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South Coast Central Commercial Property News - Friday, October 27, 2017

Issue #36

ON THE right road

South Coast Central News

At a time of some economic uncertainty, the positive message for the region is the priority being given by the government to transport schemes.

These are mainly road improvements to unlock bottlenecks which are vital in an area of high traffic densities and a wide array of business and industrial parks.

The schemes:  Upgrade Junction 9 of the M27 between Portsmouth and Southampton which will underpin a substantial development at North Whiteley  Improvements to Junction 8 of the M27 and A3024 corridor which approaches Southampton city centre;  Red Funnel has won an appeal to the government for its new ferry terminal at East Cowes, Isle of Wight. It said that this would resolve traffic congestion in East Cowes, boost the island economy and aid the regeneration of the town centre.

As so much office space has been demolished or converted to residential use, the office market in the Solent region is chronically short of space but at least, after a lull, enquiries have picked up, said Vail Williams. The majority of the enquiries are coming from small companies but the shortage means increasing headline rents.

Philip Holmes of Vail Williams said: “While there is very little newly constructed offices, we are seeing secondary stock being refurbished to a very high standard”.

Russell Mogridge of Hughes Ellard also noted the problem of shortage of supply but added “demand is on the rise from business owners looking to move away from leases to ownership of property”.

Demand in Chandlers Ford, Hedge End and Winchester is strong.

Mogridge points to the success of Lakeside, North Harbour, with the village hotel completing in November and a planning permission for the Jaguar Land Rover dealership is being heard this month. A new occupier there is Virgin Media.

The star turn in the market is provided by industrial property where Adrian Whitfield of Lambert Smith Hampton has experienced “robust levels of enquiries and progress on several new developments to contribute to a buoyant period”.

Whitfield points to the new schemes that will accommodate the demand for prime space, anticipating that the region’s larger companies will move into the new buildings, releasing secondary stock suitable for small and medium sized enterprises.

These new schemes are: Alpha Park, Chandlers Ford; South Central at Nursling; Mountpark, Southampton; the Solent Airport development at Daedalus, Lee-on-the-Solent; Pioneer Park, Portsmouth and the Dunsbury Park scheme in Havant. The background to these schemes is that take up has increased, by 34% to 500,000 sq.ft. in the third quarter compared with the same period of 2016.

A REAL Pioneer

South Coast Central News

The outlook for Portsmouth is positive which is further illustrated by the success of Pioneer Park, the industrial and warehouse development which is already 50% let only three months after its opening.

Developed by Chancerygate at the Airport Industrial Estate and being marketed by Vail Williams and Doherty Baines, it is owned by a client of Barings Real Estate and is the first post recession speculative industrial scheme in the city.

Philip Holmes of Vail Williams said: “The confidence that our clients have shown in this speculative project, and in the Portsmouth area in general, has proven to be well founded, giving the south coast a much needed industrial facility that is already in high demand”.

KEEPING IT Pure

South Coast Central News

Proving the pent up demand for offices in Portsmouth, Pure Offices’ new serviced facility had 30% of the space let in the first seven weeks.

This is their first serviced office on the south coast and has 58 offices designed for start ups or regional businesses, in a prime position overlooking the water and within walking distance of shops and restaurants.

Portsmouth has been working hard on improving its facilities, notably the retailing with the latest being the £16.2 million scheme at North Harbour.

A feature is a Decathlon sports superstore which joins such companies as Subway, Costa, Greggs and Pure Gym at Portsmouth Retail Park, said letting agent LSH.

InBrief #1

South Coast Central News

The completion of road improvements at the £30 million South Central warehouse scheme means it is on course for completion in May 2018.

The development comprises of three units totalling 19,131 sq.metres (205,935 sq.ft.) at Test Lane, Nursling.

SETTING the pace

South Coast Central News

By any standard the south coast industrial market seems to be bucking the trend of the economic indicators pointing to a slowdown in the growth rate in the UK.

The hope must be that this is not a delayed reaction to the uncertainty being generated by Brexit, but the fact is that the amount of prime industrial space is increasing in the region, said Lambert Smith Hampton.

The amount of prime space available in the second quarter of 2017 was 58,015 sq.metres (624,488 sq.ft.), an increase of 17% on the first three months.

Impressively, it has increased by 58% in the past year. Having prime space available helps the inflow of occupiers.

Adrian Whifield said: “The number of high quality developments coming to the market is easing the pressure of the shortage and will be welcomed by businesses that have been crying out for first rate sites”.He foresees an increase in take-up this year.

Reinforcing Whitfield’s point, nationwide courier and logistics company DX Network Services has become the first company to take a unit at Alpha Park, the major new development at Chandlers Ford. The company has taken a 19,141 sq.ft.

unit, on a ten year lease, at the £20m site to service its home delivery contract with IKEA.

Lambert Smith Hampton and Colliers were the joint agents on the scheme.

Lambert Smith Hampton also expects rent rates for mid-box (30,000-50,000 sq.ft.) new industrial units on the South Coast to exceed £10 per sq.ft. in 2018 as demand continues to outstrip supply. The rate of rent per sq.ft., seen by landlords and occupiers alike as a market barometer, has been steadily increasing amid a continued squeeze on desirable units larger than 10,000 sq.ft.

along the M27 and M3 corridor.

Adrian Whitfield, said: “We know that historically rent rises along the M27 consistently track those further towards London and around the M25 where we are already seeing rents of £11.50 - £13.50 per sq.ft. achieved on new schemes”.

A FIRST FOR Lymington?

South Coast Central News

Unusually for Lymington it now has the first speculative office building on the south coast for some years.

Stirley House has been developed by Westfield and is being marketed by JLL and Warwick Martel and has a variety of different sized units.

Nella Pang of JLL said: “It is excellent to see such a high quality building being constructed along the south coast, which suffers from an acute lack of office space. While we have seen industrial new build come out of the ground in recent years, it has been some time since there has been a speculative office building”.

Pang noted that there was considerable interest from local businesses. Simon Martel of Warwick Martel said: “Stirley House is in a tranquil position on the eastern boundary of Ampress Park with a riverside outlook”.

FarehamAS WELL

South Coast Central News

Apart from the new industrial developments in and around major cities in the region, there is a new speculative scheme for Fareham close to Junction 9 of the M27.

Planning permission has been given for a self-contained unit of 4,645 sq.metres (50,000 sq.ft.) on a 2 acre site at Segensworth for a scheme by Marick Real Estate with letting agents JLL and LSH.

It is an established area where the occupiers include Royal Mail, Gestamp and Estee Lauder.

David McGougan of JLL said: “This building offers a significant employment opportunity for the borough and seeks to address the shortage of industrial and warehouse space in the region”.

InBrief #2

South Coast Central News

London Clancy have let two buildings at Quadrangle Park, Southampton; one of 9,500 sq.ft. to Redlux Ltd, who provide non-contact 3d metrology and a 23,000 sq. ft. R&D high office content building let to Lumenisity Ltd, who have evolved out of the University of Southampton providing advanced fibre optic cable solutions.

Sweating ASSETS

South Coast Central News

As the government become jittery about local authorities bolstering their income by investing in commercial property, Portsmouth extols the virtues of increasing its income through investment.

Indeed, the city has received three prizes in the South Coast Property Awards with the council’s real estate team being recognised for their innovative work in realising the value of commercial property and putting that income into social measures to benefit the city’s population, said awards chairman David Murray. Another highlight was Dunsbury Park being named as Business Park of the Year.

Council Leader, Cllr Donna Jones, commented: “We’re leading the way nationally in terms of income generation from property. We promised that we would not just sit back and take the cuts (government) without doing everything we could to bring in extra money to maintain and improve services”.

Zoning IN

South Coast Central News

An important factor in the economic landscape of the region is the presence of so many high technology companies specialising in such industries as aerospace and marine.

The latest arrival at the Solent Airport Enterprise Zone, Fareham is the aviation maintenance firm Proptech, which has taken a 2,294 sq.metres (24,690 sq.ft.) unit on the Faraday Business Park. The unit was built speculatively by Fareham Borough Council and let by LSH, whose Guy Jackson said “To go from completion of this unit to agreeing a lease in such a short time demonstrates the high level of demand and the confidence that businesses have in the region”.

IT adds UP

South Coast Central News

Any town or city that aspires to have a dynamic business community needs to foster a science park, preferably linked to the local university.

That is certainly true of Southampton where the university’s science park is a growing influence in the local economy by pulling in world class businesses.

The latest arrival is Promega, a life sciences company which is taking Plot 2 Benham Campus.

The park’s CEO, Peter Birkett, commented: “There have been few land deals of this magnitude and significance on the south coast in the last decade. We have supported Promega’s considerable success in the UK for 28 years and the new development will enable us to continue doing this”.

Councillor Simon Letts said: “The decision to construct a new bespoke facility highlights the pivotal role the science park plays in attracting innovative companies to the region, and further strengthens Southampton’s growth in the life sciences sector”.

Adding to the US science influence at the park, Merck has opened an innovation hub, which is one of the company’s most significant Performance Materials Research & Development sites globally with a 90 strong multinational team.

It has particular strength in research into organic and printed electronics. Every smart phone in the world uses materials supplied by Merck. It claims to be the world’s leading suppliers of liquid crystals.

Opening the new facility, local MP Caroline Nokes said: “The cutting edge work in smart phone and solar panel technology really puts Chilworth on the map”.

In a different vein, Southampton Solent University is building a new sports building in its city centre campus which will have an economic impact locally, said JLL’s David Ramsay. “The purpose built sports building will be an enormous asset to the university and the wider city. These state-of-the-art facilities will attract students both from across the UK and overseas, boosting the university’s profile and bringing a positive impact on the local area. There are few sports centres in the region of this calibre”.

WIDER horizons

South Coast Central News

Apart from the business hotspots of the major towns and cities, there are encouraging developments and investments elsewhere.

An example is Dorset based developers Ankers & Rawlings acquiring an industrial site through Vail Williams at Ferndown for £2.47 millonwhich is let to ABF Grain Products.

In Salisbury, Lambert Smith Hampton acted for the Hargreaves Group in the £3 million purchase of two units at Bourne Way Retail Park from Rowe Estates. Hargreaves is a major investor and has a portfolio of 278,700 sq.metres (3 million sq.ft.) spread across the south of the UK.

Matthew Barker of LSH said: “Secure rental income from these large units in one of Salisbury’s principal retail parks will provide a good return on investment for our client”.

Another example is Andover which is a thriving business location where MRT is expanding its manufacturing by acquiring a warehouse from DHL at Walworth Business Park. Dan Rawlings of LSH said: “The acquisition will enable MRT to expand its successful business into an advanced manufacturing centre for aluminium die castings and machine components”.

PROPERTY Event - Solent Tennis Tournament

South Coast Central News

Kevin Stansfield from ActionCoach and NatWest commercial manager Gary Hodgson saw off match rivals winning the annual Solent Property Professionals Tennis Tournament.

Twenty property related business professionals took part in the event, which was sponsored by Hughes Ellard & accountancy firm Wilkins Kennedy, law firm Paris Smith and the Southampton Property Association (SPA).

A raffle raised £115 for Smile 4 Wessex, which provides charitable support for the Wessex Neurological Centre in Southampton.

Russell Mogridge of Hughes Ellard commented “In warm sunshine, Kevin and Gary took the honours in a tough contest against Hughes Ellard’s Tim Clark and Paris Smith’s Sean Hogan, bringing to an end Tim’s unbroken winning streak of 15 years! “This year’s comedy shot award went to real estate solicitor Katrina Spolander of Shoosmiths, who took away the wooden racket and a tennis lesson with resident club coach Matt Rogers!”

InBrief #3

South Coast Central News

Lakeside goes from strength to strength with the opening of the £19 million Village Hotel due in November and the insurance firm SPB UK & Ireland relocating from Portsmouth city centre to be the third occupier in the newly refurbished Building 3000.

Buzz OF THE PLANES

South Coast Central News

Airports feature strongly as growth points in the economy of the region, led by Bournemouth and Southampton, each with a robust expansion programme.

In the case of Bournemouth, Manchester Airport Group (MAG) is showing the way with transport improvements and new commercial property facilities, mainly at Aviation Business Park. In total there are 60 hectares of development land, which will be underpinned by a £40 million investment in transport by the Dorset Local Enterprise Partnership.

That means a more efficient road network, the current investment being in the Chapel Gate Roundabout.

As Dorset’s major business park, it plays a key role in the local economy and has over 200 businesses, illustrated by the 14,864 sq.metres (160,000 sq.ft.) advanced manufacturing plant of AIM Altitude.

Meanwhile, Bournemouth town centre has its own ambitions to improve, centred on a new business improvement district (BID) where the council is seeking a new chief operating officer.

The council says Bournemouth “has a continuously expanding digital economy, a dynamic tourist industry and a nationally significant financial services sector”. Martin Davis of the town centre BID said: “We have had a very productive 5 year period where the BID achieved countless successes”.

The economic success extends to Poole where the industrial market is in rude health with Goadsby and Nettleship Sawyer marketing seven new units at Holton Point, Holton Heath Trading Estates. Chris Wilson of Goadsby commented: “Our client has built a track record for building some of the best quality industrial/warehouse units in Dorset and this scheme will, hopefully, be of interest to both owner occupiers and investors”.

Elsewhere, Goadsby and Nettleship Sawyer have acted for GP Commercial Investments in pre letting a 1,686 sq.metres unit (18,152 sq.ft.) on the Fulcrum, Poole to Schenker. Wilson said this leaves 1 acre for development on the 26 acre scheme.

POPULAR retail parks

South Coast Central News

Following the acquisition of the 128,202 sq.metres (138,000 sq.ft.) Antelope Retail Park in Southampton, First Property Asset Management (FPAM) has appointed Stiles Harold Williams (SHL) as manager of the park.

This continues SHL’s relationship with them which covers a range of properties. In this case FPAM bought it for a client. SHL’s Clive Richardson said: “We have an ongoing trusted relationship with FPAM”.

At another retail park in Southampton, Bradbeers, a major revamp has led to Smyth Toys taking a large extended unit through LSH whose John Butt said: “The refurbishment has seen an otherwise tired and lacklustre park greatly improved through strategicmanagement”.

In Portsmouth, the refurbishment of two units at Burrfields Road, close to the Ocean Retail Park, has opened up a new retail or trade counter opportunity. Guy Jackson of LSH said: “The site has excellent road links and is a prime location enjoyed by established outlets such as Toys R Us, Currys, PC World and Halfords”.

Investment FLOWS

South Coast Central News

When a city has a dwindling supply of offices then inevitably rents increase and investment become more attractive, as we clearly see along the south coast.

There are a number of recent investment deals that underline this view, such as the sale of Compass House, opposite the Law Courts in Southampton, through London Clancy, to a private buyer for around £1.2 million.

Flude Commercial similarly have experienced a high demand by investors to sell their properties and have taken advantage of the strong market selling Exchange House, Petworth for £950,000 in August, reflecting a net initial yield of 5.56%.

The building comprises 4,916 sq.ft.

of office accommodation, and is let to Savills (UK).

Flude also handled the sale of Midland House, Southgate, Chichester, a mix of retail & offices totalling 8,304 sq.ft. for £2,200,000, reflecting a blended net initial yield of 5.88%.

InBrief #4

South Coast Central News

Room 2 is to open a 71 room apart-hotel on Queens Terrace, Southampton in Spring 2018. Robert Godwin, founder of Room 2, said: “We are excited to bring to Southampton what we feel is the first stylish hotel space. We see a big need for high quality hotel accommodation in the city and we aim to deliver it”.

WINCHESTER HAS WINNING FORMULA

South Coast Central News

Winchester has many attractions for business as well as tourism because of its history and excellent communications.

So it is no surprise that it appears to be moving up the list of cities attracting increased inward investment.

In one of the largest lettings in recent history, Skanska has leased a 1,394 sq.metres (15,000 sq.ft.) office at Trafalgar House in the city centre through Goadsby and CBRE on behalf of Gentian Development.

Skanska has a new contract to maintain Hampshire’s roads The Grade II listed building is being refurbished. Goadsby’s Allan Pickering commented: “Office rents across the south have been increasing in recent months and achieving Winchester’s highest recorded rent comes as a result of the continued reduction in quality space coupled with increased demand”.

Another new arrival inWinchester is RBS Scaffolding which bought a unit on Legal & General’s Winnall Industrial Estate through LSH jointly with Hughes Ellard.

Winchester City Council is pushing ahead with improving the city and has appointed architects Lifschutz Davidson Sandilands to take forward the Station Approach scheme.

Counciller Caroline Horrill, the Council Leader, put the scheme in context by saying “Station Approach is an important aspect of our vision for the city’s future and will allow us to offer much needed Grade A office space to the business community who are regularly requesting premises of this calibre in the city. The next step is to develop concept designs”.

Another step in the process of change is that the council plans to refurbish the tourist information centre at the Guildhall with a fresh modern look and new digital functionality and better represent businesses in the district.

This is a logical move given the growth of tourism and business in Winchester. For example, tourism income has increased from £292 million at the start of 2010 to £358 million by the end of 2015.

Refurbishment PAYS

South Coast Central News

The recently refurbished Tolbar House at Hedge End is now full after Solent Pizza Group took space there through Hughes Ellard for £199 a sq metre (£18.50 a sq.ft.).

Owned by Horatio Properties, the refurbishment brought the division of the top floor into smaller units.

Russell Mogridge of Hughes Ellard said: “There is little by way of quality offices in and around Hedge End, which is popular because of the road and rail connections”.

Another Hughes Ellard deal was the letting of offices to the automation software company Cortex in Kings Park House on the top floor while the second floor is also under offer. The property is another that has been refurbished in a £2 million contract.

The mixed use Town Quay scheme has also proved to be popular and the latest company to take offices there is the corporate recovery firm Quantuma, which has moved from another location in the city in Beresford House.

Andy Gibbs of letting agent LSH commented: “The continued success of Town Quay, which is owned by Associated British Ports, as a business area reflects the general optimism in in the economy in Southampton and beyond”.

RO buys AGAIN

South Coast Central News

RO is a property group which has proved to be fast on its feet in choosing assets and locations in the UK that offer potential for growth.

At the moment the company clearly favours Southampton because it has added to its purchase of Waterside Place in 2016 with the acquisition of the 1,630 sq.metres (17,550 sq.ft.) West Park House, which is in the centre on the junction of Cumberland Place and Bedford Place.

Nick Moore of RO commented: “The property has prime asset fundamentals providing good locational and income diversification to our other Southampton asset. This is a city which is recognised as a strong performer”. He noted that the office vacancy rate in Southampton was only 7%, or 27,870 sq.metres (300,000 sq.ft.), only a year’s supply.

InBrief #5

South Coast Central News

Selco Builders Stores have taken two units through London Clancy and Colliers International in Portsmouth and Poole. In Portsmouth, it is a 2,787 sq.metres (30,000 sq.ft.) unit in North Harbour Spur and in Poole a 3,252 sq.metres (35,000 sq.ft.) at Fleets Corner. Both agents are now seeking a unit for Selco in the Brighton area.

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