Agents’ temperatures are rising as fast as office supply is falling, but still James Robinson sees little speculative development.
Uxbridge’s office supply is drying up. There is only 5,574m2 (60,000 sq ft) of office space available in the town, out of a total stock approaching 167,220m2 (1.8m sq ft), according to Simon Williams of local agent Thomas Williams.
Consequently, he claims, rents are set to rise. The best recorded rent achieved so far is £205 per m2 (£19 per sq ft). But following a town-centre deal earlier this year at Charter Place on Vine Street, Burger King will end up paying more than this. The fast food giant took 1,672m2 (18,000 sq ft) of space, paying £194 per m2 (£18 per sq ft) for the first three years and £215 per m2 (£20 per sq ft) for the final two.
Also, recent lettings to oil company Anadarko and a soon-to-be-signed deal with Kodak at The Atrium on Oxford Road – formerly Uxbridge One – are rumoured to have fetched rents of about £215 per m2 (£20 per sq ft).
Williams’ optimism is shared by Knight Frank’s Joe Godfrey, letting agent on Charter Place. Knight Frank is marketing 2,044m2 (22,000 sq ft) there following the relocation of oil company Oryx UK Energy to Aberdeen.
“We are talking about a very strong market and we are looking to achieve a rent of £215 per m2 plus (in the low £20s),” says Godfrey. As a result of this growing interest and higher rents, he expects speculative office development to begin in earnest.
Very strong market
Yet the Uxbridge skyline is not dominated by cranes. Rocklands Estates is completing Granville House, its first speculative office development at Hillingdon, but it will only provide some 395m2 (4,250 sq ft) of space.
The one major speculative development currently under way is at Kyle Stewart’s Cowley Business Park, situated just off Cowley Road near the town centre. The park’s second phase, the 1,640m2 (17,650 sq ft) Otter House, is under offer and work on the third phase – two buildings totalling 4,703m2 (50,622 sq ft) – began this month. “They will go like hot cakes at rents of over £215 per m2 (£20 per sq ft)” predicts Williams.
“There just aren’t the decent sites out there left to do – that’s why we are seeing prelets and we have reaped the rewards at Cowley,” says Kevin Cook, associate director at Colliers Erdman Lewis and joint letting agent with De Souza Duncan Cons.
Besides Cowley, there are five key development sites in and around Uxbridge: PSIT’s Highbridge industrial estate site on Oxford Road; Sun Alliance’s Hillingdon Circus site; Scottish Amicable’s Vine Street site; the Mahjacks roundabout site owned by Grosvenor Square Properties; and London & Metropolitan Properties’ Cricketfield Road site. All are poised for development yet, with the possible exception of the PSITsite, few seem likely to be developed speculatively.
PSIT plans 4,645m2 (50,000 sq ft) of offices and, pending consent, hopes to be on site by next summer. Says John Batkin, the company’s property director: “We wouldn’t rule out speculative development [although] we have not made that decision yet.”
Office developments are also in the pipeline at Sun Alliance’s site at Hillingdon Circus, some 3 miles out of Uxbridge. It has planning permission for 6,782m2 (73,000 sq ft) adjacent to Hillingdon tube station.
“We have been very successful recently with the lettings at Charter Place [in Uxbridge town centre] and we are seeing real evidence of rental growth,” says Sun Alliance’s Mark Ashton. Even so, preletting – and not speculative development – is the order of the day.
ScotAm’s Vine Street site has planning permission for 6,503m2 (70,000 sq ft) but, says James Brounger of letting agent Richard Ellis: “We are basically looking for prelets at the moment.”
It seems that agents’ belief that the healthy market warrants speculative development is not shared by many of those whose money may be at stake. “We feel that a speculative development would be successful, but we haven’t persuaded Scottish Amicable to take the plunge,” says Brownger.
Grosvenor Square Properties is similarly hesitant about its Windsor Court scheme, in the middle of Mahjacks roundabout. Planning permission has been granted for 6,503m2 (70,000 sq ft) subject to a section 106 agreement but, says Chris Hyatt of letting agent Jones Lang Wootton: “We are not undertaking speculative development at the moment – our instructions are to find a prelet.”
London & Metropolitan Land also has a site on Cricketfield Road in the town centre. The scheme has detailed consent for 4,831m2 (52,000 sq ft) of offices. Chris Parkinson of letting agent Saxon Law says that L&M is considring a revised scheme of 3,902m2 (42,000 sq ft). Speculative development is unlikely, he adds: “It is a question of what sort of deals support new development. For a speculative scheme you need a 15-year lease at least. It is the length of the lease, not rental growth that is the issue.”
He is more sceptical about claims of a renaissance in the market and does not share the optimism of his fellow agents: “Having been through a long period of drought they get very excited when there is an increase in activity . . . people are getting carried away with hype at the moment when the level of demand in the market is still not that substantial.” He adds: “That is why it is so difficult to forward-fund a scheme. The funds see through that hype.”
The hype surrounding Sun Alliance’s proposed St George’s shopping centre has lasted for nine long years. Ashton says that the company is currently working on a new name for the scheme. Perhaps a change of title will provide it with renewed momentum. “We are aiming to submit a planning application for the end of this month and it will include a leisure element,” he says. “We are looking provisionally at a multiplex.”
Ashton also confirms that Sun Alliance is in negotiations with tenants for the scheme’s 10,219m2 (110,000 sq ft) department store and its two 2,787m2 (30,000 sq ft) variety stores. “Our targeted completion date is spring 2000 and we are aiming to be on site by January 1998,” he says.
According to Ashton, the fact that it will have taken almost a decade from the scheme’s inception to its completion is not necessarily a drawback. “The benefit of spending some time designing it is that you get it right,” he says. Certainly, the current proposals are a scaled-down version of the original.
The new centre will provide the town’s existing shopping mall, Prudential’s 36,231m2 (390,000 sq ft) Pavilion Centre, with competition once it is complete. But Stuart Fife of letting agent Knight Frank is unconcerned. He says that there are four units under offer at the centre and that it will soon be fully let for the first time since 1992. Zone A rents are about £1,076 per m2 (£100 per sq ft).
Key transactions
Denbridge Industrial Estate, Oxford Road:Investment. PSIT has acquired the estate from Scottish Widows Fund and Life Assurance Society for £4.35m. The 2ha (5 acre) estate provides a total of 9,847m2 (106,000 sq ft), let to Rank Xerox (UK) at £500,000 pa on a lease expiring in 2013. After costs, the investment yields 11.25%. Thomas Williams acted for PSIT, while Scottish Widows represented itself.
The Atrium, Oxford Road:Offices. Oil company Anadarko has taken a 10-year lease on 4,273m2 (45,994 sq ft) with a break option at the fifth year. PSK Knighton and DTZ Debenham Thorpe represented the lessor and Hillier Parker the lessee.
