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Kent, Surrey & Sussex Commercial Property News - Thursday, November 15, 2018

Issue #57

CAUTIOUS BUT determined

Kent, Surrey & Sussex News

The mood in the property market has changed with a more cautious approach helped along by the stagnation of the residential sector and the problems in retailing. Yet there is also a determination to push on with new development and regeneration.

Add to this Brexit and the waters become muddied, although the industrial sector sails on and is doing well as the e-commerce expansion brings increased demand for modern warehousing.

Commercial agents are taking the opportunity to expand as we have seen with Vail Williams in Hampshire buying Hughes Ellard and now expanding its presence in Surrey with a larger operation in Woking. In Sussex, Flude Commercial is merging with Garner Wood.

In some places there is a new emphasis on improving the local environment, such as the 31 mile cycle and pedestrian route between Shoreham and Eastbourne. In Brighton there is a plan to improve the historic seafront.

Elsewhere, the county planners have made a number of questionable decisions. In particular, the approval of plans for an IKEA store and 600 homes close to Shoreham Airport in an area where the A27 has considerable congestion. In fact planners appear to be accepting that the whole of the south coast can become one sprawling area of housing – without adequate public transport or other facilities, such as doctors’ surgeries or schools.

Not surprisingly the appetite for high risk commercial real estate has fallen in the past year. According to Brickvest’s annual barometer of investor sentiment, international property investors have dropped their involvement in sectors such as speculative development by 41% in the past year in favour of low risk and moderate strategies. Obviously, this affects every area of the UK, including the south east.

The brighter part of the report, a comprehensive survey of 5,000 investors, is that one third of the investors favoured the UK.

Emmanuel Lumineau of Brickvest commented: “The UK has so far remained impervious to Brexit fear and retains its number one position.

Whether the UK remains ahead of the rest following March 2019 will be the key trend to watch in next year’s barometer findings”.

HOMES FOR Lidl

Kent, Surrey & Sussex News

The potential for using supermarket sites for a combination of housing and retailing has been recognised for years but little has been done in the UK so far.

There is nothing new about the model because it applies in many town and city centres. Now, Lidl plans to deliver thousands of homes through mixed-use schemes on its supermarket sites.

Ed Fowkes of Prosperity Capital Partners said of the Lidl policy that it “is part of a growing trend in the UK towards mixed-use development. As land costs continue to rise alongside build costs, it makes sense for developers to intensify their land use and increase the density of development, while opening up additional economic opportunities on site."

This is a trend that will suit local authorities, particularly as they have been allowed by the government to borrow more money for housing, but it also helps commercial development where local authorities want to create jobs.

Attractive AUCTIONS

Kent, Surrey & Sussex News

A useful guide to market sentiment is provided by auction sales which remain positive.

At one of Clive Emson’s recent sales an office building in Hastings, Roebuck House, with a doctors’ surgery and pharmacy, sold for £700,000. The annual rent is £78,000.

At its autumn sale, the firm has a record 180 lots and Clive Emson said: “This is going to be our biggest sale of the year. That I am anticipating packed salerooms is testament to the enduring nature of the auction.

Autumn is traditionally a strong time for property sales and new projects being planned ahead."

Two examples at the firm’s autumn auction illustrate the nature of the market. A large Grade II listed block at 8-9 the Parade, Canterbury city centre, with three national chains was offered at £2.75-£2.8 million.

Ten car parking spaces in Brighton were on the market for £200,000-£225,000.

OPTIMISTIC SHW

Kent, Surrey & Sussex News

An upbeat assessment on the commercial market in the south east has come from SHW (formerly Stiles Harold Williams).

It said: “Hot locations such as Brighton and Croydon continue to see higher rents and falling availability. For example, vacant space in Croydon in 2013 was 167,220 sq metres (1.8 million sq ft) and is now down to 19,137 sq metres (206,000 sq ft), or 3.7% cent of the built stock.

SHW notes that the relatively few speculative builds are faring well, with many pre-let, such as Brighton’s seven storey, 6,131 sq metres (66,000 sq ft) Brinell Building which is adjacent to the railway station.

In contrast to the tight markets in Croydon and Brighton, healthier stock levels can be found in other locations in the south east, such as Crawley, but, said SHW, “these figures are seen as temporary as several large occupiers have released space in the town to relocate to new build options leaving a few large vacancies."

SHW’s Tim Hardwicke said: “The overall picture is healthy in the main with good demand across all sectors."

The national problem of a lack of industrial stock also plagues the south east and SHW said Crawley/Gatwick have only 2.7% available to a sector primarily seeking warehousing and logistics space.

The outlook for development is healthy and SHW said: “There is strong demand for land in prime locations with Croydon and Crawley seeing high prices on the back of good demand for stock."

That certainly applies to the Commercial Park Group (John Baker and Sir Robert McAlpine), now with planning permission for the first part of its comprehensive development in Haywards Heath for offices of 6,039 sq metres (65,000 sq ft) in Perrymount Road. The plan for Haywards Park is for a scheme of 37,160 sq metres (400,000 sq ft) through the regeneration of multiple buildings.

Haywards Park is one of three business hubs being developed by the group in the south east. The others are Gatwick Park and Bromley Park, which are already progressing.

John Baker commented: “Boasting excellent transport links, an educated workforce and a range of local amenities in a countryside setting, Haywards Heath has a great deal to offer major companies. Haywards Park gives workers the chance to enjoy a more flexible and relaxed lifestyle which we think will be the key to productivity.”

Brighter BRIGHTON SEAFRONT

Kent, Surrey & Sussex News

A new effort to boost the image of Brighton and pull in tourists is to be made through a scheme by Boxpark to refurbish the historic Madeira Terrace on the sea front.

The intention is to turn it into a top retail and entertainment destination with International appeal.

Boxpark will undertake a 12 month period to explore the design, funding and management options for the scheme.

That would mean restoring the crumbling Victorian arches and bringing in a new premium hotel operator.

Apart from the arches, there would be a new building and urban green spaces.

Local resident and Boxpark founder, Roger Wade, is working on the scheme with Paul Nicholson of Chalk Architecture to bring real commercial verve to the terrace.

Wade said: “Madeira Terrace is the embodiment of the Victorian grandeur that saw Brighton become the UK’s favourite seaside destination."

Scott Marshall of Marshall Regan, the regeneration adviser, said: “The regeneration of the terrace is a key priority for the city council and by working with Boxpark, its sustainable future can be realised.”

SPACES IN Guildford

Kent, Surrey & Sussex News

Guildford does not, perhaps, come to mind as a hub of technology but in fact it has the Surrey Science Park, linked to the University of Surrey, which has a number of world-class technology companies.

That is one major attraction for Spaces opening its first office in the town of 1,533 sq metres (16,499 sq ft) in Austen House, a prime location close to the railway station.

It will have co-working areas, meeting rooms and high speed internet. Richard Morris of Spaces commented: “Demand for flexible workspace is growing rapidly.”

Crawley REGENERATION

Kent, Surrey & Sussex News

The £150 million scheme by Westrock for a mixed-use regeneration in Crawley is another indicator of the vitality of the area that is so influenced by Gatwick.

Westrock now has planning permission for Phase 2 of the scheme in partnership with Crawley Borough Council for residential units and a 13,935 sq metres (150,000 sq ft) town hall and office building. This is a district of the town that has a new public square, restaurants and other facilities.

Construction on the first phase will start with the town hall in early 2019.

What is interesting is that the project has included a district heating system that will be used by the new properties.

Matt Willcock of Westrock said: “The project is turning out to be a town centre landmark scheme, exemplifying how design can be balanced with sustainability, affordability and commercial goals."

In other parts of the town, there are proposals for developments (including the station gateway) that will improve connectivity between the railway station bus stations, improving town centre facilities and key development sites - part of the £60 million Crawley Growth Programme.

Upgrading the commercial and residential space in and around Crawley fits into the general improvement in infrastructure, notably the upgrading of the M23 to a smart motorway.

At Pease Pottage, close to Crawley, Scania (UK) is building a new commercial vehicle service centre with construction by Gallagher, a Kent based group It has immediate access to the M23 and the route to London and south to Brighton.

The buoyancy of the commercial property market is a major reason for the merger of Flude Commercial and Garner Wood, providing an ability to service the market from Hampshire to Sussex.

Seasonal CHEER

Kent, Surrey & Sussex News

Such is the strength of the demand for warehouses that the usual post – Christmas hiatus in the market is likely to be avoided in 2019.

That is the view of Which Warehouse which has assessed website enquiries and calls they have received. The result is a hefty 50% rise in visits to their website, The much publicised reason for this growth is e-commerce but in fact the report also highlights that companies have been overproducing before Brexit and storing their products.

Phil Degavino of Which Warehouse commented: “The demand for warehouse space is only set to increase as we prepare for Brexit, so we’re urging retailers and manufacturers to reach out to us with their warehousing needs."

The expansion of logistics is putting a considerable strain on the road network in the south east, epitomised by the constant congestion at the Dartford Crossing. The answer, said the Freight Transport Association (FTA), is for the government to build the new Lower Thames Crossing.

This would link the A2 east of Gravesend with the M25 to the north. Malcolm Bingham of the FTA said: “The M2/M25 route is a vital cog in the country’s freight machine and it must continue to work as smoothly as possible.”

New ASHFORD SCHEME

Kent, Surrey & Sussex News

Ashford contnues its dynamic growth with plans approved for a mixed-use scheme on the 140-acre Waterbrook site at Junction 10 of the M20.

The scheme is for new commercial property, retail space, 400 homes and a doubling of the parking capacity of the Ashford International Truckstop.

The site is owned by GSE Group, whose Darrell Healey said: “It will create a new business space and new homes for Ashford as well as much needed parking for lorries. Across Kent, there is a growing shortage of quality commercial property."

The first building to be launched in the Ashford Commercial Quarter is Connect 38 with offices and a restaurant together with retail space. At 7,479 sq metres (80,500 sq ft), it is the largest office building built in Kent for 20 years and is already 75% let.

Karl Elliott of Clague Architects, who designed Connect 38, said: “We are currently finalising the much bigger vision for Ashford Commercial Centre, which will ensure that the town is well-placed to welcome London and international firms looking for a well-connected new home.”

SHORTAGE easing

Kent, Surrey & Sussex News

SHW has been pushing the problem of a lack of new industrial building in Sussex for some time but now it sees hope on the horizon that the shortage is being tackled by developers with new schemes.

A handful of developers are now building schemes and SHW particularly mentions two which are nearing completion, both by Westcott Leach.

The new industrial scheme at Swallow Business Park, near Hailsham, is nearing completion of the second phase. Terms have already been agreed on one unit.

Building work on the initial space at Eastside Business Park in Newhaven is due to be completed before the year end, with two more blocks to follow.

David Martin of SHW said: “With the shortage of industrial and warehouse stock in Newhaven, these units will prove attractive to both local occupiers and companies seeking to relocate into the area, helped by its Enterprise Zone status.”

CHICHESTER Shines

Kent, Surrey & Sussex News

To a large extent the industrial and business parks are well spread throughout the three counties.

For example, Chichester has become more favoured as a location although it does have a congested main road in the A27. Even so, Glenmore has had a real success with its business park (named after the company) with only five of the 80 units remaining on the market.

The park has achieved this in only 18 months’ marketing by Lambert Smith Hampton, joint agents with Henry Adams and Michael Jones, with a range of occupiers, such as the World of Books. Guy Jackson of LSH said: “The park was built on a speculative basis without a single deal in place and take-up by businesses has been nothing short of phenomenal. Strong demand continues for these small units and I predict we will reach full occupancy very soon."

The business park is a major success story for Chichester and has brought increased employment to West Sussex.

Two KENT SCHEMES

Kent, Surrey & Sussex News

Two new commercial developments in Kent – at Dartford and Rochester Airport – will bring much-needed industrial and warehouse space to the county.

At The Bridge in Dartford, Buccleuch Property and Wrenbridge have planning permission for four warehouses of 4,181 sq metres (45,000 sq ft) on a 1.9 acre site.

Located just off Junction 1A of the M25, construction will be completed by July 2019.

Neil Finnie of Buccleuch said: “This latest acquisition further enhances our presence in the area, offering a prime opportunity to create value and expand our development exposure in the south east."

The scheme at Rochester Airport – Innovation Park Medway – envisages a massive 99,406 sq metres (1.07 million sq ft) of business space, taking advantage of the Enterprise Zone status of the airport.

The aim of Medway Council is to highlight the quality of the park’s digital connections and transport links as well as the access to four Medwaybased universities.

Councillor Alan Jarrett commented; “The park offers high-value technology, engineering, manufacturing and knowledgeintensive companies the opportunity to grow in a bespoke commercial development."

Kent already has important science facilities at Discovery Park and Kent Science Park.

Market BRINGS EXPANSION

Kent, Surrey & Sussex News

Vail Williams is on the expansion trail and is now to open a regional office in Surrey at One Crown Square, Woking. This will be its sixth regional office in the UK and will have a team of 15 surveyors covering all aspects of property consultancy as part of a new push to expand through acquisition and internal relocations and new recruitment.

Kevin Cook of Vail Williams said: “We are putting into action our ambitious plans to grow our business in line with our plans. We are already working with an increasing number of clients in Surrey.”

NEW ENGINE FOR Shoreham

Kent, Surrey & Sussex News

A major boost for the industrial estate on Shoreham Airport has come with the engineering company Cox Powertrain taking 2,601 sq metres (28,000 sq ft) on Cecil Pashley Way.

The building is being refurbished and will have the production line for the new CXO300 outboard diesel engine which Cox claims will be the world’s highest density diesel outboard engine.

Tim Boutsis of Cox, which has been operating from the airport since 2007, said: “The prospect of having our assembly line working alongside our engineers gives us the agility we need to deliver this game-changing technology."

He added that the UK is a hot bed for engineering talent and that “the government’s commitment to support innovation in the UK as part of the Industrial Strategy makes this the right time and place to move ahead with our plans."

The expansion plan means that Cox will more than double its current 70 staff by 2020.

Local MP Tim Loughton commented: “This is great news from another exciting, world-beating local company which is going places and has chosen Shoreham as its base.”

InBrief #1

Kent, Surrey & Sussex News

Flude Commercial, the Sussex based commercial agency, have merged with Garner Wood in Portsmouth, extending their network into Hampshire.

The company now has three offices (Brighton, Chichester and Portsmouth) and employs more than 30 people, making it one of the largest surveying practices on the south coast.

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