Knight Frank Sorbon

View our extensive range of commercial Office and Industrial properties to buy, lease and rent in the Thames Valley area.

Thames Valley Commercial Property News - Friday, October 5, 2018

Issue #61

MARKET remains strong

Thames Valley News

In some parts of the UK the concerns about Brexit and the economic effects seem to be pushed to one side by businesses - even if the subject is hotly debated.

That seems to be true of the Thames Valley, where activity has held up with JLL stressing in its latest report that it remains an attractive region for both investors and occupiers.

JLL’s research indicates that investment deals in the Thames Valley could reach £2 billion in 2018, “reflecting sustained demand from both domestic and international buyers who continue to target best in class assets.” For take-up, it reckons this will reach 185,800 sq metres (2 million sq ft) in 2018.

Interestingly, the size of the space taken has declined by just over a quarter for each deal since 2008. One of the stand-out industries taking space is autotech because the region is at the heart of the research to develop battery technology for cars.

The life sciences business, a feature of the wider south east, has also performed strongly with occupiers wanting to be near suppliers as well as Heathrow to give access to international markets.

JLL’s Jon Neale commented: “The Thames Valley office market remains the most vibrant and robust commercial location outside central London. The pace of job creation in the region, especially from the tech and communications sectors should translate into a continued demand for space, underlining the strong fundamentals."

James Finnis of JLL stresses the emerging shortage because of a lack of new development and predicts it becoming a real problem in 2018/2019.

As in some other parts of the UK, there is an increase in the amount of flexible space being leased, which accounted for 18% of the total in the first quarter. Another important trend is that domestic investors have become more prominent than international funds in the first half year, in contrast to 2017 when they dominated the Thames Valley.

Knight Frank notes that the transaction rate has increased and the first half take-up around the M25 was 10% above the ten year average. It is worth noting that the M25 market and the Thames Valley do not coincide but each is a good guide to the region.

In the case of the M25, Knight Frank also stressed that deals were small and leasing of flexible space increasing but also that the vacancy rate was at a peak.

Co-op BUYS IN ASCOT

Thames Valley News

Without fuss, the Co-operative has embarked on a strong expansion policy which has translated into buying or leasing retail and industrial property.

In Ascot, the Southern Co-op has bought Unit 3 on the Ascot Business Park from Salmon Harvester through Vail Williams. Russell Miller of Vail Williams said: “We frequently act for Mutual Associates, which is part of Southern Co-op and are always on the look-out for investment opportunities for this client. The unit at Queen’s Square provides a healthy rental income which is equivalent to £285.14 a sq metre (£26.50 a sq ft) with good prospects for future growth.”

Howdens IN BRACKLEY

Thames Valley News

Over the past few years, the kitchen and joinery company Howdens has been a feature of lettings in many industrial parks and trade counter centres.

It has now taken a unit at Rockspring’s 13,006 sq metres (140,000 sq metres) Arrow Park, Brackley which has good road access to the M40 and M1. There is a total of 11 units in the newly built park.

James Haestier of Colliers said: “The strong interest we have had in Arrow Park is testimony to the quality of the speculative build and further demonstrates the demand we have for good quality stock in strategic locations.”

InBrief #1

Thames Valley News

An example of the growing influence of flexible offices is provided by Regus taking 1,652 sq metres (17,787 sq ft) in Henley-on-Thames, its first office in the town. Richard Morris of Regus said the company’s research showed that 30% of corporate real estate globally could be flexible by 2030.

UK CITIES SCORE IN dynamic poll

Thames Valley News

Brexit may be dominating politicians’ thinking but in the world of business, it has less effect, judging by a Savills survey that placed 5 UK cities in the top 20 of dynamic European cities.

The criteria range from inspiration to investment and infrastructure and while London easily comes top in Europe, the list also includes Oxford, Cambridge, Reading and Bristol. Within the top 40 cities are Manchester, Newcastle and Birmingham.

Savills says of Oxford that “it is among several of this year’s biggest risers which are benefiting from new investment schemes announced this year.” Oxford rose six places this year into the top 10 and has been earmarked by the government for 100,000 new homes. It is at the western point of the ‘golden triangle’ of leading research universities in the UK. It was in fifth place on the Savills’ index for innovation.

This dynamism is reflected in the buoyant property market with new developments and rising rents in the city and wider county. Bidwells said that rents in Oxford increased by 16.7% in the past year because of “demand from fast-growing university spin-offs to reach a prime rate of £376.60 a sq metre (£35 a sq ft)."

Bidwells calculates that there is demand from 68 registered occupiers for a total of 103,543 sq metres (1,114,524 sq ft). The university spinoff companies are expected to create 500 new jobs a year.

David Williams of Bidwells said: “The Oxford city centre office market is dictated by constrained supply created by a number of historical ownership and geographical factors."

He expects the constraint and lack of new development to continue.

Putting the market in perspective, the half yearly take-up of 25,000 sq metres (269,000 sq ft) was the highest half year total in a decade and even more pertinent, 59% of this was for knowledgebased industries such as IT and bio pharma.

While city centre development is constrained, it is a different picture in Oxfordshire where the science parks continue to expand. Two planning applications have been made by Thomas White Oxford for St Johns College for a mixed-use business community to the north of the city.

The centrepiece of Oxford North will be 86,966 sq metres (936,120 sq ft) of workspace which will create 4,500 new jobs and 23 acres of open space together with 450 new homes.

Julian Barwick of Oxford North commented: “The new mixed-use community will form a key part of Oxford’s future. Our proposal is for a high level of investment in social benefit bringing open spaces, homes and infrastructure.” As well as commercial space, shops and an hotel, there will be substantial road improvements to the A40 and A44.

BACKING Milton Park

Thames Valley News

Milton Park has been a major success for many years and helped set the tone for business and science parks in Oxfordshire.

It is jointly owned by Hermes and the Canadian Pension Plan Investment Board (CPPIB) who have refinanced a £200 million seven year facility for the park. Chris Taylor of Hermes said: “The loan is a key transaction for our new Milton Park partnership with CPPIB and is testament to the strength of the park."

MEPC is the asset manager and has recently overseen the development of Park Drive East, one of the largest speculative developments in Oxfordshire.

James Dipple of MEPC said: “With the new loan (which was provided by Barings) in place and the ongoing support of Hermes and CPPIB we have a really solid platform to continue to invest in Milton Park which will includes new development.”

Begbrooke ALSO HAS ITS MOMENT

Thames Valley News

Another science park set to expand is Begbrooke Science Park south of Oxford Airport.

Specialising in energy, nanotechnology and aerospace research, the park has been given the green light to expand by Cherwell District Council. Unusually, this has been allowed even though it is within the Green Belt for the city.

There is a waiting list of potential occupiers, said the council, and the government has given a grant of £4.2 million for expansion.

The council’s view is that there is now sufficient land for new development without encroaching further into the Green Belt.

Cherwell is leading the Healthy New Towns programme funded by the NHS for Bicester to discover ways to make it appealing for residents to lead healthy lifestyles.

THE FUTURE OF Slough

Thames Valley News

Central Slough, which has the benefit of a new Crossrail station, has become more important for offices with Ashby Capital and U + I creating its £200m million Future Works scheme.

Designed by Sheppard Robson, the first phase will have 9,290 sq metres (100,000 sq ft) of office space in a three phase regeneration process that will ultimately expand to 33,515 sq metres (350,000 sq ft) of offices.

The aim has been to have quality, such as a large roof terrace with views of Windsor Castle. On the ground floor is retail space and the feature of basement parking electric car charging points.

It is close to Slough’s new business station and also near the main railway station.

Central Working has already leased the ground and first floors for its service office operation.

Peter Ferrari of Ashby said: “The Future Works is at the forefront of Slough’s transformation and launching it highlights our confidence in the town. Named to be the best place in the UK to work by Glassdoor, and with the highest concentration of global headquarters outside London, Slough is already an extremely business-friendly location. The Heart of Slough regeneration is transforming the town centre and the arrival of the Elizabeth Line next year makes Slough one of the most exciting business locations."

Also in Slough, the creative workspace provider Spaces has opened an office in the Porter Building in the centre of the town. It chose it because of Slough’s rating as one of the top 16 tech towns in the UK and is attracting increased investment and entrepreneurial talent from the whole UK, Spaces said.

Richard Morris of Spaces said: “People now recognise that they can be more productive and successful in a dynamic working environment.”

Sixt’s sells HEATHROW SITE

Thames Valley News

Aberdeen Standard Investment AIPUT fund has bought car rental company Sixt’s Heathrow property for just under £5 million.

The car rental firm will continue to operate on the 1.5 acre site opposite Hatton Cross tube station. Sixt, which has been on the site for 20 years, plans to upgrade the operation.

Nick Smith of AIPUT said: “Our acquisition of this keystone site will enable AIPUT to work closely with Sixt in supporting the growth of the operation, benefiting from access to all passenger terminals, central London and the rest of the south east. The car rental site will dovetail with AIPUT’s logistics facilities.”

NEW AT Greenham

Thames Valley News

A new scheme at Greenham Business Park is a collaboration with the tech company Roc Technologies to design and build a new headquarters in the park.

The 150 acre park is adjacent to Newbury and is the largest strategic employment site in the area.

Rupert Holtby of Greenham Business Park said: “We have been working closely with Roc to design a building that meets their needs and also works with the business park perspective.”

FEATURE - Reading IN TOP LIST

Thames Valley News

It may come as a surprise to many people that Reading has scored highly on the Savills’ index of Europe’s most dynamic cities.

However, it is in 9th place as a venue for investment and comes above Berlin and just below Frankfurt (yes, the German financial centre).

Irfan Younus of Savills commented: “While the continued dominance of London as Europe’s leading super-city will reassure those investors concerned by the threat of Brexit, what is particularly encouraging for the UK is that its cities have performed more strongly than any other country in responding to the threats and opportunities caused by urbanisation."

Brexit features in Haslams’ Neil Seager’s assessment of the market in which he says that, regardless of the outcome “companies will have to revisit their distribution network to take account of the trade rules and border controls.” This is of considerable importance to Reading with its pivotal position for industrial and business parks in the Thames Valley.

“Added friction at the border will lead to a need to store goods for longer and even without any added friction the process will undoubtedly be different in some way and will have a direct impact on the distribution of goods."

“This, coupled with the continuing rise of e-tailing, is good news for a market that has already seen stellar performance in recent years."

Seager feels that investors and developers should be buoyed by this prediction and cites McKay Securities speculatively developing 12,449 sq metres (134,000 sq ft) at Theale.

Kier’s 5,017 sq m (54,000 sq ft) Trade City is an example of the need for new build small unit schemes. It only completed in May 2018 and is already 30% let, with 2 further units under offer. Philip Hunter of LSH (who market the property along with Haslams) said that this positive takeup is testament to the high specification and excellent location of the scheme but is also the result of the acute lack of supply in the Reading market for small unit schemes.

In a similar vein, Salmon Harvester’s Opportunity Fund has set a new record rent for its Stadium Trade and Business Park, Reading at £9.00 psf with three new lettings. Salmon Harvester is advised by Sharps Commercial and Cogent Real Estate.

The buoyancy of the business parks, some of which are close to Reading, will help its office market where, for example, Northwood Regional, has embarked on a programme of improvements at the 10,219 sq metres (110,000 sq ft) The Blade which it purchased from Aviva Investments a year ago.

Nick Turner of Northwood said: “These works include reconfiguring the reception area and refreshing common parts such as lighting and we are also installing new showers for cyclists. We believe this iconic building will benefit from a fresh new look."

In his view The Blade has a top rank list of occupiers such as Bracket Global and Urban Sciences and Northwood is also moving into the property. Built in 2009, it set a new rental record for Reading when Gateley paid £366 a sq metre (£34 a sq ft).

Turner added that “we are using our hands-on asset management experience to stay ahead of the competition and through our joint agents, Haslams and LSH, are actively marketing any available space.” At the moment, there are only two small suites available.

For Turner “the Thames Valley is still one of the premier office markets outside London and remains robust.”

Commercial Property Register. All rights reserved. Privacy Policy : Legal Information
Web design and hosting by iWeb Networks Ltd