of Cambridge through the development of new facilities for Anglia Ruskin University, alongside the wider development of new homes, hotels, shops, offices and public space.” The scheme has been designed by TP Bennett Architects and is designed to meet the BREEAM excellent sustainability rating, which is an increasingly important requirement on new buildings. According to Mike Ayton of Juniper Estates, the Cambridge office market continues to be active and the first half take up, together with deals in the pipeline, indicates that the total for the year will be over 37,160 sq.metres. “Companies like Jagex and Arm are expanding and we are getting to the point when developers need to go for speculative schemes. The vacancy rate for good buildings is only 3.5%.”
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Third time lucky
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| Councillors in Watford will be hoping that it is third time lucky for the redevelopment of the town centre. They had been faced by the second choice developer, London & Regional, pulling out of the project because apparently it wants “to concentrate on the core business.” They had taken over from Capital Shopping Centres for the 37,160 sq.metres (400,000 sq.ft.) Charter Place scheme. Now the baton has passed to Henry Boot Developments as the council’s joint venture partner. This has been a real problem for many towns throughout the UK as the decline in the economy hit home and developers pulled out of shopping centre schemes. The one comforting piece of information at the moment is that the increase in the number of empty units in shopping centres has, according to the latest surveys, halted although still leaving some centres with a third of the shops empty.
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In Brief #2
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| SEGRO has just completed a £1 million refurbishment of two units located within Ventura Park, Radlett. Units 2 and 3, which total over 74,000 sq.ft. of space, have now been fully refurbished and redecorated. Stephen Payne of SEGRO, said: “Ventura Park and Parkbury Estate are both established, developments situated in a strategic location.”
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Quintain has vision of Wembley
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| The massive regeneration of Wembley has taken another step forward with Quintain getting planning permission for the 157,930 sq.metres (1.7 million sq.ft.) Wembley City North West scheme. It will be built around the new civic centre with 1,300 homes, a new shopping street with 30 units and a department store together with the upgrade of the Olympic Way, the pedestrian route into the stadium. The £500 million development will be built in tandem with the existing plan for a mixed use scheme of 594,560 sq.metres (6.4 million sq.ft.) surrounding the sports stadium. An interesting point about the planning permission for the North West sector is that Quintain is required to provide only 15% of the housing for social tenants. Adrian Wyatt, Chief Executive of Quintain, believes Wembley will benefit from the strong growth of the London economy over the next 15 years at a faster pace than other major cities in the world, said PwC. Evidence of this growth is apparently provided by the take up figure for offices in London over the past few years, which was over 510,950 sq.metres (5.5 million sq.ft.) in the first six months. Wyatt sees Wembley as another nodal point for London with a travelling time of only 10 minutes to Marylebone. He is not alone in his bullish view of Wembley because St Modwen is engaged in a £90 million development around the central railway station and high street for 12,542 sq.metres (135,000 sq.ft.) of retailing, together with offices, an 86 bedroom hotel and 24 flats. The sheer scale of the development in Wembley will probably carry the area forward, as it is likely to do in Stratford with the vast new Westfield Shopping Centre, which has just opened, and the Olympic sports facilities. Apart from the opening of the shopping centre, this scheme has moved forward with Jones Lang LaSalle and BNP Paribas Real Estate being appointed by Lend Lease and London & Continental Railways to market the 371,600 sq.metres (4 million sq.ft.) International Quarter Stratford City campus. Construction of the £1.3 billion scheme on 500 acres will start in 2013 and is expected to benefit from the publicity generated by the Olympic Games.
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Cleaning up to success
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| A tired industrial estate of 24 units at Carter’s Yard, Kiln Farm, Milton Keynes has been transformed by the property group Kindale after advice from agent Douglas Duff and had immediate success with new lettings. The estate had suffered from high vacancy rates until Douglas Duff’s Graham Young produced a comprehensive improvement plan. Kindale director Peter Hughes said: “He gave us chapter and verse about what was needed to turn the situation around and I am delighted to say he is being proved right.” So far, 5 of the smaller units have been taken. Young said: “If you make the environment attractive not only does it appeal to new tenants, but existing tenants begin to take pride in their surroundings.” All the units have had their external cladding cleaned, landscaping has been refreshed and additional car parking created. Internally, the refurbishment has transformed the appearance and facilities of the units.
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Branson
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| A question arises from the improvement in Hemel Hempstead and Watford. Could it be that the log jam of companies wanting (and often needing) to move has opened up a little? One of the problems in the past few years is that many executives are wary of taking on new space in the face of the poor economy. Yet in many case their companies are doing well and need extra space or a new location. In both towns the letting deals have been done with a variety of companies, although high technology groups, who have to grow to compete, have been to the fore. It has meant that the mood among agents has lightened considerably. Equally important in terms of overall confidence, Quintain has not wavered from its commitment to transforming Wembley. Their plans are particularly ambitious but they have shown on many occasions that they can deliver, notably at Greenwich Peninsula. Their ambition is, of course, backed up by St Modwen also building at Wembley. They also are not in the habit of making mistakes on new schemes. Even so, it is not an easy task because Wembley is, in some senses, in no man’s land, although it does have good road and rail communications.
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