HELLIER Henry Adams

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South Coast Central Commercial Property News - Saturday, April 27, 2019

Issue #39

Steaming AHEAD

South Coast Central News

Leading the way in a well balanced commercial property market remains the industrial sector, which is performing so strongly throughout the UK, boosted by ecommerce and storage for a disruptive Brexit.

The regional market in the first three months of the year continued in a similar vein to 2018, said Tom Holloway and Stuart Mitchell of Holloway Iliffe and Mitchell, adding that another trend last year was a hunger for freehold deals.

Fortunately for the industrial market’s health, they report that there are several speculative schemes nearing completion, such as Merlin Park, Portsmouth, Velocity, Havant and Daedalus Park, Lee-on-the-Solent (which is particularly popular among potential occupiers).

Holloway and Mitchell said: “The market continues to be active, whether in spite of, or because of, Brexit it is difficult to know.

Businesses are still growing, and with the growth can come the need to move”.

“The first few months of 2019 have already been busy and we are optimistic that the South Coast is quite well placed to weather the storm and more widely the market won’t stagnate to the same degree as it did a decade ago”.

As far as city centre offices are concerned, Steven Williams of Realtest said: “There has been a reasonable level of activity in the city centre office market in the first quarter, despite the stagnating effect of the protracted Brexit negotiations.With a further extension looking likely it will be interesting to see how this affects occupier sentiment in the second quarter and the remainder of the year.

` What has boosted market sentiment is that last year was a record for industrial property, said Lambert Smith Hampton, with the agency claiming to have handled half the deals, a total of 139,405 sq.metres (1.5 million sq.ft.).

LSH spotlights some of the key developments that have underpinned themarket, such as schemes at Nursling, Hounsdown and Chandlers Ford.

Adrian Whitfield of LSH commented: “It has been a hugely successful year for our team.

Uncertainty over Brexit has certainly not had an impact so far, with the industrial sector booming as developers continue to build speculatively, helped by excellent transport infrastructure. It is gearing up to be a busy and intriguing 2019”.

Transport improvements are a factor in the buoyancy of the market, such as plans to upgrade two junctions on the eastern approach to Southampton. In particular, the upgrading of Junction 8 on the M27 will increase safety and capacity. The other changes are at the nearby Windhover roundabout and the road improvements adjacent Dock 20, Southampton.

Looking AHEAD

South Coast Central News

In a market beset by competition between commercial and residential developers for sites, it is encouraging that Hampshire has a development portfolio that provides evidence of worthwhile places for industrial, business, leisure or office use.

In conjuntion with Lambert Smith Hampton, the county council has published this list which includes:  Southampton Airport Economic Gateway for storage and industrial uses;  Basing View Business park and Enterprise Zone, with the potential for a large office project:  Alpha Park, Eastleigh;  South Central Southampton, where John Lewis recently completed on a unit;  Chilcomb Park, a new development in Winchester;  Plans for a new city gateway at Nelson Gate, Southampton.

Andy Hodgkinson of LSH said: “We are encouraged by Hampshire County Council’s proactive and positive approach to attracting businesses of all types and sizes to the region vital for employment, economic growth and prosperity”.

Ferndown CHOICE

South Coast Central News

Ferndown Industrial Estate has long been a popular location for industrial property because of its access to the A31, a major route in the area.

South Coast agents Goadsby has had considerable success with the estate and is now marketing a 1,510 sq.metre (16,246 sq.ft.) unit that was rebuilt a few years ago.

Chris Wilson of Goadsby said: “We have already had a number of potential occupiers enquiring because of its yard and access to the nearby A31”.

To add to this Goadsby is also acting for a private client in marketing three recently built units at Cobham Business Centre, Ferndown Industrial Estate. Cobham is a new business centre.

InBrief #1

South Coast Central News

Industrial estates, such as Marchwood, that are near the ports (in this case Southampton) are performing well. At Associated British Ports’ Marchwood there has been an influx of new occupiers such as Formation Freight Services and Automotive Accessories.

WILL IT last?

South Coast Central News

The question must be will the buoyant conditions in the industrial market continue throughout this year? On the basis of the recent evidence there is a good chance the answer is positive. Lambert Smith Hampton’s Market Pulse shows there was a good level of enquiries at the end of 2018 for large sheds with rents on the milestone of £107.60 a sq.metre (£10 a sq.ft.).

Regarding the next twelve months, Adrian Whitfield of LSH said that “due to wider economic factors, we expect take up in the first half of 2019 to be lower than previous years, however, as we witnessed in 2016, we are confident that the market will rally, once there is clarity on Brexit, to produce a strong finish in the last two quarters of the year”.

LSH highlight the fact that there is a considerable amount of capital targeted at the South Coast as investors like the strong rental yields in the region.

Their argument for a positive view of industrial property is also based on the fact that the UK is considered to be under warehoused with the advantage in the region being the presence of two major ports together with top class transport links by road and rail.

Museum ON PARADE

South Coast Central News

One of the more interesting properties to come onto the market is the former Royal Marines Museum on the Southsea seafront at Eastney.

It is available because the museum has been upgraded and relocated to the site in Portsmouth Historic Dockyard which is due to open in 2020.

The three hectare museum site, built in 1865, has the potential for a range of uses, such as a conference centre, boutique hotel or residential use.

As can be expected, the museum has restrictions on any scheme that infringes on its historic importance. It is also in a conservation area and is listed which will mean for a developer a close relationship with Portsmouth City Council. LSH are marketing the property.

MAKE IT Snappy!

South Coast Central News

Over half the available space at Town Quay, has been let since the development was launched in November 2018, after a substantial refurbishment.

Four units, totalling 10,000 sq.ft.

are now under offer with just three units left totalling 9,000 sq.ft. Town Quay, owned by Associated British Ports and located on the shores of Southampton Water, offers a variety of modern, open plan workspaces.

Nella Pang of JLL commented: “We always knew Town Quay would be a popular choice for a range of businesses and organisations, so it’s no surprise just how quickly these fantastically refurbished properties have been snapped up”. Town Quay is being marketed jointly by property agents JLL and Vail Williams.

Pumped UP

South Coast Central News

Selwood, the pump solutions and plant hire group, has chosen Woolsbridge Industrial Estate at Three Legged Cross for its new purpose built unit.

Established in 1946, it is now one of the largest pump rental firms in the UK and needs the new unit, which is owned by Ankers & Rawlings, a family owned property business, to service clients throughout the region.

Russell Miller of Vail Williams, who acted for Selwood, said: “Woolsbridge Industrial Estate has a strategic location near to a good road network and close to Ringwood, Ferndown, Wimborne and the north of Bournemouth. Given the limited availability of suitable buildings, the most viable option was a development led scheme”.

InBrief #2

South Coast Central News

Just two units remain at Centurion Park as He Man Dual Controls, which manufactures vehicle controls used by driving instructors, take a 9,891 sq ft Unit and Tool Station take a smaller unit of 4,958 sq ft. Lambert Smith Hampton and Vail Williams are joint agents on the scheme.

Two warehouses totalling 86,305 sq.ft. and 44,819 sq.ft. together with an adjoining 0.67 acre plot of development land at Chichester Business Park have been purchased for £16m by Aberdeen Standard after LSH and joint agents Flude Commercial facilitated the sale on behalf of Seaward Properties, joint venture partners in the park.

JLL has responded to the strength of the regional market by increasing its Southampton staff by six new appointments, including Alex King, as new director of planning.

JLL’s Emma Eaglestone commented: “Our business in Southampton and the Solent continues to grow across a range of sectors and we are boosting the team to meet this growing demand”.

Supply SHORTAGE

South Coast Central News

The picture for the region’s office market is more uncertain than for industrial.

The old problem of conversion of offices to residential use, looms and whether this has undermined the market more than many experts believe. Supply has fallen sharply to 80,792 sq.metres (869,329 sq.ft.), which is 58% less than 10 years ago.

In 2018, take up along the M27 corridor was 24,240 sq.metres (260,821 sq.ft.), which is 24% below the 10 year average but in line with the 5 year average of 250,000 sq.ft.

On the other hand, the percentage take up of Grade A office space has risen steadily to reach 31%, which is in line with occupier’s demand for modern better quality space.

Indeed, Andy Hodgkinson of LSH paints a more optimistic picture, with a rebalancing, as some secondary buildings that are no longer fit for purpose for modern business have been converted to alternative use such as residential, student accommodation and hotels.

Hodgkinson makes the point that: “Buildings with strong office fundamentals in terms of location, floor plate configuration and size have been bought by developers, extensively refurbished and remarketed at new prime rents”.

Examples of such high quality City Centre refurbishments that are coming on stream in Southampton are Imperial House, Oceana House and 1 Dorset Street.

However, as James Brounger of CBRE points out: “The office leasing market on the South Coast has been substantially driven by out-of-town activity in 2018 with Solent Park leading the way”. Availability on the park is down to 7%, the lowest level seen in over 10 years.

This view is also endorsed by Russell Mogridge of Vail Williams who commented: “Solent Business Park and Lakeside have both seen strong demand. This is fuelling rental growth in most locations and business’ should not delay pursuing their preferred office location, if they need to expand over the next 6 months”.

Winchester IS DIFFERENT

South Coast Central News

Proof of demand for offices in Winchester has come with the pre let to financial company Brewin Dolphin in Sunley House, a new mixed use scheme.

Allan Pickering of Goadsby, who together with LSH, acted for the landlord Lewis Investments, said: “After substantial investment, Sunley House has become an example of how to achieve exceptional results refurbishing commercial space in the heart of Winchester, to satisfy the demand for quality offices. In this case, it has attractive cityscape views and we are receiving interest in the remaining space”.

Apart from the city’s unrivalled history, it also has the elements of modern business life such as top class road and rail links.

Nella Pang of JLL who acted for Brewin Dolphin commented: “There is strong demand and little quality offices available in Winchester city centre. Sunley House is close to local amenities and a short walk from the railway station”.

Goadsby also acted for Resourceful Marketing in leasing an office on Winchester High Street.

Michael Lord of Goadsby said: “These types of offices provide an ideal opportunity for a company seeking a city centre presence in smaller open plan offices”.

Inevitably in such a historic and vibrant city, residential development is to the fore as indicated by one of the latest deals to sell a plot through Carter Jonas to Alfred Homes. This currently has an imposing Arts and Crafts style property but will now be allowed to have a number of units.

Ryan Harris of Carter Jonas said: “The homes are likely to be extremely popular with buyers given the local amenities and proximity to the centre of Winchester”.

Small industrial units do particularly well in Winchester and Goadsby has let two units on the Scylla Industrial Estate, which caters for start up companies, a successful sector in the city. There are a limited number of units empty at the estate.

PEAK FOR ecommerce?

South Coast Central News

While ecommerce has boosted industrial property, some observers are predicting that it has reached its peak in the UK and Europe.

A report from Colliers predicts that retailing will regain its popularity as an asset class, especially in tourism led locations.

It said that: “While logistics has benefitted from the growth in e-retailing, there are signs that it has hit maximum penetration across Europe”. Colliers, a retail specialist, notes that the rate of online e-commerce sales growth is slowing as markets reach higher levels of online penetration.

Damian Harrington of Colliers said: “Pure online e-retailers do not generate high profits, but omni channel retailers are the exact opposite. The big retail brands have to take on retail space to help drive sales because having a better store presence builds their brand and actually delivers higher levels of online sales”.

“Some centres will continue to deliver results and are highly defensive assets. These hubs combine a strong retail mix with food and beverage, and leisure facilities. They encourage dwell time and appeal to both local visitors and the tourist markets in terms of paying customers”.

Solstice THRIVES

South Coast Central News

Amesbury is another of the rural locations in the region that is, surprisingly, a thriving commercial location. In this case it is centred on Solstice Park.

Planning permission has now been applied for by JLL for 11 new units totalling 3,531 sq.metres (38,000 sq.ft.) for RO Real Estate with a further application for another 12,732 sq.metres (137,000 sq.ft.) at what is known as Helix.

This larger application will allow RO to develop a wider range of larger units. Road links will be improved with the forthcoming South West Expressway to upgrade the A303.

Jonathan Manhire of JILL commented: “The south’s industrial and logistics market goes from strength to strength. But across the region there is a critical lack of development land”.

“Helix offers occupiers a unique opportunity to acquire grade A industrial space along the A303”.

Also at Amesbury, the letting of two suites through Myddelton & Major means there are only three available in Minton House on the Amesbry Distribution Park.

Coming BACK

South Coast Central News

If ever a city has had a hard, and unfair, time it has to be Salisbury following the germ warfare attacks.

It is fighting back and that will help the commercial property market.

Here Ameriscot Commercial has launched new office suites at Warner House, a modern building with a total of 20 units.

A heartfelt comment from Salisbury City Council leader Matthew Dean is that “we are thrilled to have this new office in our city and we look forward to Warner House becoming a real business hub”.

The offices are split into a variety of units making them suitable for small or large occupiers. Marketing is by Goadsby and Myddleton & Major.

InBrief #3

South Coast Central News

An interesting commercial transaction is the leasing deal by owner Woodpecker Properties to Humberts UK through Goadsdby of a unit on Parkway Farm Business Park, Poundbury, on the Dorchester environs new town built by Prince Charles’s Duchy of Cornwall. This much criticised development has, in fact, proved popular with both residential and commercial occupiers over the past two decades. Unlike many schemes in the UK, the development has been steady and taken a very long view.

Kier Property & Test Valley Council’s 51,000 sq.ft. Evolution 50 Warehouse, on the Walworth Business Park, Andover, has been purchased by Canal & River Trust for £6 million. Lambert Smith Hampton acted for the seller and DTRE for the purchaser.

FREE PORTS for airports

South Coast Central News

Brexit has sparked off a wave of new thinking about commerce and in particular how to maintain trading links.

One suggestion is to make regional airports free ports, defined area where goods can be imported, manufactured or re-exported inside an allocated boundary without incurring customs duties or taxes.

The concept is being actively promoted by Andrew Bell, Chief Executive of Regional & City Airports (RCA), which owns Bournemouth Airport. He wants the airports operators throughout the UK to adopt the strategy and believes the government would benefit from it as a post Brexit strategy.

Apart from its usefulness for the UK as a whole, Bell believes it could give a boost to the viability of regional airports many of which trade on a marginally profitable basis yet play a vital role in the local economies. At Bournemouth, there has been considerable commercial development at the airports which has helped the regional economy.

In the case of RCA it has a portfolio of airports, owning Bournemouth, Exeter, Coventry and Norwich but also managing Blackpool, City of Derry and Solent for their owners.

Bell talking of the scenario after the UK leaves the European Union (which is not clear at the moment) with the ability to establish an independent trade and customs policy. He said: “Within that there is the option to create ‘free’ ports, where goods entering and exiting a designated zone would not be subject to any tariffs, or if they are, can be offered at a discount rate”.

“Anywhere can be offered as a free port and the UK’s regional airports offer a compelling case”.

That would help attract new investment into the free port areas (as has happened with Enterprise Zones) helping the Government’s policy of addressing the regional economic imbalance. “We have the Northern Powerhouse and the Midlands Engine so why not the Regional Airports Accelerator? The model already exists throughout the world from the United States through to the Middle East to the free trading hub of Singapore. There are 3,500 free ports operating worldwide employing 66 million people in 135 countries.

Totton WIN

South Coast Central News

Aitchison Developments are set to be granted a full planning consent for the development of 3 industrial/warehouse buildings adjacent to AFC Totton on the A36.

Jason Webb of Hellier Langston, sole agent on the scheme says: “The site is strategically located close to both Jct.2 of the M27, and the popular Calmore Industrial Estate.

This opportunity will give both local and regional businesses the chance to expand into new modern industrial/warehouse space in a tried and tested location”.

The new build scheme, which will be known as Totton Business park, will see construction of circa 60,000 sq.ft. of units ranging in size from 4,400 sq.ft. up to 31,430 sq.ft.

and will provide much needed medium sized space for the western end of the M27 corridor. With the imminent grant of planning permission, construction will begin in Q4 2019, with tenants being ready to move in by Q4 2020. Chris Mills of Aitchison Developments commented: “We are delighted to have secured the purchase of this development site which has been allocated for development in the New Forest District Council Local Plan. A number of local and regional occupiers have already expressed interest in the proposed units which highlights the lack of new supply in the area”.

Petersfield PERFORMS

South Coast Central News

Petersfield is another thriving town in the region showing this with the sale of two units totalling over 2,788 sq.metres (30,000 sq.ft.) through Holloway Iliffe & Mitchell to local businesses.

One unit of 1,673 sq.metres (18,000 sq.ft.) was sold to Viking Test, a printed circuit board supplier, which started in the town in the 1980s.

The second unit of 1,394 sq.metres (15,000 sq.ft.) has been bought by Newsome Tools, a Sheffield based company that is now expanding across the UK.

Stuart Mitchell of the agents said: “The industrial estates on Bedford Road are popular locations for a range of businesses and selling the two units is really positive for Petersfield. Over the past few months we have seen growing interests in freehold industrial property as businesses seek their own sites and the South Coast has benefitted particularly from this trend”.

The supply situation has improved, he said, with several mid sized sites coming on stream.

InBrief

South Coast Central News

ABQ, the hotel group, has certainly taken a shine to Bournemouth and has now bought the Trouville Hotel, increasing its portfolio there to six.

The new acquisition has 892 bedrooms together with conference and banqueting facilities and was sold through Goadsby.

INDUSTRIOUS Chichester

South Coast Central News

Chichester, along with much of West Sussex has been blighted by a genuine dearth of built available industrial and warehouse supply in recent years. As demand grew for suitable industrial property, occupiers have been forced to either compromise when looking for alternative premises or delay moving, as more suitable options have not been available.

Chichester however, has experienced considerable development in the last 24 months.

Approximately 220,000 sq.ft. has been constructed during this period, with a further 110,000 sq.ft. to due to be completed within the next 12 months. Three significant sites of note are Glenmore Business Park, Cedar Trade Park and Chichester Business Park.

Phase 1 of Glenmore Business Park totalling approximately 80,000 sq.ft. was released to the market in early 2016. Much of this supply was absorbed swiftly due to the latent demand in the market from a combination of owner occupiers and investors. Phase 2 is close to completion which has released another 105,000 sq.ft. into the market. A significant amount of the development from Phase 1 and 2 comprises smaller units of between 1,000-2,000 sq.ft. which make them ideal for start ups and local businesses. Much of Phase 2 is now available to let providing much needed high of quality space for potential occupiers.

Cedar Trade Park which fronts onto Chichester’s prime industrial location at Terminus Road is also nearing completion. This will release another 17,500 sq.ft. of warehouse and trade counter supply into the market. The scheme is geared toward trade counter occupiers.

Finally, Chichester Business Park, located on the outskirts of the city will see the development of 40,000 sq.ft. of brand new accommodation, due to be completed in April 2019.

20,000 sq.ft. of this has already been pre let with advanced talks already being held for the rest of the space. Moreover, the business park has plans for an additional small unit scheme totalling approximately 65,000 sq.ft.

with units ranging from 2,000-5,000 sq.ft.

Mikael Goldsmith of Flude commercial commented that “It is fantastic to see the development of new warehousing and factory accommodation in and around Chichester, especially when considering the shortage in other parts of the county and surrounding areas. We anticipate that the available space will be well received bringing new business and enterprise to the city”.

Navy releases ANOTHER SITE

South Coast Central News

Another major former Royal Navy site has come onto the market part of historic Gosport’s Royal Clarence Yard being marketed as a potential employment hub for the marine industry.

The 5.7 acre site has been released by the Defence Infrastructure Organisation and is ideal for marine use because of the deep water access to Portsmouth Harbour.

Parts of the complex have already been transformed with a mixture of residential, office and light industrial space. There are listed buildings among those being offered through LSH, such as the steam fire engine house and the New South Store.

One interesting historical perspective is the site has the remains of a railway station once used by Queen Victoria, whose royal yacht would be berthed at Gosport, to take her from Gosport to Osborne House on the Isle of Wight.

The former station could be converted for commercial use such as a restaurant.

Also in Portsmouth, Aviva Investors plans to expand the Nelson Centre after buying two units totalling 2,788 sq.metres (30,000 sq.ft.), adding to the five units it already owns at the Centre. The latest acquisitions will now be refurbished.

The Centre has already set new top industrial rents for the city.

Aviva has extended its involvement in Portsmouth by purchasing Pioneer Park which was speculatively built by Chancerygate with eight units and now has only one available. LSH and Hellier Langston are the letting agents.

Mark Poplett of Hellier Langston said: “We are expecting to see a high level of interest in this remaining unit which provides a rare opportunity in the area”.

At Burrfields Road, close to Ocean Retail Park in Portsea Island, there are two units of 901 sq.metres (9,696 sq.ft.) available and because of the main road frontage, could be used for either trade counter or retailing particularly as there are other major retailers nearby such as PC World and Halfords.

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