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Thames Valley Commercial Property News - Sunday, June 3, 2018

Issue #60

ALL change

Thames Valley News

Looming large on the horizon for the Thames Valley is the arrival of the Elizabeth Line (Crossrail) that will transform transport in the Thames Valley by linking themajor centreswith a frequent tube service.

The first sections to be completed are at the eastern end, which has little impact on the Thames Valley, but the western end will open progressively and be completed by the end of 2018.

Experience of other major transport improvements, such as the Jubilee Line, indicates that areas can be speedily developed, land prices rise and commercial property becomesmore valuable, aswitnessed by the area around London Bridge.

The exciting point about the Crossrail impact is that it ties together the core of the Thames Valley, from Maidenhead to Reading and Slough but it also brings easy access to Heathrow.

What it offers is easier commuting so that companies have a wider choice of employees because so many new areas are opened up.

Perhaps that means many people who commute to London will now choose to work locally.

In turn, that would particularly boost Reading which has the infrastructure to grow and already has a sophisticated commercial property market. Another apt example of a transport system that brought widespread business opportunities is provided by the Metrolink in Greater Manchester.

Aviva Investors has proved the point with a funding arrangement of £32.7 million that allows it to develop a complex of three industrial buildings on the Uxbridge Industrial Estate in West London, another area that will benefit from Crossrail. The largest of the three warehouses is 11,116 sq.metres (119,653 sq.ft.) which will be completed towards the end of the year.

For Aviva it is a continuation of its investment in West London where it has a cluster of logistical assets in West Drayton and Uxbridge.

Alastair Wakefield of Aviva commented: “The combination of a strong level of occupier demand and the continued lack of good quality industrial accommodation is placing significant upward pressure on rental levels, particularly in the south east and Greater London.

Urban logistics and the last mile supply remain at the top of the agenda for many in the market”.

Len Rosso of Colliers International added that “the combined impact of the third Heathrow runway, the opening of Crossrail and the ongoing lack of stock means that we are confident this scheme will attract very strong levels of demand”.

The music PLAYS ON

Thames Valley News

The former EMI factory at Hayes adds to the picture forWest London with amixed use scheme by Crest Nicholson at the Machine Store.

This is residential led but it also has retail space and a health centre.

Construction is starting and is part of the £250 million project for the former EMI factory by U+I which will provide 640 homes, and a large amount of retail and leisure space as well as 46,450 sq.metres (500,000 sq.ft.) of offices.

Sean Ruane of Crest Nicholson said; “With the arrival of Crossrail later this year, Hayes is set to become even more popular with those looking for easy access into the heart of the capital”.

Tom Edgerley of U+I added that it “is exciting to watch the Old Vinyl Factory come to life with students, office workers, residents and visitors who are all benefitting from this major regeneration”.

HOMES FOR Southall

Thames Valley News

The attractions of West London are underlined by Stanhope‘s £200 million Southall scheme where Network Homes has become part of the joint venture.

Once again, this is a residential led mixed use scheme to build 550 homes together with retail and commercial space, plus flexible workspace for small businesses and start ups.

Location is all important here and it is close to a new Crossrail station in the centre of Southall. Of equal importance is that it is the key element in the regeneration of Southall, which is making progress through other nearby sites being bought for development.

Stanhope‘s David Camp said: “This alliance between a major private developer and a leading housing association is the only way we are going to solve London‘s housing crisis”.

InBrief #1

Thames Valley News

Richard Upton, Deputy Chief Executive of U+I, is selling some of the three hotels he personally owns. He is asking £8.25 million for the 132 bedroom Eynsham Hall, Witney, Oxfordshire which has consent for another 80 bedrooms. He may sell the other two, the 99 bed Devonport House in Greenwich and the 11 bed The Bell in Ticehurst, Sussex sometime this year.

THE POETRY OF Milton Park

Thames Valley News

While the UK economy may be slowing, the pace of expansion of the technology sector is unabated judging from the new schemes in the Thames Valley.

In particular, Oxfordshire is buoyant with MEPC‘s Milton Park, where a newspeculative £24million project is largely completed, setting the pace.

The first building to be finished was the 3,902 sq.metres (42,000 sq.ft.) 141 Park Drivewhich sets the tone by providing a high degree of flexibility between laboratory and office space, fulfilling demand frominnovative and technological companies in the county.

The three buildings, claims MEPC, comprise the largest speculative developments in Oxfordshire.

Philip Campbell of MEPC said: “Our priority at Milton Park is to create an attractive environment where innovative businesses can thrive and expand, bring job creation and help to boost the local economy.

In recent years, the park has achieved almost full occupancy. Park Drive East fulfils this relentless demand from science and technology businesses”.

The 2,509 sq.metres (27,000 sq.ft.) 143 Park Drive is already pre let to Oxford Immunotec, an Oxford University spin off, which has been located on the park for a decade.

Another thriving company, Oxford Immunocore, is also taking on a new laboratory at 95 Park Drive, due for completion in the summer, bringing in another facility of 4,924 sq.metres (53,000 sq.ft.). Currently the company occupies 15,329 sq.metres (165,000 sq.ft.) at Milton Park.

Andrew Hotchkiss of Immunocore commented: “This is an exciting time for us and our new purpose built laboratories will allow us to continue expanding our groundbreaking research, which we believe will lead to new treatments for cancer and other diseases. Milton Park is an ideal location, with excellent communications and transport links”.

Meanwhile, Caliber Facilities Management has agreed with MEPC a further three years‘ contract for M&E Management and Cleaning at Milton Park which employs 140 of its staff. MEPC‘s crucial role at Milton Park and in Oxfordshire has been recognised by Chief Executive James Dipple being awarded Property Leader of the Year for 2018 in a ceremony at the Bodleian Library in Oxford. It recognised his contribution to the market over a 20 year period.

Dipple said: “The experience we have derived from our involvement at Milton Park can be seen in other development projects in the UK at locations such as Silverstone Park, Wellington Place, Leeds and NOMA in Manchester”.

WINNING formula

Thames Valley News

Another science and technology park in Oxfordshire at Harwell is also expanding steadily.

Oxford Nanopore, a DNA sequencing company is to lease 1,347 sq.metres (14,500 sq.ft.) at Harwell Innovation and Science Campus, significantly increasing its manufacturing capacity including high specification clean rooms, laboratories, office space and logistics areas. William Cooper of Harwell said: “We‘re seeing them grow into a phenomenal world leading company and by supporting their scale up we are sparking the start of a new era of high tech manufacturing on the campus”. The campus now has 37,160 sq.metres (400,000 sq.ft.) of space completed and the next application for nearly double that is being submitted this year. The Harwell campus has the scale and capability to provide world leading companies such as Oxford Nanopore with the footprints, scale and quality build they require to support massive expansion, Cooper said.

The long term plan is substantial, for 510,950 sq.metres (5.5 million sq.ft.), of which close to a third is to be built by 2025, making it, claims Harwell, the largest regeneration and commercial property project ever seen in the region.

FIVE combine

Thames Valley News

In an unusual move, five south commercial property agencies have merged under the banner of Alexander & Co of Dunstable.

The five agencies include Bannister in Bicester, Claire Lloyd Properties and Hartwells, (both in Aylesbury), andWing & Baker Pearce in Harrow. Together they cover Oxfordshire, Buckinghamshire and Berkshire as well as Middlesex.

Group CEO George Thomas commented: “Our clients will have access to an ever widening pool of investment opportunities, in terms of properties to buy and let and in areas perhaps they were not considering, along with greater marketing of their properties”.

InBrief #2

Thames Valley News

Property consultancy, Sharps Commercial, has been named the Thames Valley Industrial/Logistics Consultancy of the Year at the 2018 Thames Valley Property Awards. The annual event, staged by The Business Magazine, recognises the achievements of the region’s property market, with this year’s accolade for the number of industrial deals completed being awarded to the Reading based firm. The award category for Industrial/Logistics Consultancy of the Year (by number of deals) was sponsored by SEGRO.

Sharpening THE IMAGE

Thames Valley News

Having bought the 11,055 sq.metres (119,000 sq.ft.) The Blade office building in Reading from Aviva Investors last September,Northwood Regional will now invest in a range of improvements.

Northwood will now relocate from its offices in Newbury and start internal improvements in a three months‘ project to reconfigure the reception area and refresh common parts. It also hopes to get planning for improvements to the streetscape around the property.

Northwood‘s Nick Turner commented: “The Blade is already a hugely successful office building and we are making the investment so that we continue to meet the needs of modern occupiers”.

One unusual scheme in Reading is the redevelopment of 35-43 Greyfriars Road by Boultbee Brooks to create a new urban warehouse style workspace to be known as the Brick Works. The property will offer floors from 220 sq.metres (2,360 sq.ft.) up to 396 sq.metres (4,260 sq.ft.) or a self contained office of 1,719 sq.metres (18,500 sq.ft.) which will have the advantage of a concierge service.

Tom Fletcher of Lambert Smith Hampton said: “The Brick Works is a rare opportunity for an occupier with ambition, high standards and a sense of style to acquire a self contained workspace on either a leasehold or freehold basis. It is unusual to find a building of this quality and style in Reading and so close to the station”.

One of the latest industrial schemes for Reading is McKay Securities‘ plan to demolish a chilled storage warehouse at Theale Logistics Park and develop a single 12,453 sq.metres (134,043 sq.ft.) distribution warehouse or, alternatively, four units with a slightly smaller area.

Simon Perkins of McKay said: “The Thames Valley is characterised by low supply of good quality, mid sized distribution space. This is at a time of favourable demand dynamics, driven by the rapid growth of e-commerce and the structural changes in consumer behaviour. Theale Logistics Park is particularly attractive, servicing the metropolitan hub of Reading while also providing easy access to the rest of the UK‘s motorway network”.

Chandler Garvey’s view is that “the industrial sector is flying” and that 2018 is likely to see further developments being planned Greyfriars Road for delivery in 2019.

Setting THE PACE

Thames Valley News

Serviced offices are an increasingly important part of the commercial propertymarket and are increasing strongly in the Thames Valley.

A measure of the importance of the sector is a prediction by Savills that take up for serviced offices is likely to reach 46,450 sq.metres (500,000 sq.ft.) outside London this year, a 14% increase on 2017.

The report noted that demand was for high quality offices so that Grade A accounted for 75% of the take up.

Savills‘ Jon Gardiner said: “While serviced offices are definitely not a new concept, they have really established themselves in the UK regions as a viable and appealing solution for a range of businesses.

We are therefore seeing the dynamic shift in the overall office market and traditional landlords must continue to reinvent themselves in order to compete in terms of price and lease flexibility”.

Heathrow is a top venue for serviced offices and Regus has opened its third facility there in Terminal 3.

It has 12 meeting rooms of various sizes as well as a drop in business lounge. It already has Express locations at Terminal 5 and Terminal 2.

Airports are a favoured location for Regus and it has facilities at Gatwick and Birmingham as well as overseas. Richard Morris of Regus said: “Our strategy is to continually expand our global network and diversify the type of location we offer”. It now has 3,000 locations throughout the world.

Star TURN

Thames Valley News

The industrial market has been the star turn among the commercial property sectors in 2017 and according to JLL is set to continue this performance in 2018.

JLL‘s Andy Harding said: “The industrial market had a stellar 2017 and became the standout sector among the commercial property types. From an investment perspective the sector outperformed and our latest forecasts suggest this trend looks set to continue over the next four years”.

In fact, the report said that demandwas stable in 2017 compared with 2016 in eight of the eleven regions, with two improving (North West and North East) and one declining in Yorkshire & Humberside.

A combination of robust, but stable demand, very low supply and generally healthy interest in new speculative development generated rental growth which was 11.4% last year in 21 locations monitored by JLL in the greater south east. Slough Estates shows how this view applies to the Thames Valley.

In Newbury, Vail Williams let a 1,458 sq.metres (15,693 sq.ft.) unit for Clipstone Investment Management at Fountain House South, Newbury, to Electronic Manufacturing Solutions (EMS) where Vodafone is one of the local occupiers.

InBrief #3

Thames Valley News

London Clancy has sold a 2,135 sq.metres (22,982 sq.ft.) retail unit at Winklebury Way, Basingstoke on behalf of a private investor to a Private Vehicle with a quoting price of £1.25 million.

Windsor HAS PULLING POWER

Thames Valley News

Apart from the royal wedding, Windsor has become a favourite place for commercial property investors.

RO, which has been active in the south east, has bought the 833 sq.metres (8,971 sq.ft.) Admiral House for £4 million from Jansons Property with a net yield of 5.66%.

Christopher Thomas, Bray Fox Smith and Vail Williams acted.

Admiral House is a former Edwardian police station that is now an office property in the town centre.

David Kershaw of RO said: “Windsor is a superb location.

The historic town is thriving as the surrounding area looks to benefit from its royal connections and the halo effect of the nearby Crossrail development.

This is a strategic acquisition for us as Windsor has a shortage of quality offices, presenting a strong prospect for rental growth”.

Windsor’s popularity as a business destination is evidenced by the recent letting at Morgan House to Tetra Pak and the lease renewal by En Route International at the 1,096 sq.metres (11,800 sq.ft.) Assurant House. Christopher Thomas acted on both transactions.

However, the big scheme in Windsor is by Salmon Harvester with a £100 million mixed use project on a site at 67 Alma Road which has consent for offices of 23,225 sq.metres (250,000 sq.ft.) although the newplanning application is for houses as well and less than half the space as offices.

Doug Stewart of Salmon Harvester said: “We hope to progress the town‘s first build-to-rent scheme and at the same time deliver flexible office space”.

MORE FOR Crawley

Thames Valley News

The Commercial Park Group, which is a partnership of John Baker and Sir Robert McAlpine, now has planning consent for the development of BCL House, Gatwick Road, Crawley.

The scheme is for offices of 5,574 sq.metres (60,000 sq.ft.) which is adjacent to another partnership scheme for Northwood House.

John Baker said: “Securing planning permission for the second phase of Gatwick Park is a vote of confidence in our wider vision to create a newbusiness hub in Crawley”.

Crossrail WILL HELP

Thames Valley News

On the basis that Slough comes within the orbit of the Crossrail zone, then SEGRO‘s Slough Trading Estate will receive an extra layer of significance to add to its long standing success.

The latest arrival is Axflow, a pump systems company, that is leasing 1,338 sq.metres (14,400 sq.ft.6) at 820 Yeovil Road, bringing the occupancy rate on the estate to 97%.

The property is one of three units being developed which is the second phase of the improvement to Buckingham Avenue at the western gateway to the estate.

Paul Lewis of SEGRO commented: “Axflow joins the 24 new companies who moved here in 2017. The redevelopment of the units on Buckingham Avenue is an example of how we are continuing to transform the estate and attract new customers, securing the highest levels of occupancy we have seen”.

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