The London end of the M11 could spawn a development corridor rivalling that of the M4 – if the Channel Tunnel fulfils its promise and the Jubilee Line extension goes ahead. Alexander Hahn says that there may be bright prospects for those taking the long-term view.
If some motorways can be said to be glamorous – and surely there are many who would argue that they cannot – then the M4 rules as the tarmac equivalent of Elizabeth Taylor among bit-players. For 30 years the Western Corridor out of London has been a byword for prosperous commercial agglomeration and appealing development opportunities.
But the M4 no longer has things its own way. The sun does not just rise in the east, it is beginning to shine upon it too. At last, the M11 eastern corridor is being seen as a serious alternative to the way out west.
One major factor for the M4’s pre-eminence is that the M11 was completed only in 1979. Yet, in the 13 years since, the idea of a comparable eastern corridor has grown in credibility as hi-tech companies flocked to Cambridge and the regeneration of London Docklands exerted an eastward pull on the City.
However, it is what lies in store for the London end of the M11, rather than what is already in place, that is important. CrossRail, the proposed Jubilee Line extension and the Channel Tunnel are projects which could offer tremendous benefits to the area. Still further infrastructure enhancement will come in the form of the East London River Crossing, due to be completed in 1996.
Once these projects are in place, there are prospects for impressive rental growth in the latter part of the decade, despite current unfavourable market conditions. Moreover, investors are not blind to the fact that east London has a considerable way to go before it comes close to rivalling the affluence enjoyed by the capital’s west.
Agents Goldstein Leigh and Grant & Partners are quoting a healthy £14 per sq ft for the remaining space in BICC Developments’ Bourne Court in Southend Road, Woodford Green. Units on the 85,000-sq ft scheme range from 2,300 sq ft to 5,500 sq ft and 15,750 sq ft of space has been let to a wide array of small occupiers.
The site is less than five minutes’ drive away from both the M11 and the M25 and has a further 2 acres available for industrial/distribution design-and-build.
In June, Barclays Financial Services occupied 30,000 sq ft in Gredley House, Stratford Broadway, at £15.50 per sq ft. Glenny acted for freeholder Unex Group and the remaining 20,000 sq ft in the building is said to be under offer.
“There is a range of accommodation on the market at the London end of the M11, ranging from £9.50 per sq ft to the £16.50 per sq ft which we are quoting at Gredley House,” says Sean Galvin of Glenny. “There seems to be a reasonable amount of interest in that part of the world in anticipation of the M11 link, Jubilee Line and Channel Tunnel.”
Recently, General Accident took 3,250 sq ft of office accommodation in the refurbished Olympic House, Ilford, at a rent equating to £14 per sq ft. Glenny and Goldstein Leigh acted for the landlord.
The Becketts, a 60,000-sq ft speculative development by Salcombe Investments, is located in Ilford town centre at the junction of the M11 extension road and Ilford Hill. Unfortunately, the contractor on the scheme has gone bust and work on site has stopped.
“Really, we have not been able to go forward with it,” says Neil Ridley of agent Nelson Bakewell.
At South Woodford, Bass Developments is seeking a prelet or presale on its “Old Rectory” site which has consent for up to 50,000 sq ft of office space. Glenny is acting as sole agent on the scheme, which has a parkland setting.
In its UDP, the London Borough of Redbridge has identified Newbury Park as an area for future office development. Here, Glenny is sole agent on Henley & Capital’s 12,000-sq ft King George’s Place.
Older space can command lower prices. For example, Nelson Bakewell has let 5,000 sq ft in Kirkdale House, Leytonstone, to Waltham Forest Housing Action Trust at £5.50 per sq ft. “So few deals have been done in Ilford itself that it is hard to say where the market is,” says Ridley. The market peaked in 1990 when Haussman Ling let Clock Tower House, Cranbrook Road, Ilford, to TSB Bank. The occupier paid £19 per sq ft for 7,200 sq ft.
Further out, near junction 7, Knight Frank & Rutley and Coke Wipperman are marketing 33,000 sq ft of new space in three buildings in Epping town centre. Falconry Court, a development by Birse Properties and Arawak, has received an award for design excellence from Epping council. The quoting rent has been reduced from £23 per sq ft to £19.50 per sq ft and several local occupiers are said to be interested.
“The financial advantages for City occupiers to move their back-office operations to these locations has been largely eroded because of oversupply in the core,” said Knight Frank & Rutley’s Nick Evamy. “But what locations like Epping can offer is an improved environment.”
Although offices have been slow to be let in the M11 corridor, there have been a number of transactions in the investment market. At Countryside Properties’ £7m office village – Clements Court, Ilford – 12 of the 15 units have been sold.
Investors include National Westminster Bank and Neptune Orient Lines of Singapore. The remaining three buildings offer about 2,500 sq ft each and are for sale through Glenny at £135 per sq ft.
A second investment deal involving Countryside Properties saw the forward-selling for £3m of a 20,000-sq ft gross office development in Barking town centre, next to Vicarage Field shopping centre. The purchaser was COSCO, China’s state-owned shipping company (and the largest single shipping company in the world), which will move in on completion of the scheme in June.
Further underlining the enduring popularity of the area with shipping businesses are the decision by Hapag Lloyd to go ahead with a design-and-build for a 30,000-sq ft office scheme in Cambridge Road; and Anglo-Soviet Shipping Co’s move into Wey Estates and Regiland Developments’ 50,000-sq ft phase one of Riverside Court, also in Barking, after a presale.
Retail at the London end of the M11 is dominated by Ilford Exchange, a joint Norwich Union and Prudential Assurance development which opened in September 1991. The 300,000-sq ft scheme has more than 100 units and may be accessed from two prime-pitch shopping streets, High Road and Cranbrook Road.
Top rents in the Exchange are about £115 zone A, compared with a maximum of just below £100 zone A in pedestrianised High Road. There are few units available in the latter and demand is holding up well.
Last summer, Clive Lewis let 154 High Road to Phillips, which paid £55,000, breaking back to £72zone A, for a slightly off-pitch unit. Other, more recent, examples include the sale by Glenny this summer of the Job Centre site to Bradford & Bingley Building Society, where the rent was £77,500 pa and a premium in excess of £50,000 was achieved. Also this summer, Glenny represented Bristol & West Building Society to acquire the former Saxone unit at a rent of £148,750 pa.
Cranbrook Road has not held up nearly so well as High Road – transactions are fewer, rents lower and there are at least 10 units available within a 150-yard stretch. Nevertheless, there has been some activity. Evans & Payne and Glenny let 46 Cranbrook Road at a rent equivalent to just under £60 zone A.
According to a recent SERPLAN ranking of shopping centres outside central London, in terms of total gross retail floorspace, Ilford is ranked third in outer London and seventh in the South East.
Industrial
According to Redbridge council’s vacant property register, there was a little over 400,000 sq ft of industrial and warehouse property available within the borough at the end of last year. As activity has been slow, this level is unlikely to have altered greatly during the past 12 months.
Redbridge’s main industrial centres are at Hainault (50 acres) and South Woodford. There have been few recent lettings.
The 30,000 sq ft of two-storey offices and 16,000 sq ft of sheds at AMEC Properties’ Hainault Business Park is almost fully let. Acting on behalf of the tenant, construction company John Lelliott, Glenny is seeking to secure a sublet on 3,500 sq ft of office space.
Similarly, deals at Woodford Trading Estate have been few and far between. However, Glenny recently let 10,360 sq ft in units 8/9 at a passing rent of £54,000.
Goldstein Leigh secured a brace of warehouse lettings at Barking. Acting on behalf of a private pension fund, it let a 42,000-sq ft shed at Thames Road to electronics group Alba for £3.40 per sq ft and at River Road it let 18,000 sq ft to a local haulage company at £3 per sq ft.
“There is tons of stuff available which is cluttering up the market,” said Goldstein Leigh’s Ian Goldstein. “And, unfortunately, I think we have always been a poorer relative to west London.”
However, during the past decade, industrial land values have risen far faster in the M11 Corridor than in the Thames Valley. As Mark Prisk highlights in his report, Redbridge: An Eastern Axis, during the late 1980s industrial land values in Bracknell rose by 60% while, in the town of Harlow, close to the M11, they leapt by 400%.
Good factory/warehouse space in Ilford and Stratford could be expected to command £6 per sq ft.
Regeneration and the local authority perspective
The London boroughs of Hackney, Newham, Redbridge and Waltham Forest have the distinction of belonging to two corridors. Not only are they at the southern end of the M11 but also at the western end of the East Thames Corridor.
Indeed, in early October, all four authorities took stands at the East Thames Corridor 1992 exhibition which was staged by Barking & Dagenham Council – proof positive of an eagerness to generate inward investment.
With an eye to the future, the authorities are awaiting publication of the report by consultant Llewelyn-Davis on the East Thames Corridor commissioned by the Department of the Environment. But that is not to say that the councils have been inert or unresponsive to interest in the M11.
“We are very keen to take advantage of the opportunities offered by the M11 corridor,” said Paul Williams, assistant borough commercial liaison officer at Redbridge. “We do see ourselves as an authority which benefits from vastly improved accessibility. And we are seeking to take advantage of that position. Current market conditions aside, we believe that we have the potential for further office development in the area.”
“The council is very pro-active in seeking to attract people into Redbridge,” agrees Neil Ridley of Nelson Bakewell.
To expand upon Eastern Promise (1986) and Eastern Promise Fulfilled? (1989), independent reports by Derrick, Wade & Waters, Redbridge commissioned a third report on the corridor which was published in June. Mark Prisk’s Redbridge: An Eastern Axis maintains that the area is geographically well positioned and is in line to benefit from a “formidable” series of public- and private-sector investments.
Existing access from the M11 to the edge of the Royal Docks through the A406 North Circular and A13 provides a sound foundation. However, it palls in comparison with investment plans which are in the offing.
The most significant among these are: a £450m upgrade of Docklands Road from the City to the Royals; a third bore hole for Blackwall Tunnel, costed at £80m; £190m invested in modernising the A13 from Docklands to the M25; the East London River Crossing; £9.5m injected into the A12; and a £186m revamp of the North Circular from the A10 to the M11 interchange.
On top of all this comes the £120m M11 Link Road through Hackney Wick. This is being opposed by both Hackney and Waltham Forest councils, although it seems probable that the CPO will go through.
“We are not convinced about the regenerative effects of the M11, because there isn’t really going to be an exit of the motorway into the middle of the borough,” says Waltham Forest town planner Emma Peters.
“What we are concerned about is that the borough will be used as motorway route to take people in and out of London and that the environmental damage will far outweigh any economic benefits. We do think that there is going to be a need for an awful lot of mitigating environmental works along the M11 in this borough.”
Peters is also project officer for Temple Mills, an 80-acre site where Waltham Forest has reached an advanced stage of putting together a partnership between British Rail, British Gas and itself to develop the land for a variety of industrial, food retailing and leisure uses.
Temple Mills borders the Stratford site chosen by the Government as the terminal for the high-speed Channel Tunnel rail link and Waltham Forest is keen that the development becomes more than just a freight depot serving the station.
The implications of Stratford’s selection as the Tunnel link terminus are covered by Prisk’s report, which says: “Stratford will have outstanding communications for local, national and international rail travel and, with the M11 on its doorstep (via Hackney Wick link) and a unified site of over 400 acres, it will become one of the busiest interchanges in Europe.
“There remain serious questions as to how the immediate area can and will cope; how the inclusion of freight on the route will affect the amount of land actually available for commercial development and, most fundamentally, whether Stratford, in its current guise, should be Europe’s first impression of London.”
On a more positive note, the feasibility study on Stratford undertaken by Colin Buchanan & Partners concludes that some 16,800 jobs will be created through the development of a business park, shopping centre, hotel, conference and leisure facilities. Moreover, the improvements to local rail transport in the form of the Jubilee Line and Docklands Light Railway extensions should not dismissed lightly.
Meanwhile, overlooking the Thames at Beckton, Carter Commercial Developments in conjunction with Tesco has plans to develop Gallion’s Reach into a major retail/industrial park. The former gas works site in Newham covers 130 acres and has consent for 1.5m sq ft of space, of which 500,000 sq ft is for industrial use.
In Redbridge, the closure of the George V Hospital – on the A12 near Newbury Park Central Line station – offers a major regeneration opportunity. The building lies adjacent to council-owned land, releasing 52 acres for commercial redevelopment. A further 10 acres is available for redevelopment at the Claybury Hospital site.
“Our area’s first advantage is accessibility,” says Paul Williams. “The other principal advantage is the quality of the environment. We have a large amount of green belt and leisure facilities.”
