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South Coast Central Commercial Property News - Friday, April 27, 2018

Issue #37

MARKET DUE FOR defence boost

South Coast Central News

Growing pressure to increase defence spending in the face of Russian belligerence and conflicts in the Middle East will have an impact in the region.

Apart from the Portsmouth Royal Navy base, there is a substantial defence related business sector catering for all defence but especially strong in the marine sector.

However, the Ministry of Defence budget is under pressure so there should be no surprise that the MOD is seeking to both save money and raise funds, mainly from property sales. Here, Lambert Smith Hampton (LSH) is using its online auction system to sell MOD property.

Oliver Childs of LSH said: “We have been pioneers of the online auction over the past two years and have developed a track record for success having sold a wide variety of property in the UK”.

The potential for development of MOD assets is illustrated by the schemes at Daedalus, Solent Airport.

The importance of the region’s economy is well recognised and has produced new investment in transport links. One key junction which is to be upgraded Is the A34/M3 junction, which is heavily used by vehicles moving between Southampton docks and the Midlands.

Mike Short, Chair of the M3 Local Enterprise Partnership, said: “The improvements to Junction 9 are critical to the strategic corridor that runs all the way from the Port of Southampton to the Midlands and North which will help rebalance the national economy”.

Another road upgrade in the region is at the heavily used A31 at Ringwood.

An indication of the buoyancy of the South Coast market is provided by the industrial sector where demand has been so strong, said Lambert Smith Hampton’s Adrian Whitfield. However, 2018 will be a key year as increased supply kicks in although so far this year Whitfield has seen a 15% rise in enquiries, which supports his prediction that rents will move above £107.60 sq.metre (£10 sq.ft.) for mid box properties of 2,788 to 4,647 sq.metres (30,000-50,000 sq.ft.).

Interestingly, increased demand for mid sized units rather than smaller properties indicates greater corporate long term confidence as well as a shortage of smaller properties.

One intriguing aspect of Southampton is that people in the city are prepared to take the most risk when investing for the future, according to a study by Moneybox, followed by Edinburgh and, surprisingly,

One door closes ANOTHER OPENS

South Coast Central News

The Standard Life Investments Heritage with Profits Fund has secured three lettings for Fareham Industrial Park, totalling over 80,000 sq.ft. making the 450,000 sq.ft. scheme fully let.

Armorgard, a leading manufacturer of secure storage for tools and equipment, has taken 60,000 sq.ft, whilst HRP Limited has taken 5,500 sq.ft, both on ten year leases.

Completing the trio of lettings, refrigeration and air conditioning distributer Kooltech has relocated on the estate taking a 15,000 sq.ft.

unit on a ten year lease. The Fund was jointly advised by Hellier Langston and Hughes Ellard.

As one park becomes fully let another opens. Merlin Park, Portsmouth, the areas’ largest speculative development for a decade, is nearing completion.

The 6.5 acre site features 100,000 sq.ft. of space in seven units for business, industrial and warehouse uses and will be the home of Hampshire Constabulary’s new Eastern Police Investigation Centre. Joint agents on the scheme are Lambert Smith Hampton & CBRE.

FAST PACE OF change

South Coast Central News

An analysis from JLL of global trends in the real estate industry highlights the substantial changes that are taking place.

In particular, the demand for flexible working space is increasing, together with what JLL calls a more dynamic workforce combined with greater focus on employee performance and wellbeing.

At the heart of the faster market is the need to compete and be innovative in terms of embracing technology in a digital age. This has to mean a different set of priorities for developers and planners in providing the structures to suit the new conditions.

InBrief #1

South Coast Central News

The mixed use development of the former Bargate Shopping Centre (which will also open up hidden areas of the city’s medieval walls) will move ahead with the start of demolition of the old area. It closed because of the changing landscape of the business district, said Southampton Council.

SUN SHINES ON Solstice

South Coast Central News

One major business park (which could be argued is in an unlikely location) proving a great success, is Solstice Park, Amesbury.

It has seen substantial expansion and a string of deals, the latest being the sale of two plots in the EOS section through Myddelton & Major.

The agent’s Dean Speer said: “The parcels of land have been acquired by tea importer, Imporient, and the motor trades firms, Andover MOT Supercentre and Express Motorshop, and will have purpose built accommodation”.

Speer added that it continued a trend of companies building bespoke premises and there has also been strong demand from owner occupiers or developers seeking a southern base linking into the South Coast and South West.

A further plot of 8.6 acres, EOS2, is available for development, either as plots for self build or large warehouse/industrial space.

An indicator of the popularity of Solstice Park is that the initial phase of the Bluestone Centre being developed by Northwood Engineering only has one of the 12 units available following the sale of Unit 5 to Intelligent Solutions in Transport as an investment. It is let to Charlescotes Flooring Company.

Speer said: “Many of the units in the business centre were sold off plan. Bluestone is the first new business centre in the strategically located Solstice Park and is significant for employment in Wiltshire”.

In its increased buying on the South Coast, RO has added a 9 acre plot at Solstice Park for £2.45 million. RO believes the plot is ideal for either a trade counter or industrial development and will gain from the improvements to the A303 road, as well as being in an increasingly popular area for commercial property.

Solstice Park is 9 miles from Salisbury, where Cubex has sold, through Myddelton & Major and GVA, the 3,834 sq.metres (41,267 sq.ft.) Warner House to Ameriscot Commercial, who already own property in the city and a 31,586 sq.metres (340,000 sq.ft.) portfolio of offices in Dorset, Hampshire and Wiltshire.

Bill Parker of Ameriscot said: “Salisbury is an attractive city but it lacks high quality modern offices.

As with all our buildings, we try to offer something different and Warner House will have a coffee shop and attractive courtyard garden and office suites will be air conditioned”.

At the High Post Business Park near Salisbury, the latest unit, a 4,629 sq.metres (49,828 sq.ft.) has been sold through Myddelton & Major to complete the sale of the park. The asking price for the unit was £2.3 million.

Shortage PERSISTS

South Coast Central News

The shortage of prime office and industrial space is the problem as illustrated by JLL and Hughes Ellard (HE) now marketing the last available space in a newly refurbished building on the outskirts of Southampton.

It is Vanbrugh House, which is within the Botleigh Grange Office Campus at Hedge End, where the available space is on the ground floor. Nella Pang of JLL said: “Vanbrugh House has a special appeal because of its proximity to nature, and the quality of the space which has already attracted leading brands. Our own research has shown that people’s experience of the workplace is highly important in terms of attracting, retaining and inspiring staff”. Russell Mogridge of HE added: “We are confident of securing a tenant soon, as it provides one of the best business locations outside of Southampton city centre”.

Another good example of the type of company that is growing well in the region is provided by CJR Propulsion, which has invested £3 million in expansion and taken adjacent space at the Centurion Industrial Park, Bitterne Road through Lambert Smith Hampton.

The unit has been refurbished by Colliers Capital for the Staffordshire Pension Fund. CJR supplies precision engineered propulsion and stern gear packages for commercial and leisure superyacht brands.

STACKED HIGH IN the south

South Coast Central News

Topping the UK league for the number of speculative industrial developments highlights the dynamic character of the South Coast.

The report from Lambert Smith Hampton details that the area has the highest number of speculative schemes for small and medium units being built speculatively, which is a good guide to future economic growth.

To this should be added that the take up figures for mid sized units of 4,645-9,290 sq.metres (50,000-100,000 sq.ft.) for 2017 represent an increase of 37% on the previous year and 31% on the five year average.

Jerry Vigus of LSH commented: “The south is undoubtedly a major driving force for the national economy and 2017 was nothing short of spectacular in the take up of industrial space”. He added that the large proportion of speculative schemes indicates the confidence in themarket.

The national scene for industrial property is healthy with a record number of investment deals last year at 540, up 51% on 2016.

Sales of industrial property are also doing well. At the Sandford Lane Industrial Estate, Wareham, Goadsby and Sibbett Gregory sold a 9,874 sq.ft. unit to an owner occupier at a quoted price of £590,000. In 4 Moorside Place, Winchester, Goadsby and Holt Consult have sold a unit of 50/50% office and industrial space.

Michael Lord of Goadsby said: “We have seen a rise in the demand for industrial space in Winchester”.

There are a number of hot spots for industrial development, such as at Reliant Close, Chandlers Fordwhere construction has started on two warehouses totalling 4,645 sq.metres (50,000 sq.ft.) with completion due in October with WarwickMartel and LSH acting for the landlord, Store Property Investments.

Ross Moyler of Store Property said: “This scheme is an example of how we invest in our portfolio to attract occupiers”.

Oddly enough, the performance of the construction industry nationally belies the strong showing on the South Coast. Blane Perretton of the consultancy Naismiths said: “The loss of momentum in commercial property and infrastructure work dragged down both output and sentiment in the latter part of 2017”. One reason he gives for the decline is that large companies are backing off ahead of Brexit.

LeadStream EXPANSION

South Coast Central News

An example of the type of company that is either moving to the South Coast or expanding within the region is LeadStream, a financial services group.

Its growth has propelled it from Fareham to St Andrews House on Solent Business Park for its call centre. Such is the pace of expansion that it plans to increase its staff from 80 to 150.

The firm’s Chief Executive, Matthew Milnes, said: “Our service teams are involved in 2,500 fresh enquiries a day, placing customers with the best company to suit their requirements, whether that is life insurance or stock and shares in other financial investments”.

Russell Mogridge of letting agent Hughes Ellard said: “LeadStream is an example of the go ahead business which requires quality office headquarters. The location is ideal, just off Junction 90 of the M27 with a superb employment pool across the conurbation, all within commuter distance”.

Boom TIME

South Coast Central News

The student housing market is booming and JLL suggests that it accounted for £1 in every £10 invested in the UK commercial property market in 2017. JLL says this trend is being reflected in Southampton as a result of the University of Southampton’s ambitious growth plans.

Southampton is also expected to see a big rise in the number of private rented sector (PRS) and co-living housing schemes, where investors buy up blocks of property for the purposes of buy-to-let, benefitting from increases in both value and rent. Co-living spaces are designed as a stepping stone for people who may have left university but don’t want to live on their own. Their collaborative living spaces appeal to small groups who enjoy the vibrancy of communal living.

The sector has grown substantially in major cities such as London and Bristol but is now spreading to the smaller regional cities, including Southampton, which already has one PRS scheme at the Fruit and Vegetable Market and several others in the pipeline.

InBrief #2

South Coast Central News

In a £1bn, 15 year programme Whitehill & Bordon is being transformed into a green town. After the army left the town in December 2015 it freed up over 100 hectares of land which will have retailing, leisure & entertainment and office space. The project will deliver 100,000 sq.metres of commercial, retail and leisure space in addition to 3,350 new homes. One of the early successes at the scheme is the BASE Borden Innovation Centre at Broxhead House, Louisburg Barracks, which is already more than a quarter full, weeks before the official opening.

Space GALORE IN PORTS

South Coast Central News

Without doubt the largest potential for new development lies with Associated British Ports (ABP) and its 2,372 acres in 21 UK sites.

The potential for the £3.5 billion landbank, of which Southampton is an important part, could support as much as 2.8 million sq.metres (30 million sq.ft.) of new space with an emphasis on logistics and port related manufacturing facilities.

As part of the exercise, ABP is also assessing how much land it could sell for uses such as residential development.

As it is owned by pension fund investors, CPPIB, Hermes, Borealis and GIC it can take the long view on its assets and hold onto its portfolio for income growth.

To further the development aims, ABP has a new team with a 31 member group of property professionals boasting a wide range of experience and skills. The port company is currently in the throes of a £1 billion investment to improve facilities in its ports.

Director Jens Nielsen said: “We have a really significant landbank and now have an experienced team to ensure investors, occupiers and agents can fully capitalise on the opportunities this space offers”.

To this view, Huw Turner, Head of Property, added that “Whether our customers’ businesses are port related or not, the size of our estates will enable clients to grow and expand while remaining in the same location. We provide a full one stop service from the start to the completion of a project and beyond as we create a development partnership with our clients”.

Southampton, like some of the other ABP ports, has good road and rail communications and is of course a premier container port.

Some of the sites in the ports already have outline planning permission as well as infrastructure in place. Given the dynamic of the economy on the South Coast, this new initiative is likely to be attractive in an area where residential development has taken so much of the employment land.

Institutions BUY

South Coast Central News

An essential part of the industrial property market is that the major institutions are buying, aswe seewith Standard Life Investments paying £20.2 million through LSH for the Fareham Trade and Business Park.

The potential for Standard Life is considerable because rents on the park are below the latest rates in the region with the highest at £86 a sq.metre (£8 a sq.ft.), even though the 12,542 sq.metres (135,000 sq.ft.) park has been refurbished by Oceanic Estates.

The park has a blue chip line up of occupiers such as KFC, Formula One Autocentres and Encon.

Another trade centre development is occurring at the former Truvox building at Third Avenue, Millbrook (on the main western approach to Southampton) by developer Maytree.

Here, there will be six units in a popular trade counter area of the city.

Chesters Commercial and LSH are joint agents and over 50% of the space is under offer ahead of completion in June.

Commercial Property Register April – September 2018 www.16 compropregister.com Space GALORE IN PORTS Without doubt the largest potential for new development lies with Associated British Ports (ABP) and its 2,372 acres in 21 UK sites.

The potential for the £3.5 billion landbank, of which Southampton is an important part, could support as much as 2.8 million sq.metres (30 million sq.ft.) of new space with an emphasis on logistics and port related manufacturing facilities.

As part of the exercise, ABP is also assessing how much land it could sell for uses such as residential development.

As it is owned by pension fund investors, CPPIB, Hermes, Borealis and GIC it can take the long view on its assets and hold onto its portfolio for income growth.

To further the development aims, ABP has a new team with a 31 member group of property professionals boasting a wide range of experience and skills. The port company is currently in the throes of a £1 billion investment to improve facilities in its ports.

Director Jens Nielsen said: “We have a really significant landbank and now have an experienced team to ensure investors, occupiers and agents can fully capitalise on the opportunities this space offers”.

To this view, Huw Turner, Head of Property, added that “Whether our customers’ businesses are port related or not, the size of our estates will enable clients to grow and expand while remaining in the same location. We provide a full one stop service from the start to the completion of a project and beyond as we create a development partnership with our clients”.

Southampton, like some of the other ABP ports, has good road and rail communications and is of course a premier container port.

Some of the sites in the ports already have outline planning permission as well as infrastructure in place. Given the dynamic of the economy on the South Coast, this new initiative is likely to be attractive in an area where residential development has taken so much of the employment land.

IN BRIEF

InBrief #3

South Coast Central News

Rainford & Smith has sold its 1,229 sq.metres (13,224 sq.ft.) Unit 7 in Portsmouth through Vail Williams to La Espanola, a food wholesaler.

Solent FLIES

South Coast Central News

The transformation of Solent Airport, which is an example of the potential of former defence assets, is continuing apace as the £50 million plan brings new assets such as five new hangars.

The aim is to create a business airport which includes a further six hangars to be completed this year.

The new structures are within the Solent Enterprise Zone. Fareham Borough Council Leader, Sean Woodward, commented: “The council’s vision for the site will see it becoming the premier location for aviation, aerospace engineering and advanced manufacturing in the south”.

A central part of the plan is the expansion of the Innovation Centre with 3,399 sq.metres (36,584 sq.ft.) in 33 offices.

Jo Willett of Oxford Innovation Centres, which manages it at Daedalus, said: “This centre has become a hub of excellence for marine, automotive, aerospace and engineering sectors with a vibrant business community of more than 40 businesses”.

Guy Jackson of Lambert Smith Hampton, the agent for Solent Airport, said: “The new hangars offer aviation businesses and clubs space to store their aircraft. It is another significant step in the growth of the Solent Enterprise Zone and the fact that three hangars are under offer is an indicator of the huge appeal of the site”.

The vision for the 200 hectares site is far reaching with its two business parks having access by road, air and sea and a growing onsite skilled workforce as part of a plethora of start-up businesses.

The potential for development land is at least 49,980 sq.metres (538,000 sq.ft.).

One of the secrets of Daedalus is the Centre of Excellence in Engineering Manufacturing and Advanced Skills training (CEMAST) with its strong links to major companies such as BAE Systems, GE Aviation, Virgin Atlantic and Jensen Motorsport.

The Brexit debate appears to have failed to deter the National Grid from planning a link between the UK and France’s electricity transmission network with the aim of enhancing security, affordability and sustainability, known as IFA2, or Interconnection France-Angleterre. The convertor for the network will be located at Daedalus.

NEW FOREST Success

South Coast Central News

A guide to how to transform old industrial buildings is provided by Ampress Park in the New Forest where a World War II Wellworthy engineering factory has been transformed into Ampress Park by UBS.

After extensive decontamination and using agent Hellier Langston as adviser’s, the 15,799 sq.metres (170,000 sq.ft.) park is now home to top companies such as Screwfix, Travis Perkins, Halfords and Howdens.

Jason Webb of Hellier Langston, who has been involved with most of the sales and lettings on the estate, commented “The final Travis Perkins unit is under offer and due to complete shortly, making the estate effectively fully developed and fully occupied”.

Roll on RO

South Coast Central News

Shrewd investors like RO have seen the potential of Southampton with three deals in the past 18months.

The latest acquisition is 1 Dorset bought from Aberdeen Standard Investments for £5.2 million, taking RO’s spending in Southampton to £16 million. It has already purchased Waterside Place for £7.6 million and West Park House for £4 million.

1 Dorset was built in 2006 and is in the established central business district relatively close to the main shopping area and the railway station. RO will refurbish the building, which is important for the city in providing Grade A status.

David Kershaw of RO commented: “Southampton has a high demand for well located and high quality offices coupled with very low availability and we hope this will fill a gap of high end office space. RO has been an active investor along the South Coast, apart from Southampton, with deals in such places as Chichester”.

InBrief #3

South Coast Central News

Acting on behalf of a private vendor, Goadsby has sold the 3,500 sq.ft, Unit 17, Branksome Business Park Poole. Quoting price was £450,000.

Nationwide tools specialist Toolstation has opened a new 4,467 sq.ft.

trade counter at Southampton Trade Park bringing the park to full occupancy. Hellier Langston & Lambert Smith Hampton were joint agents on the scheme.

Fibre Mechanics has taken a 24,000 sq.ft. industrial boat building complex on a new lease at Waterloo Road, Lymington. London Clancy acted on behalf of private investors.

Developers ACTIVE

South Coast Central News

While there is a shortage of industrial properties, at least the flow of new developments has increased.

A good example is Peel Logistics, £30 million South Central scheme at Test Lane, Nursling which is nearing completion with a pre let of the 46,000 sq.ft. Unit 3 to the first occupier, John Lewis Partnership which is preparing to take occupation in September. The two remaining units are Unit 1 at 116,895 sq.ft.

and Unit 2 at 39,075 sq.ft. which will both be ready earlier in May.

Joint agents are Lambert Smith Hampton (LSH) and JLL. Southampton City Council Leader Simon Letts said: “I am not surprised at the high interest in this well located dockside site and the city looks forward to welcoming the new occupiers and the employment they will bring”.

At Chandlers Ford, a £20 million industrial and warehouse scheme is complete at Alpha Park, one of the first (of many) speculative schemes (by Bencote Properties) in the region for some time. One unit of 1,779 sq.metres (19,141 sq.ft.) has been let to DX Network at £9.50 per sq.ft. and another of 44,868 sq.ft.

has been let to Charles Kendall Freight at a rent rumoured to be £10 per sq.ft, a record level for this area. A unit of 84,382 sq.ft. remains available through LSH.

Jonathan Maher of Bencote said: “Southampton is amarketwe believe in strongly, which is why these units were built on a speculative basis”.

Adrian Whitfield of LSH said: “Our focus having secured DX and Charles Kendall is to now identify an industrial or warehouse occupier for the only 84,000 sq.ft. Grade A specification unit available now to occupy in the market”.

A NEW life beckons

South Coast Central News

A new life is on the way for Bournemouth Airport after tech entrepreneur Sir Peter Rigby bought it from Manchester Airport Group (MAG), This continues Sir Peter’s purchase of UK airports, having already acquired Exeter and Norwich. Bournemouth lost £6.3 million in its last financial report even though MAG has invested £50 million in the airport.

Sir Peter said: “The acquisition of the airport is an important landmark in our strategy of creating a robust and credible group of regional airports and services across the UK.

Not only does it expand our catchment to include major regions of southern England but also focuses operations on a core market poorly serviced by the major aviation players”.

A particular point about Bournemouth is how active the hotel investment market has become with the latest deal the sale of Topland’s 83 bed Hallmark Hotel through Christie to Motoring and Leisure Services (MLS). GVA acted for MLS.

Christie’s Alex Campbell said: “The market for hotels in Bournemouth is robust with demand outstripping supply for good quality premises”.

Similarly, Goadsby has had a strong year for hotel sales handling the 5 star Balincourt Hotel and 23 bed Liza Inn, where the Russian owners sold to Turkish operators.

Goadsby’s Ian Palmer commented: “It was encouraging to be busy during the latter part of last year given the uncertain period we are in, though it is an indication of how robust the local hotel market is”.

Fast LANE

South Coast Central News

Moves are being made to develop a Local Development Order for the Dorset Innovation Park at Winfrith. The order will have the effect of fast tracking planning consent for future employment and supported uses on the site, subject to a number of conditions and residents are being invited to have their say on what these conditions should be, as well as the design of the site.

The site is Dorset’s second largest strategic employment site and it is developing an advanced engineering and manufacturing cluster based in marine, defense and energy technology. Plots of 0.5 acres are available for sale through joint agents Sibbett Gregory and CBRE.

Lorna Carver, Dorset Local Enterprise Partnership Director said: “Dorset Innovation Park is expected to facilitate 2,000 new jobs and attract dozens of new businesses to the area. The site boasts 50 hectares of land, of which 35 hectares can be developed. Having a Local Development Order in place will smooth the path to achieving its economic ambitions by simplifying the planning process for subsequent investments”.

InBrief #3

South Coast Central News

Victory Communications, a unit of BT Local Business, has moved to One Port Way, Port Solent Marina, owned by Northwood Regional UK which has an extensive portfolio along the South Coast. LSH acted for Northwood. Barry Saunders of Victory said that because of so many changes in business communications “businesses are thinking way beyond email and internet access and are making the most of the benefits of cloud storage, voice over internet technology and video calling”.

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