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South Coast Central Commercial Property News - Friday, May 5, 2017

Issue #34

COMBINING strengths

South Coast Central News

Widespread support for the concept of a Solent Combined Authority is a positive message for the continued economic growth of the region.

The poll of Southampton residents showed that 71% were in favour of such an authority having the power and funding for the economy, transport and jobs moved from central government to groups of local councils working together.

There was similar support for the Isle of Wight Council, Portsmouth City Council, Southampton City Council and the Solent Local Enterprise Partnership working closer together.

This is in line with the way economic power is devolving from central government to local authorities throughout the UK, which is also coming through elected mayors.

The property industry in the south is supportive with David Ramsay of JLL commenting: “There are areas that are crucial in ensuring the future prosperity of the region. Indeed, this new devolution deal could help to deliver transport and infrastructure projects that have not been possible through individual authorities”.

Ramsay would like to see other authorities, such as Hampshire County Council, join the bid so that the full benefits of devolution “can be realised and to avoid a fragmented approach to decision making in the region”.

In the past there have been plans for crucial transport links such as a tram or light railway system between the major urban areas.

Manchester has shown how important this can be.

The timing of the initiative is favourable because the property market is in good shape. Steve Williams of Realest said: “Unsurprisingly we have seen a longer and quieter summer than anticipated following the Brexit vote. However, we have seen signs of activity building momentum”.

Realest has had a number of good enquiries come in since September and is in discussions with occupiers for upwards of 4,645 sq.metres (50,000 sq.ft.) in Southampton city centre. Williams added that “we are nowseeing prime rents rise across Southampton as availability continues to be squeezed”.

With a favourable economic climate, companies in the region are expanding, such as Pipescenes’ move from Southampton to the M3 Trade Park in Eastleigh through Hughes Ellard. The park is privately owned.

Russell Mogridge of Hughes Ellard said: “Our industrial agency team is struggling to meet demand because there is such a low supply of available units in Southampton”.

With the M3 Trade Park now fully occupied, Mogridge believes there is an urgent need for more trade counters across south Hampshire.

Mountpark SCORES

South Coast Central News

Mountpark has successfully secured planning permission for a large industrial/logistics site on the former Ford UKmanufacturing facility in Southampton which it acquired in December 2015.

The site is in two parts, with the smaller site (6.67 acres) now under offer to a single occupier.

The site can accommodate up to approximately 366,000 sq.ft.

with units ranging in size from c40,000 sq.ft. upwards.

Phillip O’Callaghan, Managing Director of Mountpark commented: “We are delighted that planning permission has been granted. This is a major milestone for Mountpark Southampton and we intend to speculatively develop the site in a range of unit sizes. As such, it will be one of the first major speculative developments in the wider M27 corridor for a number of years, a boost for the surrounding area and the market as a whole”.

Lakeside letting

South Coast Central News

Transas Marine have completed a new 10 year lease to relocate their International Training Academy and office headquarters to Lakeside, North Harbour, taking 20,000 sq.ft.

Lakeside, the 130 acre business park, has just finished a £10 million investment on the next phase of office development which includes a 250 seat auditorium.

Russell Mogridge from Hughes Ellard commented, “Lakeside continues to attract high calibre business , owing to its excellent accessibility, high speed broadband, car parking and lush working environment”.

Construction STARTS

South Coast Central News

How variable have been the responses to Brexit throughout the UK with the south coast market undermined during the summer.

Sentiment has improved but the damage can be assessed from Lambert Smith Hampton’s industrial market report. In the second quarter of the year, enquiries fell by13 to a total of 116, substantially down on the same period a year ago.

LSH’s Adrian Whitfield said: “The majority of the fall was in the 929 sq.metres (10,000 sq.ft.) requirement but, on a more positive note, we have seen an increase in enquiries for smaller units, driven by start-up businesses, satellite facilities, parcel operators and small distribution hubs”.

Whitfield suggests the short term problem was Brexit, but in the longer term it is the shortage of stock.

“As an example of this, we are aware of a distribution occupier looking for 27,870 sq.metres (300,000 sq.ft.) close to Southampton Docks, with the largest void in their search area an 11,613 sq.metres (125,000 sq.ft.) building that is not available for 3-6 months”, Whitfield said.

In fact, the take up in the second quarter, said LSH, of 63,201 sq.metres (680,316 sq.ft.), was an increase of 73% over January-March. The figures were bolstered by two large deals, at Dunsbury Hill and Voyager Park.

Whitfield said the lack of good second hand stock “and minimal speculative development are making pre lets the only option for large units”.

Fortunately, the development market is stirring into life with Barwood Capital and Taurus Developments starting construction soon on the 11,148 sq.metres (120,000 sq.ft.) Velocity on the 5 acre site of a former Pfizer distribution unit in Havant.

Hughes Ellard, Colliers International and CBRE are the letting agents.

Other major schemes cited by Whitfield are Peel Logistics’ scheme of three large units at Nursling and Mountpark’s 27 acre site near Southampton International Airport, Eastleigh.

In Dorset, Glenmore Business Park and the adjoining Blandford Trade Park are pulling in new occupiers even before construction starts. Dean Speer of letting agent Myddelton & Major (M&M) said: “The highly prominent site’s location speaks for itself as we have already pre let six units and there is only one unit available on Blandford Trade Park”. Glenmore, where a new development of 11 units is under construction, is being jointly marketed by M&M, Goadsby and Symonds & Sampson.

POPULAR in Poole

South Coast Central News

Goadsby have, on behalf of The Receivers, sold 68/68A Old WarehamRoadwhich is a detached industrial unit totalling 11,191 sq.ft. with frontage to the busy Old Wareham Road.

The quoting price was £699,950 and 3,950 sq.ft. is currently income producing.

Chris Wilson of Goadsby commented “The purchaser was located very close by and was looking for a freehold in Poole to allow their company to expand”.

Also in Poole, Richard Carr now has planning permission for the £100 million Salterns Marina scheme of a hotel, 73 apartments, marina, spa and gym.

Having sold a small unit on the Airfields Industrial Estate at Christchurch, Chris Wilson said that there is currently a severe shortage of freehold stock and that “we had interest from a number of owner occupiers and investors for the unit”.

ENTER THE Glasshouse

South Coast Central News

Proof of the demand for new commercial space in the region is the success of Phase 3 of the Glasshouse Studios at Fordingbridge in south west Hampshire.

So far 10 of the 12 units have been pre let or sold, with the anchor tenant being the architectural practice, BrightSpace, who designed the scheme for the developer HHM Developments.

Philip Holford of agent Myddelton & Major commented: “We anticipate calling full house sooner rather than later. The vast majority of the office space at this lovely business park, with its fine views across the Avon Valley, is taken up by expanding smaller businesses”.

CONFIDENCE grows

South Coast Central News

The encouraging market trend in Southampton is that there has been a rush of enquiries for small office units in the city centre.

Russell Mogridge of Hughes Ellard said that this has brought rents for such offices up to £206.59 a sq.metre (£19.20 a sq.ft.).

He points out that office supply is low in city centres.

On the positive side, Northwood has speculatively developed two substantial units at Lakeside with 20% already let. Mogridge pointed to the large floor plates in the scheme and said that: “Northwood are so confident in this sector that they have refurbished 929 sq.metres (10,000 sq.ft.) at Botleigh Grange Office Campus, Hedge End”.

Widening the scope of Lakeside, construction has started on a £21 million Village Hotel adjacent to the Porsche Centre. This is a debut for the concept of the Village Hotel.

Another positive point is that Forum, Solent Business Park has recently changed hands and a marketing push “will be well timed with the lack of stock”.

Andy Hodgkinson of Lambert Smith Hampton said that the situation after the difficulty of the Brexit dominated summer is that “what is clear is that enquiry levels have improved and this is likely to result in in take up recovering in the second half of the year.

With the south coast continuing to suffer from a limited supply of office space, in particular, Grade A offices, those occupiers who are expanding and looking to relocate to better quality space will have limited choice and lease terms will reflect this”.

Jerry Vigers of LSH said that investment values since the Brexit vote had plateaued on prime offices and reduced in the secondary market. The most active sellers currently are retail funds.

On the buying side, due to the drop in values, we are now seeing more property companies coming back into the market.

Professions PERFORM

South Coast Central News

To some extent the office market in the region is driven by professional services and they now want better accommodation.

Russell Miller, Partner at Vail Williams, comments: “It is evident within Solent that a large proportion of activity within the office market has been and is expected to be from professional services firms”. He goes on to surmise that “post-recession businesses are focusing on growth, efficiency and productivity and the space they occupy to do this is fundamental. The overriding trend appears to be consolidation, with a preference on investing in the quality of the working environment”.

Vail Williams is marketing the Benham 5 scheme of 2,843 sq.metres (30,600 sq.ft.) and Pioneer Park, the first speculative industrial development in Portsmouth since the recession. It has 6,875 sq.metres (74,000 sq.ft.) of warehouse and distribution space, of which just under a third has been pre let.

Open DAY

South Coast Central News

Kier Property Developments & Test Valley Borough Council are hosting an occupier open day on Wednesday 9th November to showcase Evolution 50, their new 51,634 sq.ft. detached HQ warehouse building in Andover and discuss further plans for Walworth Business park. All are welcome - contact the agents Lambert Smith Hampton or JLL.

PROPERTY event

South Coast Central News

Solent Property Professionals’ Tennis Tournament Nearly 30 competitors took part in the annual Solent Property Professionals’ Tennis Tournament, held at Lee-on-the-Solent Tennis, Squash & Fitness Club, near Gosport.

Organised by Hughes Ellard, and sponsored by Wilkins Kennedy and the Southampton Property Association, the event saw competitors vying for league table points over four hours in sunshine and a biting wind.

Kevin Stansfield, the Managing Director of ActionCOACH Solent, and Tim Clark, the Retail Space Director at Hughes Ellard, beat Russell Mogridge, a director at Hughes Ellard, and Helen Thorpe from the Winchester office of accountancy firm Wilkins Kennedy, in the final.

InBrief #1

South Coast Central News

One of the features of the Solent are the forts sticking out of the water guarding the approaches to the naval bases. Lambert Smith Hampton has auctioned Horse Sands Fort with planning permission for 13 apartments.

It is owned by Clarence LLP.

IN FULL flight

South Coast Central News

Aviation has always had a historic importance on the south coast harking back to the heady days of the Schneider Trophy, with early aircraft production in Southampton and the Isle of Wight.

Indeed, there was a string of RAF fighter bases stretching along the whole region that were famous for their role in the Battle of Britain.

Now there are commercial airports at Eastleigh and Bournemouth that act as business hubs for the region.

They are active centres of new development, such as Aviation Business Park at Bournemouth Airport which is being heavily promoted by Dorset Local Enterprise Partnership through the BIG programme.

It is part of a £40 million plan funded through the Dorset Growth Deal to improve the A338 road as the link to the airport, with further transport improvements being planned.

The LEP’s Gordon Page said: “Aviation Park is the top priority in Dorset for employment and economic growth”. He added that Stoford has secured funding for a 14,864 sq.metres (160,000 sq.ft.) unit at the park.

Forward funding of the Stoford project, where the unit has about 23% of the space devoted to offices, has come from Global Gate Capital. Matt Burgin of Stoford said: “The development will bring a significant amount of investment to the south coast, providing new jobs and more opportunities for the surrounding areas”.

John Twigg of Manchester Airports Group (MAG) which owns Bournemouth Airport said: “The park currently supports 200 individual businesses and has a strong reputation as a key specialist aerospace and manufacturing hub”.

SOLENT takes off

South Coast Central News

A new name and a more aggressive marketing effort is now planned for Solent Airport Business Parks, formerly known as Daedalus East.

Led by JLL, the 49,980 sq.metres (538,000 sq.ft.) site (incorporating the Faraday Business Park) in Fareham is looking for aerospace engineering, aviation and advanced manufacturing and now has a detailed masterplan for expansion.

Now owned by Fareham Borough Council, it has the golden key of enterprise zone status which confers benefits for investors and occupiers including business rate discounts over a five year period, planning permission already in place, superfast broadband and accelerated investment in infrastructure.

A 2,323 sq.metre building is being speculatively developed on the Faraday Business Park within the site which is aimed at the aviation sector and has the advantage of an operational airfield.

Another positive factor is that CEMAST, Fareham College’s Centre for Advanced Engineering Skills Training, is located on the site.

David McGougan of JLL commented: “This is a crucial and high profile employment site in Hampshire with its potential to be home to thousands of jobs. The region has proven strengths in the marine and aviation sectors and the site offers the facilities and connections those industries need”.

An £8 million link road is being built to improve access to the M27 at Junction 11 providing speedy access to Southampton, Portsmouth and into the national motorway network.

InBrief #2

South Coast Central News

Stiles Harold Williams has responded to the strength of airport related business by starting a specialist unit to cover this sector. So far it is handling properties from a wide range of airports stretching from Southend to Gatwick.

Winchester RESISTS CHANGE

South Coast Central News

One of the problems of developing in historic cities is illustrated by Winchester where a £65 million council led mixed use scheme has been rejected by the full Winchester City Council only weeks after cabinet members agreed to appoint Hopkins Architects as preferred bidder.

The scheme would have provided much needed offices as well as housing and shops in Station Approach.

This was not a new experience for Winchester because a £150 million mixed use project by TH Real Estate for homes, a bus station and shops at Silver Hill had also been thrown out.

The reality of the office market is shown by Vail Williams’ Matthew Samuel-Camps’ comment that: “There are no new Grade A offices available in Winchester. Some 2,787 sq.metres (30,000 sq.ft.) have been converted to residential with the prospect of another 7,432 sq.metres (80,000 sq.ft.) to follow”.

That, of course, is a familiar problem throughout the UK, particularly in historic towns and cities. It is starving small businesses of cheap accommodation.

Martin Payne of TH Real Estate said: “The recent focus on localism makes it harder to get development through and the appetite is waning for locations where there are these local issues”. The problem is that popular cities like Winchester become museum pieces with no modern business function.

Science park GROWS

South Coast Central News

At least the University of Southampton Science Park is expandingwith the latest addition being the Grade A 5 Benham Terrace which was opened recently by Sir Vince Cable.

The new facility of 2,843 sq.metres (30,600 sq.ft.) has a coffee shop, roof terrace, state of the art biometric security and a superfast 1Gbps broadband.

Sir Vince said: “In order to raise British innovation to the high level of British science, we need entrepreneurs and universities to work together successfully and this science park is a great example in action”.

Peter Birkett, Chief Executive of the park, said: “Supporting the commercialisation of high quality science and technology has been of great importance here”. When the science park was named Business Park of the Year at the South Coast Property Awards, Birkett said: “Such is the demand for access to our offices and laboratory accommodation, business support and the entrepreneurial community, we continue to expand our facilities and attract businesses from across the UK to Southampton”.

Another business park, the EOS, Solstice Park in Amesbury, is also doing well with latest occupier, Travis Perkins, planning to build a 929 sq.metres (10,000 sq.ft.) builders merchants on a 1.75 acre site. This follows NRG Developments buying a 1.3 acre site at Solstice Park for 30 business units which will be ideal for trade counter use or medium sized occupiers looking to buy or rent.

Steve Mitchell of Colliers International commented: “Solstice Park has always enjoyed superb transport links and now that Travis Perkins is to arrive, other trade counter operators are sure to compete for space in the new NRG business units which will shortly become available”.

David Fahie, Development Director of Solstice Park said: “With a lot of new housing development and a massive expansion of the nearby army garrison underway, the timing for the new outlet and the NRG development is a coup for Amesbury”.

There are other sites at Solstice Park for future expansion, such as 2.09 acres at EOS1 and 8.6 acres at EOS2 which can take large developments up to 13,935 sq.metres (150,000 sq.ft.).

InBrief #3

South Coast Central News

Vail Williams have moved their Solent office to Forelle Estates’ Savannah House in Ocean Village. Michael Price of Forelle Estates commented “Vail Williams had a demanding wish list when looking for a new premises.

The fit out they have completed is high quality and we like to think they now occupy one of the very best office buildings in Southampton”.

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