Agents believe that there is too much demand for space in Welwyn Garden City and Hatfield. Amanda Bradbury explains.
Welwyn Garden City and Hatfield, which lie within a few miles of each other – close to the A1/M, have both taken top billing in the property news pages this year.
At the end of last month, Booker Belmont Wholesale announced its move to Arlington Securities’ Hatfield Business Park, the former Hatfield Aerodrome. Booker says that it will build a 32,515m2 (350,000 sq ft) food distribution centre, one of four centralised units around the country, on the 39.3ha (97 acre) business park. In all, Booker’s reorganisation will cost the company £95m. The centre is likely to be 39,483m2 (425,000 sq ft) on completion.
Abutting Booker’s site, planning consent has just been granted on a 6.9ha (17 acre) plot for another distribution building. Securicor Omega Express Parcels, which is to base its new £30m “UK Superterminal” there, is said to have chosen the location partly because of its proximity to the A1(M) and to rail connections. The terminal will carry most of the company’s Europe-bound parcels, and create up to 500 jobs on the site, says a company spokesman.
Jim Johnston, Arlington’s regional development director, says that the two deals prove “the old adage about location, location and location”. He claims that, with half the site due to be occupied in under three years, “Hatfield Business Park is the most sought after location in the country”.
Perhaps though, the biggest and best news for the area is that Tesco will be taking ICI’s 10,312m2 (111,000 sq ft) Cirrus building on Shire Park, Welwyn Garden City, from December. According to King Sturge & Co partner Michael Pearce, joint letting agent along with Knight Frank, the site has a further 1.9ha (5 acres) of additional expansion space. Following three months of negotiations, full exchange of contracts is expected imminently. “There are no significant stumbling blocks, just dotting ‘i’s,” says Pearce.
According to a Tesco spokesman, the move supersedes development plans for Old Tesco House in Cheshunt – although that office will be retained for staff working at New Tesco House, the company’s head office in an adjacent property on Delamere Road in the town. The move to Welwyn was prompted by the need to find modern, air-conditioned offices which were immediately available, says Tesco.
Most agents would envy Welwyn Garden City and Hatfield’s problems. If everyone is to be believed, there is clearly too much demand – not too little. This is true of almost all commercial sectors – retail aside – where, in line with Environment Secretary John Gummer’s policies, Welwyn Hatfield district council is firmly opposed to out-of-town schemes.
Council to pay out
It is only three months since Welwyn Hatfield district council lost a court case bought by Slough Estates, which is being awarded damages of about £48m, over the development of the Howard Centre (see EG Case Summaries EGCS132). It is unlikely that there will be much retail development in the area for years to come. And the council’s legal bill could mean that much-needed help will not be forthcoming for Hatfield town centre, which is struggling with run-down and empty properties.
Local agents say that there are few office sites left in Welwyn Garden City or Hatfield. In most parts of Hertfordshire, the past three months have been marked by increasingly aggressive competition for the best locations; this is certainly true in Welwyn Garden City and Hatfield.
Roz Nemes, agency surveyor at Moult Benn in Hatfield, says that – aside from Bishops Square and The Colonnades, both near Hatfield town centre – there is a difference with her immediate area in that there is little new space anyway: “It’s worrying, the lack of stock; nothing new is coming on to the market.”
Despite the fact that demand is outstripping supply and that there has been a recent marketing push to promote the A1 corridor, accommodation is still cheaper in Hatfield than in Watford and Hemel Hempstead, which have connections to the M1.
Industrial unit rents in Hatfield and Welwyn range from £48 per m2 (£4.50 per sq ft) to the £81 per m2 (£7.50 per sq ft) quoted on Hatfield Business Park. In the office sector, offices are up to £11 per m2 (£1 per sq ft) cheaper than in the western side of the county, which is now priced at between £108 per m2 and £140 per m2 (£10 per sq ft to £13 per sq ft).
Another difference is that rent-free periods are not the norm in Welwyn and Hatfield. But this may not be the case for much longer, especially in the highly competitive small- and medium-sized office and industrial unit market.
New business starts
According to local agents, this competitiveness is due to the start-up of new businesses which, they say, seems driven by managers “freed” by post-recession downsizing, management buy-outs and company re-organisations.
Hatfield-based Mike Davies of Davies & Co says that many of the transactions taking place in Welwyn and Hatfield are between 929m2 and 1,858m2 (10,000 sq ft and 20,000 sq ft): “There is a shortage of smaller units. I’m starting to think there is going to be a capacity question; take-up cannot carry on at the present rate.”
The medium-sized unit market, of 1,858m2 (20,000 sq ft) and above, is also moving. Davies is joint agent with Hillier Parker on Welwyn’s City Park, an industrial and warehouse development.
In the past six months, the agents have let blocks of 6,039m2 (65,000 sq ft), 2,787m2 (30,000 sq ft), 1,858m2 (20,000 sq ft) and 1,672m2 (18,000 sq ft) there. “We are entering uncharted waters,” says Davies. “All of a sudden, existing space has gone – in fact, the take-up in industrial units has been slightly stronger than offices, with not as much new development.” However, Davies does predict rental growth.
The number of speculative developments in Welwyn Garden City and Hatfield can be counted on both hands: agents are clearly hoping that the high profile moves into Hatfield will put a spotlight on the area bright enough to interest developers.
KEY TRANSACTIONS
148 Great North Road, Hatfield: Industrial. A single-storey, light industrial unit with office accommodation of 864m2 (9,300 sq ft) in total was sold for £260,000. Roger Richards acted for the vendor, a private individual, while Farris & Co represented the purchaser, also a private investor.
Berkeley Bridge Trade Gap, Bridge Road East, Welwyn Garden City: Investment. Berkeley Commercial Developments has paid £415,000 to Associated British Foods for a 0.5ha (1.2 acre) site. Planning consent has been obtained for seven B1/B2/B8 units totalling 2,063m2 (22,210 sq ft). Completion is due in November. Roger Richards and Evison & Co are letting agents.
9 Mundells Industrial Centre, Welwyn Garden City: Industrial. Easypack has taken 426m2 (4,590 sq ft) from Slough Estates on a 10-year lease with a five-year break option at a rent of £26,400 pa. Roger Richards acted for Slough Estates and Easypack was introduced by Davies & Co.
1-3 East Burrowfield, Welwyn Garden City: Industrial. Hatfield Hydraulics has taken 530m2 (5,710 sq ft) on a new nine-year lease, subject to a break option at year five. The rent is £18,000 pa. Roger Richards represented the private landlord.
Falcon House, City Park, Welwyn Garden City: Industrial. 1,617m2 (17,400 sq ft) was let last month by joint agents Hillier Parker and Davies & Co to Technical Asset Management. It has signed a 13-year lease at £70 per m2 (£6.50 per sq ft). The landlord is IBM Pension Fund.
Gate House, Welwyn Garden City: Offices. Norwich Union has let 925m2 (8,600 sq ft) to Continental Graphics at £102 per m2 (£9.50 per sq ft). Davies & Co and Weatherall Green & Smith are joint agents.Soundbites
“There will be a shortage of available office space very soon.”Tim Hutchings, chief executive, Hertfordshire Chamber of Commerce & Industry
“There’s not a lot of new stock, nothing new is coming on stream, all we seem to be doing is re-Instructions – playing musical agents.”Roz Nemes, Moult Benn
“It has been a dramatic 18 months after a quiet patch in which the A1(M) struggled and the M1 was much stronger.”Mike Davies, Davies & Co
