Thames Valley

Property News Index

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

Purple PATCH
HELP THE High Street
Shining SPIRES
BUSY Basingstoke
Knight Frank Sorbon

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Thames Valley Commercial Property News - Tuesday, November 19, 2019

Issue #64


Thames Valley News

Often considered the weathervane for the economy because of its roll call of top technology companies, the Thames Valley is, perhaps, at something of a crossroads.

That is because of a number of uncertainties, notably the construction of another runway at Heathrow as well as the obvious one of Brexit.

Like other parts of the UK it has gained from stockpiling, which has filled the warehouses as well as the strong growth of e-commerce.

However, the slow growth of the UK economy and the decline in growth of investment inevitably hits the technology sector.

According to the Office of National Statistics, this sector is estimated to have fallen by 0.4% to £49.2 billion between the first quarter and April-June. It said “the asset that contributed most strongly to the fall was the Information and Communications Technology”.

The main reason for this is generally attributed to uncertainty over Brexit.

The lengthy delay to the opening of the Elizabeth Line has not helped because many believe the new route will give a boost to the economy of the region.

Yet, amid this caution, there are a number of positive trends.

For example, Bruton Knowles has been appointed by Heathrow West to provide support services for the development of a new terminal at the airport.

In Basingstoke, the local council is active in promoting development and encouraging businesses to locate there, as well as holding onto existing occupiers.

Reading is still a healthy office market and Oxfordshire, notably Bicester, appears to be on a roll with new developments and demand for space, bringing higher rents.

The problem for the market is epitomised by Simon Fryer of Fryer Commercial who has potential deals in the pipeline but cannot finalise them because of the general mood of caution ahead of a possible Brexit agreement.

“The market has been quiet throughout the year”, he said, “but has picked up in the past three or four weeks. Occupiers want more clarity about the economic situation”.

He added that there has been a sharp decline in the amount of vacant office space in Bracknell, for example, where it is currently about 27,870 sq.metres (300,000 sq.ft.) compared with 185,800 sq.metres (2 million sq.ft.) ten years ago.

“There is only one major building available in Bracknell, the Atrium, of 9,290 sq.metres (100,000 sq.ft.), and landlords have let many of the buildings in smaller deals”, Fryer said.


Thames Valley News

The buoyant market brings its own rewards in terms of an active land market, such as Carter Jonas selling a 24 acre employment site at Witney.

The buyer is Tungsten Properties and it is part of a larger mixed use development with the 24 acres zoned for employment use. It is close to a new junction on the A40.

Carter Jonas’ Jon Silversides said: “Witney has experienced considerable growth in recent years, and the promotion of the larger West Witney development scheme, of which this site is part, has played a vital role in its progression”.

“Such factors, coupled with the fact that this is first site of this scale to become available in the region for 15 years, meant strong levels of interest”.

Purple PATCH

Thames Valley News

Bicester is really going through a purple patch of development and construction has started on Albion Land’s new distribution and manufacturing park.

To be built in three phases, Axis J9 will have nearly 46,450 sq.metres (500,000 sq.ft.) with the first and second stages having five mid sized units and eight smaller units ranging in size up to 5,946 sq.metres (64,000 sq.ft.).

The first five units will be offered on leases while 8-14 can be either freehold sales or leasehold. The final phase will be large units up to 23,225 sq.metres (250,000 sq.ft.).

Simon Parsons of Albion Land said: “For Cherwell District Council to recognise the significance of Axis J9 to the local area means we can speculatively start to develop the first two phases. We are in active negotiations with companies looking for distribution and production space”.

Cherwell Council has a new tough policy on biodiversity that requires 10% net gains through the planning system.


Thames Valley News

Theoretically the region could gain from the commercial property trend away from London and within the M25.

A report from Search Acumen forecasts that commercial new build transactions outside London will rise this year but “fall precipitously in the capital as Brexit bites”. It reckons the new build in London could fall by a third.

The analysis of HM Land Registry data shows that overall new build is down by 7% in the past year but is being maintained outside the M25.

One beneficiary of this in the Thames Valley is Slough (where SEGRO is so dominant) with 100 completed purchases which is an increase of 89% in the year.

One factor is certain to be the imminence of the Elizabeth Line (Crossrail) which will provide such transport flexibility for Slough and other towns in the region.

But there is also a long term shift north and Caroline Robinson of Search Acumen said: “The Northern Powerhouse is firing on all cylinders as more real estate is built and sold in the region”.


Thames Valley News

One of the oddities, perhaps, of the uncertain economic situation with low rates of growth is the success of luxury goods such as super cars.

Then again, the rich are getting richer so McLaren Automotive is expanding production and taking on more industrial space at its Woking location.

It has taken a 15 year lease for a further 4,815 sq.metres (51,835 sq.ft.) on Schroder Real Estate Fund’s Woking Business Park. With its existing space there, it now has 8,106 sq.metres (87,256 sq.ft.).

McLaren is now one of the largest employers in Woking with its international headquarters at the McLaren Technology Centre.

The new unit it has leased has been extensively refurbished.

Jessica Berney of Schroder commented: “McLaren’s steady growth is evidence that well managed, modern industrial premises close to London remain an attractive proposition for big business, providing as it does easy access to the capital and major airports”. JLL and Curchod acted for Schroder.

HELP THE High Street

Thames Valley News

With its base in the Thames Valley and southern England, London Clancy has taken a hard look at the situation of the High Street and the impact on landlords and investors.

Retailers are asking landlords to accept lower rents in a string of towns throughout the UK. This brings on something of a battle between retailers and landlords, one result of which is for freeholders to take an equity stake in any future sale of the businesses.

“Rather this than lose the tenant completely”, said Russell Ware of London Clancy, “because in a struggling high street an empty retail unit can be difficult to let”.

This has also drawn in greater participation by local authorities trying to protect the viability of their towns and also get rental income.

But the situation, said Ware, means rents fall.

“This is changing the relationship of landlord and tenant. There are bound to be winners and losers in the future, but we want to mitigate that as much as possible”.

London Clancy raises the picture of re-purposing buildings for different uses and suggests that pop up shops are a viable alternative for filling empty retail space. This market is estimated to be worth £2.3 billion. In a survey, 44% of retail customers said they had visited a pop up shop in the past 12 months. London Clancy believes this trend will continue.

Another point made by London Clancy is that e-commerce businesses are exploring the built high street. A pop up shop on a shorter lease allows retailers to test a market before making a longer term commitment.


Thames Valley News

Proving that industrial and office parks are still popular, a new development at Theale, the Total Park - is another example of this with a location close to Junction 12 of the M4.

The scheme for two industrial buildings totalling 3,944 sq.metres (42,453 sq.ft.) by Total Developments and is being marketed by Haslams.

Edward Chantler of Total said: “This is our first scheme in the Thames Valley. There is very little new stock on the market and we are able to offer occupiers lettings, but also opportunities to purchase their own units”.

Hicks Baker noted that Theale has risen in popularity for industrial property in the past year and has ìaccounted for a significant percentage of the total out-of-town take up”.

Meanwhile, Green Park, Reading, which is owned by Mapletree, is one example of continued expansion with its plans for speculative development at 400 and 450 Longwater Avenue.

Here it is speculatively building 21,737 sq.metres (233,988 sq.ft.) of Grade A offices, each building with five floors and due for completion in a yearís time.

Cushman & Wakefield and Campbell Gordon are agents for the scheme.

Currently the park, which is 20 years old, has 130,060 sq.metres (1.4 million sq.ft.) and is home to 60 companies employing 7,000 people on the 195 acre site. The attractions of the location will be enhanced when Green Park station (which includes the Elizabeth Line) opens next year, putting Reading and Basingstoke within easy reach.

The fact of Longwater Lake being in the centre of the park brings a natural emphasis on wild life and the environment. For example, there are BAT conservation policies as well as protection of a wide diversity of animals, such as 62 bird species.

The logistics market is, of course, having something of a golden period with Cushman & Wakefield reporting that in the third quarter take up of industrial space increased by 15% compared with the same period last year.

Take up in the first nine months of this year was on par with the five year average at 2.23 million sq.metres (24 million sq.ft.).

Bruno Berretta of C&W said: “The market is generally more favourable to the occupier than 12 months ago. However, the level of occupier choice continues to vary substantially from one submarket to another and across size bands”.

The role of e-commerce has been measured as accounting for 62% of all logistics demand in the second quarter with internet only companies taking half the total space. No wonder the traditional High Street retailing is suffering.

Shining SPIRES

Thames Valley News

As McLaren represents the cutting edge of automotive technology, so one of the UK’s top areas for science has bucked the national trend and is a dynamic place for commercial property.

It is, of course, the Oxford- Cambridge axis and the wider realm of Oxfordshire. According to Bidwells, rents in the arc have risen by 11.9% in the past year and are the highest of any regional city in the UK and are now close to Canary Wharf and Stratford East. Prime rents in Oxford are £430.40 a sq.metre (£40 a sq.ft.) and are 73.6% higher than in 2014 while supply is at a 10 year low.

DickWise of Bidwells said: “Oxford is a global hot spot for innovation and technology transfer, with a mature eco system plus billions of pounds of public and private investment being made into fast growing spin off companies, national research facilities and infrastructure. The recent announcement of a partnership between the University of Oxford and Legal & General is a recent example”.

“The government industrial strategy has focused on developing the UK’s knowledge based economy and the Oxford-Cambridge arc is right at the centre of it. Our research shows that the region contains more than 20% of the UK’s entire science and technology floor space”.

David Williams, also of Bidwells, said: “In the short term, existing stock is being rapidly re-purposed, alongside 13,006 sq.metres (140,000 sq.ft.) of refurbishment and construction currently under way returning higher rents, while in the medium term the main campuses and city centre projects will inject millions of sq.ft. over the next 10 years, a lot of which can be accounted for”.

BUSY Basingstoke

Thames Valley News

Basingstoke is one of the most active councils in the UK in promoting development and business in the town.

It has appointed three property agents to promote new office and retail schemes at Basing View.

These are: BDT and RARE who are to market the pre letting of Neon House which will replace the demolished Norden House. The building will provide 4,181 sq.metres (45,000 sq.ft.) of Grade A office space.

Norbury Sansom has been appointed by the council for retail units which are part of the new office now being constructed by Eli Lilly on the business park.

Other schemes on the 65 acre park are a Village Hotel and two office buildings totalling 7,897 sq.metres (85,000 sq.ft.) while Arena Business Centres is refurbishing Quantum House.

Meanwhile, St Modwen have submitted plans for a major speculative scheme of three high quality units totalling 18,116 sq.metres (195,000 sq.ft.) of industrial and logistics space on an 11.3 acre site to be known as St Modwen Park, Basingstoke. St Modwen is working with ITT Inc on this project and if planning is granted, work will begin in March 2020. St Modwen’s David McGougan said: “Together with ITT Inc, we are committed to delivering a wealth of job opportunities for Basingstoke”. The site is being marketed by London Clancy and Hollis Hockley.

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