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South Coast Central Commercial Property News - Saturday, October 26, 2019

Issue #40

CITY OF Culture beckons

South Coast Central News

Such is the confidence in Southampton about its business and cultural offering that the city is to bid for the City of Culture in 2026.

Councillor Satvir Kaur said: ”Culture has become the beating heart of our great city, with so much to celebrate and be proud of.

This motion cements the council’s commitment to use culture as an engine to transform the city”.

”Successful cities like Hull and Liverpool have shown the huge economic and social impact it can have on a place. There is no reason why Southampton cannot follow suit”.

This pressure for improvement in the city is shown by the new plan from developers Tellon Capital for a £100 million rebuilding of the semi derelict Bargate Shopping Centre.

The proposal is for a mixed use scheme of 152 flats, accommodation for 451 students and about half the previous amount of retail space. James Burchell of Tellon said: ”It was a dead end centre in every sense of the word and we are creating a thoroughfare with a new sense of place”.

In recognition of the fact of too many retail units in the UK, elsewhere in Southampton at the Marlands Shopping Centre some of the space is being converted to offices for start ups. Earlier in the year in his budget the then Chancellor of the Exchequer set out to make it easier to create new mixed use developments.

An interesting aspect of the changing commercial property market is the experience of agents Holloway Iliffe & Mitchell in citing that the first half year was one of the most active on record for property valuations.

The firm’s Peter Dalby said: ”There has been an escalating amount of activity across the south coast, particularly for formal valuation requests, whether for single buildings, small portfolios or increasingly HMO tenants.

Another aspect of the changing market is that thriving businesses are moving into modern premises and bringing a change in the industrial market, said Lambert Smith Hampton (LSH).

That is coming against the background of increasing take up for industrial property combined with prime stock coming on stream from new developments.

Elise Evans of LSH commented: ”We have witnessed a positive start to 2019 when compared with the same period of last year.

Tenants are grasping opportunities for more modern units, generating a churn as occupiers relocate to prime space and free up secondary stock”.

Judging from the construction figures for the UK, the picture is mixed with Barbour ABI reporting a decrease of 18.7% to a total of £4.9 billion for new construction contracts in August.

Gareth Belsham of surveyors Naismiths said: ”Even by the volatile standards of the construction industry contractors’ order books have been subjected to both feast and famine“.

TWO MORE business parks

South Coast Central News

If any confirmation is needed of the strength of the market on the south coast it is certainly provided by Kingsbridge Estates which has bought two sites for business space developments.

The largest of these is a four acre site at Concorde Way, Segensworth, while the other is a 2.6 acre site at New Lane, Havant. The two business parks will provide 13,940 sq.metres (150,000 sq.ft.) of commercial space.

The Segensworth park will have 10 industrial units developed to a BREEAM ”Very Good“ standard and range in size up to 1,858 sq.metre (20,000 sq.ft.). In the case of the former Buttericks factory at Havant, the emphasis is on small units with a total of 12 in two terraces.

Joint agents are CBRE and Vail Williams. Kingsbridge’s Chris Fry said: ”We intend to play a significant part in meeting the huge demand for business space across the south of England and have capital available to secure further, similar opportunities across the region”.

A further addition to the market is completed with a 2,788 sq.metres (30,000 sq.ft.) unit at Woolston being marketed by LSH. It is the first industrial unit in this location since 2003.

LSH’s Dan Rawlings said: ”We are expecting a high level of interest given the quality of the units and its prime location opposite Ocean Village Marina. Commercial space is at a premium in the region”.

InBrief #1

South Coast Central News

Serocor Group, a recruitment and human capital management solutions group, has signed a 10 year lease on a 9,720 sq.ft. office at Shore House, Compass Road, North Harbour Business Park in a deal brokered by agents Vail Williams.

Councils TAKE CONTROL

South Coast Central News

The direct participation by local authorities in the commercial property market is gathering pace with one of the largest being Portsmouth Council’s purchase of the 55,762 sq.metres (600,000 sq.ft.) Lakeside North Harbour office campus.

George Cook of Flude said of the purchase of the 120 acre site which has 97% occupancy that: ”As almost all the city’s office market is at Lakeside, the purchase will ensure that Portsmouth has a say in the future of the local office market for many years to come, while also providing the council with a stable income stream from occupants, such as IBM, Babcock International and Regus“.

Cook highlighted the success of Portsmouth University ”which has brought confidence from out of town developers, who have spent £ millions on student units”.

Southampton Council is also taking a direct role in the property market at the former Toys R Us retail unit where the proposal is for a mixed-use development with 275 residential units in three buildings and a 6,505 sq.metres (70,000 sq.ft.) landmark office building. One attraction is that it is opposite Southampton Central Station.

The interesting feature is that the office building is a £27 million investment by Southampton Council, creating a revenue stream from rent and business rates. When completed, it will be held in the city’s commercial property portfolio.

Apart from the income, the council wants to demonstrate the importance and viability of new offices in the city. The total value of the completed project could be around £150 million. There are also future plans for further office, commercial and leisure space on the former retail site.

It fits into the expansion of the Mayflower Quarter which includes a new maritime promenade linking the station past West Quay down to the waterfront near Mayflower Park.

Ringwood SCHEME

South Coast Central News

Hoburne Development is due to begin construction of a major new industrial enterprise park in the heart of Ringwood, which has been designed to provide space for small to medium sized businesses.

The Hoburne Enterprise Park at Embankment Way, Ringwood, will comprise 21 high quality, self contained factory and warehouse units ranging from 950 to 1,860 sq.ft, providing a wide range of sizes, that can be adapted if further expansion is required.

Units in phase one of the development will be available for occupation in July 2020 on a leasehold basis. Cowling & West are letting agents on the scheme.

Director of Development, Paul Campbell said: “Hoburne Development has been involved in the new business park scheme for over two years, and we are confident that demand will be high as we feel these new units will help to fill a gap in the region’s commercial property market”.

FAVOURED Winchester

South Coast Central News

Winchester has experienced a buoyant commercial property market for a few years covering city centre offices and industrial estates.

That applied to the Wykeham Trade Park where Hellier Langston and LSH have signed up three new occupiers for a large unit which has been split by Canmoor with the departure of APEM. Matt Poplett of Hellier Langston said: ”The estate is close to J9 of the M3 and close to Winchester city centre. High demand for the units brought a speedy letting”. Dan Rawlings of LSH said: ”All the units were under offer before the refurbishment was completed”.

InBrief #2

South Coast Central News

Chichester Agent Martin Trundle, from Henry Adams, points out that prime industrial rents across the region have dramatically increased from £7.50 psf to £9.50 psf over the last two years but have probably peaked for the immediate future as the level of growth is not sustainable as occupiers are increasingly cost conscious and are delaying property decisions given the general uncertainty in the economy.

BUY A fort

South Coast Central News

A slice of history is for sale in the Solent with three forts built in the 1860’s to guard the approaches to Portsmouth.

Originally ordered by Prime Minister Lord Palmerston, they are being sold by Mike Clare, who founded the Dreams bed company., He has redeveloped two of them, No Man’s Fort and Spitbank as exclusive hotels.’ The other, Horse Sand Fort, is used to record the history of these follies and maintains the 100 chambers and living quarters, original gun carriages and armour plated walls.

No Man’s Fort has a maximum capacity of 200 and can be used for weddings and corporate events some of which can stay in the 23 guest bedrooms. Spitbank has nine luxury suites together with space for events.

Colliers is handling the sale with an asking price of £8 million for the two forts, while Horse Sand Fort is being auctioned by Clive Emson.

Another unusual property deal in the region is a part of Chichester Harbour which is closely linked to the Guinness family where the new owner automatically becomes the Lord of the Manor. Vail Williams is marketing Bosham Quay and Bosham Sailing Club for £6 million.

There are also 400 moorings in Chichester Harbour and the income from rents and moorings is more than £400,000.

This area is of considerable historic interest with its evidence of a Roman port and settlement and said to be the oldest and continuously consecrated Christian sites in Sussex. King Harold is reputed to be buried there after he was killed at the battle of Hastings.

Ian Froome of Vail Williams said: ”This is a sound financial investment and the ancient manorial title makes it somewhat of a rarity, so we anticipate keen interest from buyers”.

Percival SET TO TAKE OFF

South Coast Central News

Mainly because of the needs of the yachting and shipping industries, the south coast has a strong reputation for hosting technology companies.

Indeed the aircraft industry has always had a major role in the local economy around Southampton, as witnessed by the Schneider Trophy races in the 1930s and the Supermarine factory.

One local aviation company that is clearly thriving is Percival Aviation which is now building a 3,717 sq.metres (40,000 sq.ft.) factory in Segensworth that will double its capacity as it continues to invest in technology, staff training and investment in a deal brokered by LSH and Vail Williams Suella Braveman, the local Member of Parliament, said: ”The new factory will create jobs and strengthen the local Fareham economy. The UK has a hugely successful aviation industry”.

The company’s Neil Percival said: ”This facility gives us the ability to significantly grow our business and support the aim of being the aviation industry’s supplier of choice, renowned for supplying high quality products at a competitive price. The aviation industry is thriving in this region and in the UK as a whole”.

Local INITIATIVES

South Coast Central News

Just how far local authorities will go in acquiring property to shore up the local economy is a real question for the future.

Fareham Borough Council has now joined others throughout the UK in adding to its property portfolio, in this case by purchasing the Broadcut Retail Park through Vail Williams.

This was an off the market deal with a private property company at below the asking price of £4.87 million. As we have seen before, local authorities with their ability to raise funds at preferential rates of interest are in a strong bargaining position in such deals.

Vail Williams also acted for Eastleigh Borough Council when it acquired the Chestnut Retail Park, Chandler’s Ford for £13 million.

Tim Clark of Vail Williams commented: ”Broadcut is a fully occupied park with three occupiers and a healthy revenue stream. The Sainsbury’s supermarket on the park is a consistent top ten performer”.

Clark added that: “Speaking generally, and based on industry research, local authority investment in the UK commercial property totalled £5.3 billion between 2013 and 2018. Long term rental streams are attractive to councils, helping to generate income to support local council services. Out-of-town retail parks appear to be more resilient than high streets”.

As we have already seen, Southampton Council is investing in the redevelopment of the former Toys R Us site. Fareham Council has bought Broadcut and Ashford Borough Council has been particularly aggressive in buying and backing commercial property, as has Warrington in Cheshire.

The question is, how far can local government investment contribute to restore the health of retailing in the UK’s high streets where there are so many empty properties? There is one example of a successful local shopping centre in Old Sarum where three units of the total of five have been reserved off plan through Myddelton & Major (M&M).

Simon Lee of M&M said: ”The development occupies a prominent trading position (four miles north of Salisbury) a new 673 unit housing scheme, currently under construction and also adjacent to a proposed 66 bedroom care home. We are expecting strong demand as the shopping centre will serve a large new population. I can see it being fully occupied before completion”.

Selling ELECTRIC CARS

South Coast Central News

High on the list of new technologies that UK regions wants to attract is electric cars and lithium battery manufacturing.

Politicians at the recent Labour Party conference in Brighton were regaled with plans for boosting electric car production and helping consumers to buy the vehicles.

One example of this is Goadsby acting for a private client in selling a unit at Queensway, Stem Lane Industrial Estate, New Milton to R Symonds, an electric car specialist.

The unit was extended in 2015.

It is noticeable throughout the UK that there has been an increase in retailers selling electric cycles, although the majority of these are made overseas even if, in some cases, designed by a British company. There is considerable concern that the country is not making sufficient effort to develop battery technology.

After a lease assignment, together with joint agent AlexRe, of Cipher House, Winnall, a warehouse unit, Allan Pickering of Goadsby said: ”There is a very limited stock for industrial units of this size in Winchester so we had a good level of interest which reflects the demand for quality space in and around the city”.

MORE parks

South Coast Central News

This problem of a shortage of stock will surely ease with the amount of new developments together with the reduced pressure from retailers to lease extra space ahead of Brexit.

Indeed there are many examples of new industrial parks expanding throughout the region, such as Adanac North, Southampton, which should be completed by May 2020.

It is a significant park catering for small and medium sized companies with 32 units ranging up to 7,154 sq.metres (76,985 sq.ft.) with Keygrove and LSH as joint agents.

Andrew Archibald of Keygrove said: “Adanac North is the first new high quality light industrial and office development in the area to be built for a decade”. Dan Rawlings of LSH added that the park, ”is in one of the best locations in the region, at the gateway to Southampton at Junction 1 of the M271 at Nursling between the city centre, docks and the M27.

These units will meet a gap in the property market which has previously focused on larger warehouse units”.

InBrief #3

South Coast Central News

On behalf of landlord clients, Primmer Olds B.A.S. have concluded a letting of a new build barn style office to Synthesis Clinic following receipt of planning permission for change of use to medical.

The two storey office is one of 5 buildings within the office park at Sunnyside View, Kings Somborne, which now has nearly full occupation

Offices: Filling up

South Coast Central News

Apart from the buoyant industrial property market, which has been boosted by stockpiling for a no deal Brexit, the office markets in the main south coast cities are also in good health.

In Southampton, the refurbished Grosvenor House now has 100% occupation following the lettings to the office provider BE Offices through LSH and Vail Williams, the engineering consultancy WSP, BDB Pitmans, the legal firm and WP, oil and fuel distributer. Andy Hodgkinson of LSH said: “There is no doubt that high on the agenda for business when considering a move is “how will the new building fit with our brand and how will it help us recruit the best talent”.

100% occupancy has also been achieved at the Quarter Deck, Port Solent following the latest deal by Vail Williams, Omnia Environmental Consulting signed a five year lease on the refurbished 2,815 sq.ft. office.

Another office property that is filling up is Oceana House, Southampton, where Avask Accounting has leased 1,800 sq.metres (17,000 sq.ft.) on two floors through Vail Williams whose Will Elgeti said: “it is the largest office letting in the city for six years”. The rent is £225.96 a sq.metre (£21 a sq.ft.).

Also in Southampton, Town Quay, now half let through JLL & Vail Williams, Starling, the digital Bank has taken 10,000 sq.ft. on a 10 year lease, attracted to Southampton because of its tech talent. Nella Pang of JLL commented: “With a number of its neighbouring cities being highlighted in Tech Nation Report 2019 for growth location, Southampton featured high on Starling’s search lists”.

CHOOSING Andover

South Coast Central News

Andover, in particular, is a popular location for companies as indicated by InCom Group, a composite kitting and engineering firm, moving to larger premises in the area.

It is moving from its base in Crown Way on the Walworth Industrial Estate to a 2,648 sq.metres (28,499 sq.ft.) at North Way on the nearby Walworth Business Park. LSH and Stratfords Commercial acted for the landlord, M7 Real Estate.

This is a sophisticated company that designs and manufacturers composite kits for the wind blade industry and has operations throughout the world.

Elsewhere, in Swanage, Goadsby is acting for Wire Fitting Designs in selling a 1,095 sq.metres (11,782 sq.ft.) industrial property at the Victoria industrial Estate.

Chris Wilson of Goadsby said: ”There are few large industrial buildings in Swanage so we are hopeful that a local employer wishing to expand will be interested“.

Chichester BUSINESS PARK BOOST

South Coast Central News

Logistics company JRP Distribution Ltd is to relocate to Chichester Business Park at Tangmere.

Construction has completed on two new high quality industrial units, one of which the company is taking.

JRP is to move from its existing base in Shorehamto the new 32,000 sq.ft. unit.

The move comes after significant investment from the Chichester Business Park Partnership, under the advice of commercial property agents Lambert Smith Hampton (LSH) and Flude Commercial, saw the park expanded with the development of two new high quality industrial units on two acres of land.

Robin Dickens, of LSH, said: “The letting to JRP is a strong market indicator of the acute lack of new stock along the A27 between Chichester and Brighton.

The availability of prime buildings has been critically low for some time now and high quality developments such as Chichester Business Park are finally meeting the demand among occupiers”.

InBrief #4

South Coast Central News

South Coast niche property consultants, Realest, have won the prestigious Industrial Agents Society’s National Deal of the Year award for the forward purchase and development of a new Aerospace Manufacturing Centre of Excellence and Global Headquarters near Coventry on behalf of Meggitt plc. The new building which is nearing completion will comprise a circa 500,000 sq.ft. facility making it one of the largest manufacturing deals in the UK this century.

Spreading OUT

South Coast Central News

What is important for the economic health of the region is that new developments are widespread, from east to west, and cater for the changing needs of companies.

One clear problem in the past was the lack of modern small units, thus stifling a variety of companies from finding suitable space in their early stages of growth. That appears to have been addressed over the past few years.

An example of the provision of small self contained office units is the Firecrest Group’s project at Timsbury near Romsey known as the Grange, being marketed by London Clancyand Keygrove.

It will have units ranging up to 511 sq.metres (5,500 sq.ft.) with completion in early 2020.

David Heda of London Clancy, joint agent with Keygrove, commented: ”The scheme will provide much needed offices where companies have struggled to find space around the Romsey/ Winchester/Southampton area.

The first part of the Grange was developed in 2007”.

A further example of new warehouse/industrial units are the 16 at Rockhaven Business Centre on the West Wilts Trading Estate at Westbury which are for sale. The units are arranged in three blocks of five units each.

Philip Holford of Myddelton & Major said: ”It is the first new development on the trading estate since 2002, so we are expecting strong interest from owner occupiers as well as investors as it is unique for this estate that units are for sale freehold“. When construction started in June, four units were already under offer.

At the Bowerhill Industrial Estate in Wiltshire, an LED screen specialist, Infilled has leased the 883 sq.metres (9,500 sq.ft.) Datum House, which has a warehouse and offices, through joint agents Carter Jonas and Avison Young.

Alison Williams of Carter Jonas said: ”Units offering a blend of both offices and warehousing are increasingly in demand and the estate is becoming popular given the new link road and improvements to the A350”.

Revving UP

South Coast Central News

Aston Martin has been having a hard time since it had a public listing of its shares and their subsequent decline.

However, that has not stopped its expansion plans which will be helped by a new Harwoods dealership close to the M27 at Swaything. At its other branches, Harwoods also sells other marques such as Audi and Bentley.

The 1.33 acres,which cost £1.7million, is part of a larger site owned by Inchcape Estates which is building a new Jaguar Land Rover dealership there. LSH acted for Inchcape Estates and Vail Williams for Harwoods.

Martin Tice of Vail Williams said: ”A key factor in the purchase was the location close to the M27 as well as Southampton Airport. Together with Jaguar Land Rover and Mercedes this will be a significant motor hub.

Russell Mogridge, also of Vail Williams said: ”This is the latest example of Vail Williams’ occupier advisory services work for growth companieswith property requirements”.

Adding to the attraction of the location, it is next to Mountpark Southampton, a new industrial and logistical development with seven units totalling 51,531sq.metres (554,480 sq.ft.) on the former Ford Transit plant.

Phase 1 is fully completed with occupiers such as the contact lens manufacturer CooperVision and health and beauty wholesaler Murrays.

InBrief #3

South Coast Central News

One of the largest industrial buildings, the 6,649 sq.metres (71,542 sq.ft.) Radial 27 at Barnes Wallis Road, Segensworth has been refurbished after Palmer & Harvey left and is being marketed by LSH and Hellier Langston.

An even larger unit, the 8,674 sq.metres (93,338 sq.ft.) Avalon, Parham Drive, Boyatt Wood, Eastleigh has also been refurbished and is being marketed by LSH.

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