Has it been all hype or will the Channel Tunnel really benefit associated property? Peter Mantle reports.
In the past Kent has suffered from the image of a peripheral location, with the inherent problem of accessibility to the rest of the UK. There can be little doubt that the Channel Tunnel, with its associated major infrastructure improvements in rail and road networks, is of such a scale that access both between Kent and the rest of the UK and between Kent and mainland Europe will be radically improved.
The M20, which links the tunnel to the M25, has the credentials to become another hi-tech silicon valley, similar to that of M4 Western Corridor. In providing a link with the M25, Kent has access to three international airports and all the main motorways radiating out of London. The opening of the new Dartford bridge, augmented by improvements to the m2 and the now-completed M20 route to Dover, will enhance accessibility by reducing journey times. All these improvements should be in place by the opening of the Channel Tunnel in 1993.
Much talked about in recent weeks has been the finally announced route of the high-speed Chunnel rail link from Folkestone to King’s Cross via the more easterly direction of Stratford. With stations at King’s Cross, Stratford, Ashford and Folkestone planned, it is clear that property development opportunities will be strong around these centres. But, as the proposed rail link will not be in place before 2000, investment in the Kent road network will have been justified and will be fully utilised.
Improvements to infrastructure being made in Nord-Pas-de-Calais will link the tunnel with the European motorway and rail network. On the French side, road and rail improvements have kept pace with each other, at least so far as passenger services go, with the Paris-to-Lille route expected to be completed by 1993 and the Paris-to-Frethun line ready later that year.
According to a recently published report by P A Cambridge Economic Consultants it is estimated that the direct employment effect of the Channel Tunnel on Kent between 1991 and 2001 will be a net gain of 12,000 jobs created. It is hoped that employment growth will be stimulated in hi-tech and service sector activities, since Kent has not yet really “arrived” as a location in these fields.
It is also expected that infrastructure improvements and the Single Market will stimulate the growth of manufacturing and distribution in Kent, with close to 5,000 jobs being created over the next decade. With the UK share of trade in the European Community steadily increasing, the opening of the tunnel will make Kent a more attractive location for firms exporting to Europe.
The influence of the tunnel on Kent’s future development will not be uniform. Tunnel-related job losses, which will occur mainly in the construction and the port and ferry industries, will be geographically located in east Kent, while job gains will be distributed more evenly throughout the country. This may reinforce Kent’s traditional image of having a depressed east, a buoyant south and centre, and a successful north more associated with the capital’s suburbs than the factors affecting its address.
In east Kent, Ashford should benefit from the building of the International Passenger Station, various road improvements and the plentiful supply of developable land. The completion of the M20 “missing link” between Ashford and Maidstone removes any inaccessibility of the town. Increases in office rents during the past three to four years would seem to support this view, with rises to around £15 per sq ft on secondhand space and up to £20 per sq ft being obtained on new space. Similarly, a record industrial rent of over £8 per sq ft was achieved earlier this year on a unit at the Ashford Business and Retail Park.
With the sitting of the IPS on the existing BR station at Ashford, the town will become a focus for passenger traffic both to central London and to the Continent. This will bring commercial life and growth to the area as firms establish themselves near Ashford. Much of its freight success will depend on the confirmation of the planned Inland Clearance Depot. Assuming that the ICD exists in the town, there is an argument for growth in offices and industrial property.
The town has several proposed developments backing the outcome of large-scale expansions. Of these, Ashford Great park is the largest, covering 2,000 acres. Overall proposals include 1.5m sq ft of business space, 400,000 sq ft of warehouse space, 1,500 homes, and leisure and retail uses. On the south-eastern side of the town, Eurotunnel Developments has recently submitted a planning application for 450,000 sq ft of retail and 300,000 sq ft of B1/B2/B8 on a site at Waterbrook. ED intends to start work on the site late-1992.
Schemes with planning conssent include Trinity College’s Eureka Science and Business Park which is intended to be a mixed-use development on 144 acres. Also with consent is Mountleigh Ashford Consortium’s Orbital Park, comprising 100 acres of design-and-build for B1, B2 and B8 uses.
Towns in mid- and south-west-Kent such as Sevenoaks, Tunbridge Wells and Tonbridge have always been keenly sought-after centres, with or without the existence of the Channel Tunnel. Limited supply, their proximity to the M25 and desirable addresses have led to their high commercial standing. This sub-region contains a third of Kent’s total employment, with the local economy being dominated by service industries. It has attracted the skilled and managerial levels who promote an affluent economy.
Overdevelopment is unlikely, owing to planning controls. Those keen to speculate on the Channel Tunnel enhancing these towns still further are effectively blocked by an articulate and well-organised resistance. The strength of these towns is apparent even in the currently depressed market. Twenties Cross, 45,000 sq ft of edge-of-town offices in Sevenoaks, has recently been purchased by an owner-occupier at a rent rumoured to be around £25 per sq ft and a yield of 8.5%. Evaluation of a freehold purchase is always difficult, however it does show a healthy market and a maintenance of rents. Tunbridge Wells and Tonbridge would be expected to see the same level.
Maidstone has a slgihtly different profile from Sevenoaks and Tunbridge Wells but, like them, through proximity to the M25, has the ability to be a commercial success independent of other Kent influences. Some major occupiers are already located in the town, including Kimberley-Clark, Mobil and Reed Paper. The economy and property market in Maidstone has been gradually maturing: office rents in the town centre now stand at £25 per sq ft.
For Maidstone the effect of the Channel Tunnel will be greater because of its position on the M20 corridor. The 650-acre King’s Hill scheme in West Malling, being developed by Rouse & Associates and Kent County Council, is likely to attract significant occupiers to the area because of its location between the tunnel entrance and London.
North Kent has traditionally been viewed as an industrial location and, despite substantial job losses in the 1970s and early 1980s, the area still has 23% of its workforce engaged in manufacturing industries. The fortunes of North Kent rest more on the policies to regenerate the East Thames Corridor, integrating it with a much wider east London market, rather than the influences of the Channel Tunnel. Dartford and Gravesend, after completion of the Dartford bridge, are well placed to attract development, combining access to the M25, A2/m2 and M20 with access to the river.
Blue Circle Properties has a massive 12,000 acre-stake in the area including the 250-acre Crossways Business Park at Dartford. The scheme has scope for a total 2.8m sq ft of development, of which warehouses will comprise 1.8m sq ft and offices 1m sq ft. Blue Circle is currently marketing the second speculative warehousing phase at Crossways, to be known as Newtons Court, and the first office buildings on Admiral’s Park, where rents are quoted at £18.50 per sq ft.
The French have not been slow to take advantage of the opportunities presented by the tunnel. There are good development sites along the coastal belt of Nord-Pas-de-Calais and opportunities for commercial development in and around Lille. Currently under construction at Calais is the Channel Tunnel terminal complex, which is a major project comprising facilities for passengers in transit as well as leisure and retail uses, including the proposed offices of Eurotunnel. Arlington Securities Europe is also proposing a major business, ditribution and retail park at Calais which will evenutally total some 1.7m sq ft.
One new element introduced by the tunnel is the possibility of greater colalboration in economic policy across the Channel. This concept of the transfrontier region is a relatively new one being promoted by the European Commission. Since the French and English Channel regions now technically have a mutual land border, both are eligible for funding under Interreg, a programme of EC grants for internal and external border areas.
Within the UK, Kent will not be the only area to gain benefits from the building of the Channel Tunnel. On the freight side British rail expects to carry 7.2m tonnes of goods per year through the tunnel, of which 70% will flow to or from regions north of the capital. In anticipation, Railfreight Distribution is planning to establish a network of up to 12 regional terminals, to be known as regional freight villages, serving the main commercial centres of the UK. These villages are seen as essential by the manufacturing industry if Britain is to maintain and increase its share of the European markets post-1993.
In practice it now seems more likely that there will be only nine sites designated, many of which have been criticised as being little more than glorified sidings using existing tracks. Just two sites in Manchester and Wakefield have been earmarked for the freight village idea.
In Manchester, the Trafford Park Development Corporation will help to pay part of the £11m cost for the 20-acre development, which, it is hoped, will create about 4,000 jobs in the area as well as investment of between £200m and £250m in Trafford Park itself. Similarly, at Normanton, near Wakefield, it is expected that the new 200-acre complex will generate 4,000 jobs, although up to 10,000 jobs may be created if it successful in attracting new businesses.
Elsewhere in the Midlands, plans largely centre around expanding the existing freightliner terminal at Birmingham, with the option of developing a freight village at Bescot or a new terminal/freight village at Coleshill. In Wales, Cardiff has been designated as the tunnel freight link for South Wales and South West England, providing an added boost to the development of Cardiff Bay, where between 5m sq ft and 6m sq ft of industrial and warehousing space are planned.
Further north in Scotland Railfreight Distribution is considering three options including redesigning the existing freightliner facility at Gushetfaulds, Glasgow, developing a freight village in the Hillingdon area, between Glasgow and Renfrew, or constructing a new intermodal terminal and a freight village near an existing marshalling yard at Mossen. At Liverpool it was recently announced that the freight terminus will be located at Royal Seaforth, with other termianls planned at Wilton in Cleveland, Willesden in North London, and Stratford in east London.
Undoubtedly all centres marked for freight terminals/villages will see strong inward investment from the property sector supported by demand from companies looking for warehousing and distribution space.
