Peterborough is out to conquer the development market. Lawrence Higgins reports.
Peterborough appears to be entering one of the most exciting development periods since the Romans built the roads there in 4AD! The first load of bricks and mortar will soon be used on Hanson’s Hampton new town, while Peterborough council has announced plans for £100m of commercial, leisure and residential development on 18ha (44 acres) of run-down land on the south bank of the River Nene. It is also looking at proposals to expand the overall leisure/retail base of the city centre.
In addition to all this, work on the four-lane A1(M) extension to the town is progressing well, and Eurostar will run a direct service from the city into Europe. The icing on the cake would be for Hinduja Corporation to win Lottery funding for its £100m Concordia cultural and leisure park.
High potential
James Hopkins, MD of Hanson Land, says: “The potential [for Peterborough] is very high. There is definitely life being breathed back into the city.” But Stephen Hawkins of Barker Storey Matthews is keeping his feet on the ground: “The market is on the up and there is a buzz, but we must remember that no new developments have actually happened yet.”
Peterborough’s retail sites are part of this buzz. Robert Dickens of Dickens Watts & Dade says: “With prime zone A rents in Norwich Union’s Queensgate Centre now up to £1,399 per m2 (£130 per sq ft), we have surpassed levels set in the boom years.”
Hawkins says: “The centre is incredibly successful, but I do feel there should be a greater variety of retailers.” He may get his wish; plans have just been announced for a £4m extension which will provide an extra 4,181m2 (45,000 sq ft) in four stores.
Retailing is also strong outside the shopping centre. Dickens reports zone A rents of £969 per m2 (£90 per sq ft) along Bridge Street, with virtually no vacancies. However, the secondary shopping areas at Long Causeway and the Rivergate Centre have not fared so well. Dickens says that these areas are letting, but only slowly. He puts Causeway zone A rents at £646 per m2 (£60 per sq ft) and Rivergate’s at £323 per m2 (£30 per sq ft).
Hawkins sees a need for new retail development. He says: “The city could support a second department store. If space was utilised in one of the secondary areas and linked to Bridge Street or Queensgate, I feel that a second primary zone could be created.”
Untapped custom
Charles Knight, manager of Queensgate, agrees: “Over 300,000 shoppers visit the centre each week, but I still feel there are untapped customer bases,” he says.
Responding to such demand, the council has put forward 12.1ha (30 acres) by the railway station for retail and leisure development. Brian Ross-Jones, council development director, says: “The railway site will link to Queensgate, enlarging the primary zone. This, along with the South Bank site, will extend the borders of the city centre.”
For the foreseeable future, space in the centre will remain tight. But, says Dickens, “with a shortage of space and strong demand, I am certain that we will see further rental growth”.
There are 11 planning applications for major out-of-town retail sites currently under consideration. Unex Group has acquired the former T C Harrison site at Northminster, submitting a planning application for 3,809m2 (41,000 sq ft) of mainly leisure use. And the brewers are ever busy, with Greene King, J D Wetherspoon, Allied Domecq and Ansells all taking sites in 1996.
Barker Storey Matthews’ figures suggest a take-up rate of some 60,385m2 (650,000 sq ft) of industrial space in 1996, leaving 167,220m2 (1.8m sq ft) vacant. But Hawkins considers 92,900m2 (1m sq ft) to be more realistic, as some of this vacant space is, he says, unlettable.
Hugh Thomas of Lambert Smith Hampton says that, for good-quality space, there is only 27,870m2 (300,000 sq ft) available. “There is a definite lack of high-bay eaves above 8m (26ft) and, if companies want good-quality space over 4,645m2 (50,000 sq ft), there is only a handful of choices available”.
Office oversupply
Dickens Watts & Dade puts industrial rents between £22 and £32 per m2 (£2 to £3 per sq ft). The company’s William Rose says: “If the current rises continue, then once rents are consistently nearing £48 per m2 (£4.50 per sq ft) there will be speculative development, but this may take one or two years.”
Much of the office space that went up in the early 1990s is still on the market today. Says Thomas: “We have just let the Churchgate building which was built in 1991. But Pegasus and Bayard Place, offering around 11,148m2 (120,000 sq ft), were both completed in the same year and are still unoccupied.” He estimates that there is still 74,320m2 (800,000 sq ft) of space on the market.
Despite the perceived oversupply, the city has seen its first speculative development for five years. Boon Building & Construction has developed three two-storey buildings, totalling 1,254m2 (13,500 sq ft), at Bakewell Court, Orton Southgate. The buildings will be available in July. Thomas says: “The developer noticed a void in the availability of high-quality, self-contained buildings, and is confident that there is a market for the site.”
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A place to work, rest and play
McLean Homes will be the first company to commence development on the Hampton new town. After completing the ring road in April 1996, Hanson put the first phase of sites on the market through Jones Lang Wootton and local agent Dickens Watts & Dade. McLean paid about £432,419 per ha (£175,000 per acre) for the 2.7ha (6.67 acre) site, on which 66 houses will be built at Hampton Harrogate. Building is due to begin this Easter. Commercial space at Cygnet Park will be phased on to the market at £494,193 per ha (£200,000 per acre), with industrial land at London Road costing £370,645 per ha (£150,000 per acre). Tesco’s 12,077m2 (130,000 sq ft) hypermarket will be the key to Spen Hill Properties’ 26,000m2 (279,870 sq ft) Serpentine Green retail centre, where construction work begins this summer. James Hopkins, managing director of Hanson Land, points out the importance of attracting a confirmed retail developer to the site. “It means that we can create a ready-made environment for residential and office development. This was an integral part of our plan,” he says. Hampton offers development sites at a time when Peterborough is awash with space. They are also competing with the Commission for the New Towns which faces strict annual land disposal targets. But, says Hopkins: “We are offering something that is not currently available on the market.” |
Transactions
Churchgate, New Road: Offices. Liberty Pensions has taken 1,284m2 (13,823 sq ft) at £97 per m2 (£9 per sq ft) on a 10-year lease with breaks at three and five years. Dickens Watts & Dade, Richard Ellis and Lambert Smith Hampton acted for the owner, MEPC, while Hillier Parker acted for the tenant.
Nene Gate: Leisure. Allied Domecq has purchased a 0.7ha (1.75 acre) site for the development of a ‘Wacky Warehouse/Big Steak Pub’ outlet. A sale price of £595,000 was achieved. Dickens Watts & Dade and Lambert Smith Hampton acted for the vendor, Sisson-Cox Homes, while the purchaser was unrepresented.
Bretton Way: Industrial. Fengate Commercial Services has leased 4,088m2 (44,003 sq ft) at £22 per m2 (£2 per sq ft) on a 10-year lease with a five-year review and option to purchase. Chesterton and Dickens Watts & Dade acted for Schroder Exempt Property Unit Trust. The tenant was unrepresented.
Units B & D, Harrier Park: Industrial. United Overseas has taken separate 10-year leases on units of 3,443m2 (37,058 sq ft) and 1,440m2 (15,497 sq ft). The rent equated to £27 per m2 (£2.50 per sq ft). Lambert Smith Hampton, King Sturge and Baring Houston & Saunders acted for Gulliver Development Property Trust; United Overseas was unrepresented.
