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Kent, Surrey & Sussex Commercial Property News - Friday, March 16, 2018

Issue #55


Kent, Surrey & Sussex News

A bold move to alleviate the shortage of new offices in the south east is the aim of former Baker Lorenz executive John Baker.

His John Baker Group has teamed up with contractor Sir Robert McAlpine in a new operation, the Commercial Parks Group, to develop 185,800 sq.metres (2 million sq.ft.) of offices in the south east, starting with Gatwick. It already has a £20 million portfolio in Crawley, Bromley and Haywards Heath as part of the programme of creating a series of business hubs.

John Baker said: “The south east continues to see an influx of skilled workers seeking a more comfortable, flexible lifestyle outside central London. Haywards Heath, Crawley and Bromley are becoming key destinations to live and work.

Gatwick Park and our presence in Bromley and Haywards Heath will create vibrant, accessible 21st century business destinations”.

The plans are being worked up by Urban Infill Architects which already has planning permission for a 10,219 sq.metres (110,000 sq.ft.) office scheme in Crawley on Gatwick Road with an ambition of regenerating the area further.

The group aims to create 46,450 sq.metres (500,000 sq.ft.) at Gatwick Park, which is close to the airport.

Ian Dollamore of Urban Infill commented: “This is a progressive project, not just because of the focus on providing the highest quality office environment and the rejuvenation of entire streets, but also because of a chance to create a business destination that will make a real difference to the quality of people’s lives”. He added that they were bringing the work to the professionals who had moved to these towns.

Lambert Smith Hampton highlights the rise of office and industrial rents ahead of new developments in the south east. Although its research is mainly aimed at the Solent region, it applies along the south coast with an increased volume of enquiries and a rise in the size of the buildings being sought.

An indication of the strength of demand in the south east has come with a report from JLL on robust take up of large industrial buildings in the UK, with what it calls the Greater South East (an aggregate of Greater London, the south east and eastern England) accounting for 39% of the UK total. Demand increased by 40% last year compared with 2016.


Kent, Surrey & Sussex News

In listing 180 brownfield sites with the potential for housing development, Brighton & Hove City Council is in danger of ignoring the needs of its local economy.

That is because of the problem along much of the south coast of a lack of modern industrial space.

Some of the sites are already being developed and others have planning permission for residential. An example is a former gas works site near Brighton Marina which could have 88 homes, as well as some retailing.

Indeed, if a mixed use approach is taken then this could be an advantage for commercial property developers.

The council believes that 87% of the city’s future housing could be built on brownfield sites.

The dilemma is illustrated by the problems in Worthing, which apply to the rest of the region, with a worsening of the under supply situation for industrial property. SHW says this inhibits current and future economic development in the town.

The agent only has a handful of properties currently available in the town and adjacent areas.

Current availability of 6,134 sq.metres (66,025 sq.ft.) is just 2.4% of total stock, arguably the lowest proportion in the south east. Most of it is small and relatively old.

Duncan Marsh of SHW said: “There is an acute scarcity which we have been dealing with for some time, and despite repeated calls for action, nothing has happened”.

“What is needed is for the situation to be prioritised by government, councils, planning authorities and private developers in order to create more favourable conditions for local businesses, and to entice new companies to the county”.


Kent, Surrey & Sussex News

Indications that the peak of online shopping is approaching has lifted sentiment for retail premises in a number of countries and may be swaying investor sentiment in the UK.

Several recent transactions seem to confirm this. British Land is buying the Royal Victoria Place Shopping Centre in Tunbridge Wells for £100 million from Hermes and AXA is negotiating to buy Lendlease’s 25% shareholding in the Bluewater Shopping Complex in Kent.

Meanwhile, McArthur Glen is expanding its Ashford designer outlet by 9,290 sq.metres (100,000 sq.ft.).


Kent, Surrey & Sussex News

In launching a new promotional publication, SHW is underlining the buoyancy of demand in Sussex.

SHW’s Martin Clark said: “Commercial property is a vital indicator of trends in the wider economy”. He listed the following trends:  Strong demand for flexible/ co-working office space;  Office to residential conversions helping to alleviate the housing shortage. (Though elsewhere it argues for making land available for industrial schemes);  A rise in the amount of new speculative office and industrial space across the region;  Hardening of investment yields;  SHW has achieved major lettings for retail clients such as Subway for whom it has found 113 stores;  SHW has expanded its building consultancy so that it now handles more complex and larger deals, many of them outside its core area on the south coast.

Indeed, its analysis of the market is a guide to the trends in the adjacent counties as well as along the coast.

For example, the shortage of new office and industrial space means yields are increasing at a time when demand is strong.

An example of the firm market is that the agent let five units in Westcott Leach’s new Swallow Business Park near Hailsham in Block E, a 5,023 sq.metres (54,067 sq.ft.) building which is currently under construction and due for completion in the summer. This pre-let accounts for just under 25% of the space in the property.

The business park is already a success with SHW discussing the letting of a 1,858 sq.metres (20,000 sq.ft.) unit.

David Martin of SHW said: “The availability of these new units has come at just the right time with the lack of available industrial and warehouse stock in East Sussex”.

Martin believes that interest in the business park from companies throughout East Sussex is partly due to the competitive rent of £86 a sq.metre (£8 a sq.ft.). Another point he makes is the flexible approach of Westcott Leach in the size of the units from small to large.

Westcott Leach are riding the wave of the buoyant industrial market with the development of the Eastside Business Park, Newhaven where two blocks have already been pre-let and where construction of three terraces totalling 5,574 sq.metres (60,000 sq.ft.) is due to start in the spring.

INTO A cathedral city

Kent, Surrey & Sussex News

Historic Chichester has also experienced a rise in commercial activity as illustrated by the opening of a new business centre, the Chichester Enterprise Centre.

Basepoint, in partnership with the district council, has opened the centre on the Terminus Road Industrial Estate. It has 83 units including serviced offices, studios and workshops up to 65 sq.metres (700 sq.ft.) and is situated close to the A27.

Richard Morris of Basepoint said: “The new business centre offers high quality managed workspace to support existing SMEs and new start ups in the local area”.

Also in Chichester, RO has purchased 31-33 East Street from M&G Real Estate for £4 million.

Apart from retail units, there are flats and a maisonette on the upper floors. It is the prime shopping centre of the cathedral city, one of the leading shopping destinations in West Sussex, with a catchment population of 252,000.

David Kershaw of RO said: “In a recent report by Knight Frank, Chichester came third behind Cambridge and Bath in a ranking of the top 200 towns across the UK.

This type and size of mixed use property within a market town, let to strong blue chip retail tenants with an attractive residential angle is right in RO’s sweet spot for acquisition”.

A LEAP OF faith

Kent, Surrey & Sussex News

Despite uncertainties about Brexit, the healthy industrial market over the last 18 months has led to a shortage of good quality stock which, in turn, has put upward pressure on rents and capital values. Occupiers find it increasingly difficult to agree pre-lets and developers need to start building speculatively said Martin Trundle of Henry Adams.

Speculative development can be a risky business particularly in the regions, given the lower rents and the time lapse between buying a site and actually letting a building.

The Glenmore Group started development of the largest speculative industrial development on the south coast at Glenmore Business Park in Chichester in May 2015. It provides up to 16,722 sq.metres (180,000 sq.ft.) of industrial space and it has proven hugely successful with Phase 1 being completely occupied and Phase 2 having 40% of the space sold off plan with practical completion due later this year.

Complementary developments are now occurring such as Ravenna Point, a 1,520 sq.metres (16,360 sq.ft.) trade counter scheme by Chichester District Council and Chichester Enterprise Centre.


Kent, Surrey & Sussex News

A 3.6 acre site fronting the A26 in Tonbridge is to be transformed by Jardine Motor Group in a £12 million plan for a Jaguar Land Rover dealership.

Due to open in December 2018, the motor complex will total 4,245 sq.metres (45,693 sq.ft.) and has been master minded by Colliers International, whose Anthony Keohane said: “The dealership will be situated on a prominent gateway site into the town and has excellent visibility. This will be a state-of-the art showroom with room for 18 cars together with used vehicles and a 24 bay workshop”.


Kent, Surrey & Sussex News

The long drawn out plans for the redevelopment of the Whitgift Centre in Croydon have moved on with the council granting planning permission for the £1.4 billion scheme by Hammerson and Westfield.

However, there is some way to go before construction can start because there is still the lack of an anchor tenant to join Marks & Spencer although Westfield say an agreement with an anchor tenant is actually in place.

Sarah Jones, MP for Central Croydon said: “Croydon is an exciting place to live in London right now, with Boxpark, the Fairfield Halls redevelopment, street art, huge music talent and Tech City. The one piece of the jigsaw that we have all been working towards is for the town centre to become the vibrant heart of Croydon once again. We have the largest young population in London and this will create thousands of job opportunities”.

The next step is approval by London Mayor, Sadiq Khan, of the revised plan of close to 1,000 flats and 139,350 sq metres (1.5 million sq.ft.) of retailing and leisure space together with public realm space providing better integration with West Croydon.

Hammerson’s Robin Dobson said: “There is huge loyalty in Croydon to bring it back to the place it used to be 20 odd years ago. The size, quality and diversity of what we are talking about in retail, leisure and entertainment will allow us to do just that”.


Kent, Surrey & Sussex News

Despite the uncertainties over the Government’s decision on further runway capacity in the UK, the fundamental appeal of Crawley and Gatwick to businesses remains strong, says Altus Group agency director Tim Hodges.

Major occupiers already based in the area continue to expand and new companies are seeking space. The core market in 2017 was dominated by sub 10,000 sq.ft. office transactions but there are a number of larger 20,000 to 50,000 sq.f.t requirements in the market. “A common feature of the market has been occupiers reviewing their space requirements at lease events and taking advantage of more flexible working practices, collaborative working areas and buildings designed to deliver better efficiency ratios reducing floor space requirements for the same number of employees”, says Hodges.

Prime rents are favourable compared to other nearby centres and the appeal of Gatwick Airport together with excellent public transport and a skilled employment base has attracted many blue chip occupiers to the region, including Nestlé, Lloyds Bank, Santander and BDO all of whom are based in City Place opposite Gatwick Airport.

Landlords in this location are recognising the changing dynamics of the market and taking an increasingly pro-active approach to occupiers changing space requirements. For example, at 2 City Place Royal London Asset Management are now offering the opportunity to lease a sub divided suite in a range of sizes from 7,500 sq.ft. up to 21,000 sq.ft. to meet demand.


Kent, Surrey & Sussex News

A new complex of housing and a medical centre is planned for a 2.2 acre site in Kenley It will be developed by a subsidiary of Sheikh Holdings and its development partner, Haxted Estates, with finance from the Wellesley Group.

The £21.7 million project will have 113 residential units together with the medical centre and is another indicator of the moves away from London.

Andrew Turnbull of Wellesley commented: “Today, less than 20% of our loan portfolio is in London and it is quality schemes in areas of high residential demand that are the focus of funding”.


Kent, Surrey & Sussex News

Crest Nicholson and Waverley Borough Council have joined forces in a plan to regenerate Farnham town centre in the £116 million Brightwells project.

At the heart of the scheme is a £40 million retail and leisure hub, anchored by Marks & Spencer and Reel Cinemas together with 220 residential units clustered around a new town square. Construction is due to start in the summer. The development has been pre-sold to Surrey County Council. In detail, there will be a six screen cinema, eight restaurants and a combination of 24 retail units.

Detailed planning permission is in place. Chris Tinker of Crest Nicholson said: “Once complete, the scheme will regenerate an important location in the centre of Farnham and deliver much needed homes”.

InBrief #1

Kent, Surrey & Sussex News

The strong market in Surrey is one factor in the merger of Curchod & Co and Wadham & Isherwood. The combined firm, to be known as Curchod & Co, will have four offices (Farnham, Camberley, Woking and Weybridge), providing a wider regional coverage.


Kent, Surrey & Sussex News

Another milestone in the renaissance of Ashford has come with the start of construction of the £104 million M20 junction.

This will unlock new development sites as well as speeding up journey times, helping to boost the inward investment that is playing a vital role in the improvement of Ashford’s economy.

The junction is part of a £550 million roads programme in the south east for smart motorway upgrades in Kent, the Solent and on the M23 near Gatwick.

Cllr. Gerry Clarkson of Ashford Borough Council said: “The start of construction is more good news for the town and another example of the momentum in Ashford’s transformation. Our big 8 projects are all moving forward and the future is looking very bright indeed”.

Jo James, Chief Executive of the Kent Invicta Chamber of Commerce, commented: “So much economic activity has been locked up while we waited for this project to come forward, with the green light for it the brakes will finally come off these investments”.

The new motorway junction start coincides with work commencing on improving Ashford railway station for international trains with new signalling equipment and updated platforms.

Ashford’s achievements in regeneration and economic progress have been recognised by the council being shortlisted for the 2018 LGC awards, the biggest such award in the public sector. One reason for the shortlisting is the council’s response to reductions in public expenditure with its long term view that the period of cutting services is over. It now invests in assets to generate income streams and in its employees to oversee commercial agreements.

In addition, Kent County Council has been shortlisted in both the entrepreneurial category as well as the major award of Council of the Year.


Kent, Surrey & Sussex News

A further part of the regeneration of Hythe is coming with plans for a swimming pool and leisure complex at Princes Parade.

A major aspect of the regeneration plan is that it will bring a large amount of public space, allaying local fears that the area would be overbuilt.

It also means building 150 homes to help fund the leisure centre with its 100 station gym and public open space as well as easing the local housing shortage.

Part of the plan is to re-route the Princes Parade road to improve access to the seafront. Also central to the scheme is to provide opportunities for small scale commercial uses, such as a café, a restaurant and a boutique hotel to expand to the seafront.

The plans mean remediation of contaminated land and its return to public use and the safeguarding of ecological features plus the introduction of new habitats to encourage native species to flourish, an unusual detail in a regeneration scheme.

Leader of Shepway Council, Cllr.

David Monk, commented: “This ambitious scheme will transform a contaminated and underused site into a fantastic new leisure centre, with beautiful parkland that will enhance the Royal Military Canal and is the fulfilment of a promise to the people of Hythe”.

Better transport is coming

Kent, Surrey & Sussex News

Transport improvements continue to play a vital role in the improvement of the economy in the south east.

A vital interchange at Wisley for the M25 and A3 is to get a £175 million restructuring that will allow for a substantial rise in capacity through widening to four lanes between Ockham and Painshill and aims to speed the journey of the 100,000 drivers a day that use the routes.

Among the beneficiaries will be RHS Garden Wisley which is a major destination in the region, and commercial space though faster journey times in a wider area stretching throughout Surrey to such places as Guildford.

A core element of the plan was to protect ancient woodlands and provide a model for environmentally friendly road improvements.

InBrief #2

Kent, Surrey & Sussex News

Questor 60, a speculative scheme of five industrial/warehouse units totalling 5,574 sq.metres (60,000 sq.ft.) in Dartford completed in late summer 2017. The units were pre-let to Proper Music Distribution Ltd, whose Malcolm Mills said: “The brand new units work really well for us, allowing serious improvements in our working efficiency”.

Due to the success of Phase 1, Aberdeen Standard and Goya Developments are now working up the planning application for three detached units totalling 7,6363 sq.metres (82,200 sq.ft.).

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