All gold on the horizon Redevelopment of the old Terry’s chocolate factory is ready to be unwrapped. Will it be smooth, rich and satisfying? Or the sort of selection you leave in the box? Nadia Elghamry reports
In a few days’ time, Steve Davis, managing director at Grantside, will tie up one of the most important agreements in York.
Half a decade and a planning refusal after he first took on the former Terry’s chocolate manufacturing site, the city of York council will at last sign the final agreements for a massive £165m redevelopment on one of the highest profile sites in the city.
After “one or two” sleepless nights, 10 boxes stuffed with planning information detailing his company’s intentions and enough supplementary electronic information to “come close to crashing the council’s systems”, Davis and Grantside are ready to move ahead and have, for the first time, produced a detailed schedule for doing so.
This is a big step forward for the site, which sits around a mile south of the city. York council turned down Grantside’s initial proposals in September 2008.
Since then, however, the developer has brought in town planner Turley Associates, delivered a new set of plans and, in February, received an almost unanimous “yes” vote from council.
Right from the start, however, Davis has said the site is a gamble. Because it sits in a conservation area and contains several listed buildings, Grantside’s plans have come under the full glare of public scrutiny. Davis, then, is a master of understatement – or possibly just battle weary – when he says: “There’s relief we’ve got the planning.”
He explains: “Because of the site’s heritage and history, it was always going to be a challenge getting it through.”
Eamonn Keogh, planning director in Turley Associates’ Leeds office, was one of the team tasked with that challenge. He says that the biggest hurdle was to get everyone concerned back on site following some negative reaction to the refusal in September 2008. Rather than tweak what had already been proposed for the site, he recalls: “We started afresh with a clean sheet of paper.”
The council granted consent at the vote in February for a scaled-down version of Grantside’s initial scheme, giving the nod for 300,000 sq ft of offices, 271 homes, some retail, two hotels – a four-star and a budget – as well as a doctors’ surgery and a children’s nursery.
This version includes concessions to the council on housing, to replace plans for apartments with more family homes. Grantside had been opposed to this in 2007, but Davis now thinks that this may have been a blessing in disguise, saying: “It’s more appropriate to today’s market.”
He adds: “When the recession struck, because of the planning situation, we were stuck with nothing to do. But there was actually probably nothing we could have done, so the timing hasn’t been that bad, and it has helped us weather the recession.”
Scaled-down returns
Scaled-down plans, though, can mean scaled-down returns. Davis says: “Yes, we still need to get a return and to cover the £26m we paid for the site, but we have reached that level and we’re happy.”
Davis hopes to achieve grade-A office rents of around £17 per sq ft, which is above the headline level in York. “It is a little bit up,” he says, “but the site and what is being developed is great, and that comes with a premium – and by the time the space comes out in 2012, the market will have recovered a bit.”
Local agents seem to agree. Nigel Taylor, managing director or York-based Taylor York Commercial, says that, if space were to come to the market now, it could achieve £16.50 per sq ft with six months rent free on a 10-year lease, rising to 12 months rent free depending on the term.
He cautions, however: “Quite simply, there have not been any deals on grade-A space in a prime business park in York for 18 months to confirm that. Rents of £17 per sq ft might be a starting point for negotiations and are in line with the level I’ve been talking about but, as far as I know, this level has never, ever been achieved in York – however, it is a prime site.”
Delivery will be key. Keogh says: “Clearly, we are in interesting times in the property market. Nevertheless, we hope to have all the legals and planning conditions sorted by the end of May.”
The aim is to crack on this autumn with demolition of the more modern unlisted building, clearing the way for a start on site in March next year.
At that point, the listed, five-storey factory building will be refurbished first, led by a prelet to a budget hotel. Keogh says: “It is a key building and needs to be secured. It will probably be the focal point for the site and will give people some confidence.”
Davis adds that the factory building will also contain around 40,000 sq ft of speculative office space, with floorplates of around 5,000 sq ft, but he remains vague on the details of the funding for this. “Well, that’s the next hurdle to be overcome,” he admits.
The company has cash reserves that will allow it to make a start on development, but it will need help to fund the entire programme. Davis refuses to disclose how much this might be, or when funds will need to be brought forward, saying only: “We get phone calls on a daily basis from people interested in the site, and we’ll set up a mix of joint ventures and funding development agreements.”
For now, Davis must concentrate on getting those all-important agreements signed before he can get his teeth into the next segment of the Terry’s chocolate scheme – and before he can entertain any hopes of sweet dreams.
Terry’s selection
The redevelopment of the Terry’s site will provide:
