Speculative developers are poised to exploit Gatwick Airport’s flight plans for the business class. Lawrence Higgins reports.
Gatwick Airport, traditionally considered the chartered holiday airport, is shedding its passengers-in-sombreros image and is muscling in on Heathrow’s business trade by offering flights to nearly 300 destinations.
It is a move that has led speculative developers to move in on the locality in a bid to tap international demand.
Three speculatively developed buildings are already available in nearby Crawley, with three more to follow, plus one at Gatwick itself. Office rents in Crawley and Gatwick are now £215-£258 per m2 (£20-£24 per sq ft). This compares with £323 per m2 (£30 per sq ft) at Heathrow, where space is limited.
The largest of Crawley’s three available buildings is Canadian & Portland and Threadneedle’s 3,935m2 (42,355 sq ft) Portland Building in High Street, which is being offered at £253 per m2 (£23.50 per sq ft).
John Miles of Canadian & Portland says that Crawley’s air connections abroad have spurred interest in the area.
“Gatwick’s growth is of great benefit to Crawley,” he says. “We had a company from Dallas look at the building. There are three flights daily from Gatwick to Dallas, and the building is only 10 minutes away.”
Chris Broome of Fleury Manico adds: “In the 1980s, nearly all office deals involved local companies. Since the recession, new companies have come from far afield and now dominate lettings.”
Rail and motorway connections together with the South East’s lack of stock also contribute to Crawley’s attractions. Paul Bolden of Jones Lang Wootton says: “The airport is the main puller, but the whole communications network is the key. Crawley has a deep market, with local and international demand. And there are few new buildings in the southern apex.”
Crawley’s two other speculative buildings are Barwood and BZW and London Orbital’s 2,872m2 (30,917 sq ft) Shrewsbury House, High Street, and Berkeley Commercial’s 1,672m2 (18,000 sq ft) Shaw House, Orchard Street.
At Gatwick, BAA/Lynton is speculatively developing the 5,805m2 (62,487 sq ft) First Point. It is designed for airport-related occupiers, and rents will be around £248 per m2 (£23 per sq ft).
Speculative development in the pipeline includes Hostmead Developments’ scheme at the 1.2ha (3 acre) Parkside site, for which it paid £1.85m. Work is due to commence on 5,574m2 (60,000 sq ft) of offices later this year. Agents Donaldsons and Stiles Harold Williams confirm that a prelet is being sought but that development will go ahead regardless at a rent of about £248 per m2 (£23 per sq ft).
A prelet is also being sought for Salmon Developments and Ironcliffe Estates’ 3,437m2 (37,000 sq ft) office scheme on Gatwick Road. Joint agents Weatherall Green & Smith and Johns Commercial confirm that development will commence in the spring, with or without a prelet. Rent is being set at £215 per m2 (£20 per sq ft).
The Exchange, High Street, will offer 1,478m2 (15,907 sq ft) of offices above 777m2 (8,360 sq ft) of retail. Joint agents JLW and Stiles Harold Williams say that development will proceed with a prelet of either element.
Despite a potential 19,509m2 (210,000 sq ft) of new space coming on stream, the secondhand market is buoyant. Peter Ross of Vail Williams points to a deal at Ocean House, beside Three Bridges Station, where the 1,663m2 (17,900 sq ft) secondhand building went for £188 per m2 (£17.50 per sq ft). Bolden says: “Just one year ago, good secondhand stock was achieving rents only in the mid-teens.”
Adam Godfrey of Stiles Harold Williams says: “We’ve had tremendous take-up, with figures back at 1989 levels. There is now no decent-sized secondhand building stock available. This lack of stock is the only factor that could stall market growth.”
But the deal which all local agents believe will set off the market is the letting of Barwood and BZW and London Orbital’s Lonsdale House (see Transactions).
Ross says: “The whole market was waiting for this letting. It’s the first of the new generation and bodes tremendously well for the other new buildings. It’s the first time Crawley has reached £215 per m2 (£20 per sq ft) for over eight years.”
Bolden adds: “Crawley needed to hit the £215 per m2 (£20 per sq ft) benchmark. The market can build on this deal.”
Crawley’s industrial market has also seen improved take-up figures, but the speculative developers have not been so quick to enter. Andrew Osborne of Vail Williams says: “Stock levels have reduced greatly. There is now no new accommodation whatsoever available.”
Broome adds: “We have seen no speculative development since the Faraday Centre three years ago. This hung around and may have put developers off. But it has now gone for over £65 per m2 (£6 per sq ft).”
Take-up of secondhand stock is increasing. Peter Jones of Stiles Harold Williams says: “There was 92,900m2 (1m sq ft) available at the beginning of 1997. There is now only around 65,030m2 (700,000 sq ft).”
This figure remains relatively high because the space is in large units which are not attractive to occupiers. As Jones explains: “There are 10 buildings on the market in units of more than 1,858m2 (20,000 sq ft), totalling 55,740m2 (600,000 sq ft). “But there is a lack of suitable buildings below 1,858m2 (20,000 sq ft).”
He estimates that total availability of such units has halved, since the beginning of 1997, to a total of just 9,290m2 (100,000 sq ft).
Sites are available for development, however. Jones puts availability at 12.5ha (31 acres), with capacity for 51,095m2 (550,000 sq ft). The largest is 5ha (12.6 acres) at Maidenblower, where the prime site is Camino Park with 2.6ha (6.5 acres). One of the main reasons that developers have held back is land costs of more than £1.48m per ha (£600,000 per acre).
But Osborne believes that speculative development is looming. “Hopefully, the demolition of Salisbury’s old building, in Fleming Way, indicates that owner BZW will build out 6,503m2 (70,000 sq ft) of greatly needed speculative space.”
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Young and old night owls flock to Crawley If you joined in the Christmas spirit in Crawley by partying until dawn, chances are you were strutting your funky stuff at Rank Entertainment’s newest dual nightclub, Ikon and Diva, in Station Way, writes Lisa Pilkington. The purpose-built, two storey 2,694m2 (29,000 sq ft) night spot comprises Diva, for the over-25s, and Ikon, for the over-20s, offering six bars and two food outlets. Ikon and Diva is part of Rank’s plans to open a network of nightclubs. One has already opened in Southampton and others are to follow in Maidstone, Basildon and York. Rank, helped by ACL – now part of Knight Frank – began searching for suitable premises three years ago. After looking at a number of sites, it acquired Station Way from the Commission for the New Towns in November 1996. Deborah Buller, development controller at Rank, says that the reason for choosing Crawley was straightforward: “It didn’t previously offer a quality nightclub. We’re delighted with initial trading.” Meanwhile, Crawley Leisure Park, a joint venture between Frogmore Estates and Crawley borough council, offers 15,329m2 (165,000 sq ft) at the old football ground. Most of the scheme is now let, according to David Carvey, consultant to Stiles Harold Williams, joint agent with Holley Blake. “There are only two units left and one is under offer. The other is a 325m2 (3,500 sq ft) unit, and we’ve had interest in that too,” he says. Tenants include Virgin, which proposes a 5,760m2 (62,000 sq ft) 15-screen multiplex; Bass, with a 2,973m2 (32,000 sq ft) Hollywood Bowl; First Leisure, with its 3,716m2 (40,000 sq ft) Esporta health and fitness club; and Pizza Hut, which has taken 334m2 (3,600 sq ft). Terms are being finalised with Whitbread for a TGI Friday’s and First Leisure for a Brannigan’s pub. Carvey expects to complete deals by the end of January. Construction began last November with completion due at the end of this year. Simons Estates has paid approximately £4.5m for the 1.8ha (4.5 acre) Squareabout site. The company bought the land from CNT for a £12m leisure and residential development. It will include a 74-bedroom Holiday Inn, an American diner and a Bass Taverns pub. Fairclough Homes will develop 62 houses and flats on the remaining land. Jones Lang Wootton acted on behalf of CNT, while Savills advised Simons Estates. Retail development includes Scottish Widows at 5-31 the Martlets, linking County Mall with Queens Square. Jonathan Brooks of Lambert Smith Hampton says that prospective tenants include HMV and First Sport, and puts zone A rents at £1,076 per m2 (£100 per sq ft) – £108 per m2 (£10 per sq ft) below County Mall, owned by FPPS, the property arm of Friends Provident. Crest Nicholson, meanwhile, proposes 5,110m2 (55,000 sq ft) of retail/leisure at Queens Square. At the Exchange, High Street, agents Stiles Harold Williams and JLW put rents at £25,000 pa for a 107m2 (1,150 sq ft) unit and £135,000 pa for a 348m2 (3,750 sq ft) unit. |
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How is the Gatwick-Crawley property market competing with Heathrow? “Many companies move here just because of the airport, but we get different occupiers to Heathrow. More European companies look here.” Chris Broome, Fleury Manico “It can’t compete directly, but Gatwick has lost the charter-flight image. Many more organisations now take a serious look here.” Peter Godfrey, Stiles Harold Williams “We may never actually overtake Heathrow, but Gatwick trade is set to grow by 7% this year. It is now taken seriously as a major airport.” Andrew Osborne, Vail Williams “The scheduled services to the US are now better than those of Heathrow. ANS – a US company – took Lonsdale House primarily because of Crawley’s rail and air links.” Peter Ross, Vail Williams |
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Transactions Lonsdale House, Crawley High Street: Offices. ANS Communications has taken 1,450m2 (15,606 sq ft) at £215 per m2 (£20 per sq ft) on a 15-year lease. Vail Williams and Knight Frank acted for landlord Barwood and BZW and LondonOrbital. Weatherall Green & Smith advised ANS. Vector 2, Manor Royal, Crawley: Industrial. A&M Hearing has taken 2,601m2 (28,000 sq ft) at about £92 per m2 (£8.50 per sq ft) on a 20-year lease. Fleury Manico and St Quintin represented landlord AXA Sun Life. County Mall, Crawley: Retail. Review has taken 166m2 (1,787 sq ft) at £99,000 pa on a 15-year lease. Lambert Smith Hampton advised landlord FPPS. |
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Gatwick office take-up (m2) 1995: 12,077 1996: 9,290 1997: 30,007 |
