Thames Valley

Property News Index

Read about the latest news, views and developments in the commercial property world from our industry expert.

WINNING formula
Storm clouds GATHER
Nimble AIM
AXIS AT Bicester
Judging THE FUTURE
InBrief #1
The Basing VIEW
Slough IS SOLID
InBrief #2
LOVING Heathrow
Refurbishment IS KEY
Knight Frank Sorbon

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Thames Valley Commercial Property News - Friday, June 28, 2019

Issue #63

WINNING formula

Thames Valley News

Apart from the main parts of the Thames Valley along the M4 and M25 motorways, there is an increased emphasis on the Oxford-Cambridge corridor.

Although that takes in areas such as Cambridge that are outside this core area, it does mean a significant amount to Oxford and its thriving business and science parks.

In that sense it widens the geographical reach of the high tech hub of the Thames Valley. The scale of the development in Oxfordshire can be judged by the plans to build 100,000 new homes.

The overall concept of the region that stretches from Oxford to Cambridge is a brain corridor, so to speak, because of the quality of the educational establishments.

However, the full potential will only be realised when rail and road communications are upgraded between the two university cities, which the government plans in a £5.5 million investment.

It also should not be forgotten that Oxfordshire has a thriving auto industry, not just the Mini at Cowley but a raft of motor racing teams and their suppliers, also part of the brain corridor concept.

Bicester, in particular, is benefiting from the emphasis on the geographical axis.

Emma Goodford of Knight Frank had not anticipated the outcome in the 2018 M25 market when the big corporate deals for office space came alive again with 12 transactions of more than 4,645 sq.metres (50,000 sq.ft.). She said: “2018 started with such little expectation and grew into something well ahead of the average.” As a result, take up was 34% ahead of 2017 at 380,902 sq.metres (4.1 million sq.ft.).

Neil Seager of Haslams said: “Supply of warehouse and industrial space remains limited in the region, prompting an increase in development. Our view is that the fundamentals that produce a strong industrial and warehouse market have not disappeared and there is likely to be a high bounce once Brexit is sorted out."

At the moment, what has added strength to the market is that mid range transactions have also increased.

There are three other important trends:  The growth of co-working continues to increase with flexible office operators consistently taking more space;  Investors remain wedded to the region and there was an 18% increase in the fourth quarter of last year;  UK councils have emerged as the largest investor group taking a 32% share in 2018, thus adding to the increased role of UK investors.

 According to Knight Frank, activity held up in the first quarter, although the strong showing for large deals in 2018 did not continue to the same extent.

If there is one figure that illustrates the effect of Brexit then it must be that UK domestic investors accounted for 94% of the transactions in the M25 in January- March. What could cause some future problem is that office supply is diminishing, said Knight Frank.

Storm clouds GATHER

Thames Valley News

A stark picture of future trends in the commercial property market is painted by Caroline Robinson of Search Acumen.

She said: “The market faces a significant upheaval in the coming years as occupier demand continues to decline across the board. Demand for office space is on the decline as companies embrace remote working in an effort to reduce overhead costs and at the same time there is an increasing trend for conversion of commercial space to residential."

Robinson suggests we need tighter planning regulations if we are to better manage and maximise land and property available to us.

However, she strikes a more optimistic note for the immediate future by saying “there will likely be a rise in activity once we leave Brexit behind us, but the longer term disruption of the market cannot be ignored”, although she looks to a future of more innovation in the sector.

Nimble AIM

Thames Valley News

One area of change is the expansion of flexible office space and Officio, a workspace finder, finds that the number of businesses considering a move to this system has increased by 10% in the past year.

Officio said a driving force for this was firms’ push to be more nimble and streamline their operations. In fact while the enquiries have risen, actual take up has not increased as companies hold back from moving.

To some extent the demand is viewed as a guide to future economic performance as flexible space appeals to start ups and fast growth companies and larger companies wanting to be more responsive to market pressures.

Chris Meredith of Officio commented: “It seems that larger companies are considering a move out of traditional leasehold space and into flexible workspace which could be because they don’t want to commit to long term leases because of Brexit uncertainty.”

AXIS AT Bicester

Thames Valley News

Bicester is certainly hitting the high notes in the Oxfordshire property market with a number of large schemes such as the Axis J9 scheme by Albion Land.

It will have 46,450 sq.metres (500,000 sq.ft.) production, research and development and distribution space and is being marketed by Colliers International, VSL and White Commercial.

The site is 3 miles from Junction 9 of the M40.

In the first phase, units will range up to 6,039 sq.metres (65,000 sq.ft.) and the second phase will have smaller units of up to 557 sq.metres (6,000 sq.ft.).

Phase 3 is offered on a build to suit basis of up to 23,225 sq.metres (250,000 sq.ft.).

James Haestier of Colliers International said: “Albion Land is one of the most active commercial developers along the M40 and Bicester is a dynamic and expanding town which is fast becoming an established logistics location and I am confident there will be strong demand for the new scheme."

Simon Parsons of Albion Land said: “Demand levels are high and the Oxford-Cambridge Knowledge Arc and proposed Expressway will act as a stimulus for further significant economic growth in the area."

Another major development for Bicester is the 444 acre automotive resort known as Bicester Motion being developed by Bicester Heritage.

With a wide range of motor orientated facilities, it will have a 344 room hotel, spa and conference centre together with engineering and workshop space.

A former quarry will become Bicester Reserve, an ecology led country park and there will be such facilities as an off road driver training academy.

Dan Geoghegan of Bicester Motion commented: “The automotive industry is in a fascinating state of flux owing to changing customer habits and requirements, alongside the technology shifts in drivetrains and autonomy. Bicester Motion will enable both new and existing manufacturers to interact more effectively with their clientele."

The site is a former RAF base.

Also in Bicester, Cherwell District Council, with financial help from the European Regional Development Fund, had developed the Perch Eco Business Centre in Elmsbrook which will be operated by Town Square Spaces (TSS). It has co-working space and serviced offices over three floors and is aimed at small businesses. It is the first non domestic building in the UK to achieve the new Passivhaus Plus energy efficiency standard.

Judging THE FUTURE

Thames Valley News

MEPC and architects Perkins+Will have launched a masterplan for the 300 acre Milton Park covering the years up to 2040.

It aims to create space for 20,000 people, many of which will be highly skilled in science and technology.

Currently the park has over 250 companies employing 9,000.

Philip Campbell of MEPC said: “One of the most important things for us was engagement with occupiers and the local community."

Peter Baird of Perkins+Will added that “business parks need to evolve to keep up with demographic, economic and social changes."

Chris White of White Commercial commented: “Office occupiers are struggling to findmodern accommodation along the northern section of the M40 with the region’s main towns of Banbury and Bicester seeing a huge expansion in both residential and working populations. Somerville Court at Banbury Business Park is one of the few locations that have three modern self contained offices available to lease or purchase."

White added that it was unusual to have three such buildings available in the location where rents are nearly half those of Oxford.

InBrief #1

Thames Valley News

White Commercial are now working with Graven Hill Village on the commercial side of the self-build community which is the focus of Channel 4’s Grand Designs: The Street. Where the programme focuses on homes, White Commercial will be looking at premises for small businesses. Retail and office premises are all being marketed by Whites

The Basing VIEW

Thames Valley News

Basingstoke is going through a period of strong growth with a surge in demand in a climate of limited office supply. Following the take up of 24,154 sq.metres (260,000 sq.ft.), half of it in Basing View, local agent, BDT incorporating Woodford & Co, estimated that available space was only 54,532 sq.ft.

(587,000 sq.ft.) at the end of 2018, of which less than 10% was Grade A.

Kate Dean of Basingstoke and Deane Borough Council said: “With a shortage of Grade A space looming, Basing View is well placed to meet demand. BDP has now been appointed for the redevelopment of the gateway Norden House site and the council’s joint venture partner, Muse, has started pre let marketing of Benchmark, a 3,716 sq.metres (40,000 sq.ft.) office building."

She added that “2019 is set to be an exciting year at Basing View with a new Village hotel and work on the Eli Lilly site as well as new development in the pipeline."

There are also plans by Arena Business Centres to refurbish Quantum House, providing an additional 3,491 sq.metres (37,580 sq.ft.) of serviced office space.

Also in Basing View, there is strong demand at Southern Cross, where London Clancy and SHW are instructed on the disposal of a 3,066 sq.metres (33,000 sq.ft.) detached office building. Russell Ware, Associate Director at London Clancy’s Basingstoke office, said that the significant deals transacted in Q1 and 2 reinforce Basingstoke’s importance as a regional centre for business.

At Chineham Park, Reflexis has taken 1,264 sq.metres (13,600 sq.ft.) after moving from Basing View through London Clancy.

Joint Founding Director of London Clancy, Mark Clancy, said: “This expansion within Basingstoke is another vote of confidence for the office market in the town.”

Slough IS SOLID

Thames Valley News

In central Slough, PageGroup has taken a floor in The Switch office building, which offers refurbished Grade A space.

Vail Williams’ Steve New, who acted for Page, said “The central location and excellent transport links to the City, together with the flexible lease, made this an ideal opportunity for our client."

Maria Hoadley of De Souza, acting for LaSalle Investment Management, the landlord, said: ““We are now approximately 65% let at The Switch highlighting that companies are increasingly looking for flexible buildings that can offer a high specification working environment and excellent transport links."

SEGRO continues its substantial investment programme and has raised £450 million through a share issue to fund spending which has topped £1.5 billion since 2016.

David Sleath, Chief Executive of SEGRO, said: “Occupier and investment market conditions remain supportive and we continue to experience strong demand for new warehousing. We are on course to invest over £600 million in further developments and additional land purchases this year.”

InBrief #2

Thames Valley News

Tikehau Capital has bought the 17,651 sq.metres (190,000 sq.ft.) Nicholsons Shopping Centre, Maidenhead which is the fund’s first purchase in the UK. Frederich Jariel of Tikehau said: “This is a milestone in the deployment of our value added fund throughout Europe and is in line with our strategy of strengthening development activities in the UK.”

LOVING Heathrow

Thames Valley News

Blackthorne Point has proved to be awinner for Aberdeen Standard Investments’ AIPUT fund with a number of new occupiers and lease renewals totalling 4,181 sq.metres (45,000 sq.ft.).

The attraction is, of course, that it is near cargo terminals and the M25 which means there is only one small unit left, which has been refurbished.

Fraser Green of AIPUT said: “We work with our customers to provide high quality, flexible warehousing and industrial accommodation around Heathrow."

To ensure its continued expansion, AIPUT has secured a £55 million revolving credit facility with its long termfinancial partner, RBS International, which will provide the firepower for new acquisitions at London’s airports.

AIPUT already has a £145 million debt facility dating from 2015. Nick Smith of AIPUT said: “The new facility adds to our considerable capital resources, enabling us to respond quickly to targeted investment opportunities."

Hotels are an important part of the Heathrow market and Christie & Co has handled the sale of the 53 bed Stanwell Heathrow hotel, which is a popular destination for leisure and corporate guests.

It has been bought by the Splendid Hotel Group whose Chief Executive, Stuart Bailey said: “This acquisition cements our foothold at Heathrow and the surrounding business parks.”

Refurbishment IS KEY

Thames Valley News

Warehouse REIT have appointed Savills and VSL to market 1-5 Witan Park at Witney in Oxfordshire.

The estate is being significantly refurbished to provide 6,690 sq.m.

(72,000 sq.ft.) of industrial units, ranging from 457 sq.m. (4,925 sq.ft.).

The site is located adjacent to the A40 with some units offering an opportunity for roadside signage.

Savills’ Jan Losch said: “The units at Witan Park will provide some much needed refurbished industrial accommodation back into the market. They are well situated within an established commercial location and their flexibility will make them an attractive prospect for a range of interested parties.”

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