If property markets reflected reality TV ratings then lettings in the A12 corridor would be booming, while the Thames Valley would be in trouble. ITV’s surprise hit The Only Way Is Essex, which started its ninth series last month, has continuously trounced rival Channel 4 show Made in Chelsea, which embarked on its fifth series in April, in terms of viewing figures.
Sadly, for Essex property professionals at least, the reality of the northern ?M25 office market is that west is best, with property along the M4 corridor continually outperforming that to the east. Furthermore, there has been an average differential in headline rents of at least £5 per sq ft for at least a decade.
In some places the gap is considerably greater – for example, prime office rents in Maidenhead, at £32 per sq ft, are more than 50% higher than those in Brentwood, which languish at £21 per sq ft.
“The Thames Valley is a more mature market, so it will see more development and much better chances of getting a new building out of the ground,” explains Emma Goodford, head of south-east offices at Knight Frank.
However, things may be about to change. The Only Way Is Essex has come under fire for reinforcing stereotypes, but it has also undeniably raised Essex’s profile.
Now, the imminent arrival of big infrastructure projects such as DP World’s London Gateway deep-sea port, just off the A13 at Stanford-le-Hope (due to open this autumn) and the long-awaited Crossrail link (due to connect to the Great Eastern main line in 2018), has raised prospects of an upturn in the county’s commercial property markets.
“Crossrail has got to be good news for the county,” says Paul Bullock, associate director at Lambert Smith Hampton’s Chelmsford office, reeling off a list of sites in Brentwood, Chelmsford, Basildon and Harlow that could welcome new occupiers.
But the real game-changer is likely to come from above. For decades Heathrow airport has influenced occupiers’ location decisions around London and has been the defining factor in the meteoric growth of business space in west London and the Thames Valley.
Heathrow is already at capacity, and both passenger and airfreight numbers are forecast to rise.
The debate has for the first time seriously challenged Heathrow’s hegemony, though the government, mindful of a potential vote loser when it sees one, is sitting firmly on its hands.
The Davies Commission set up last autumn is not due to make its final recommendations until after the next general election in 2015. So there is plenty of time for speculation – and uncertainty – to grow. Arguments for expansion at Heathrow have been well-aired, as have proposals for Boris Island, the nickname for a new hub airport that could be sited in the Thames Estuary.
Until recently there had been relatively little noise about the expansion potential of Essex’s existing major airport at Stansted. That changed last month when Make Architects presented its own proposals (see page 72) that suggest it has room for several extra runways.
The relocation east of a hub airport brings with it the prospect of Heathrow closing, albeit not for a long time yet.
For that reason, says Knight Frank’s Goodford, the whole airport debate is largely irrelevant for what is likely to happen in the Thames Valley/northern M25 office market: “Any changes are a lifetime away and certainly a whole lease length away for most businesses.”
Investors are less sanguine. “The loss of Heathrow would be a disaster for the Thames Valley,” says Chris Carter Keall, head of UK asset management at Oxford Properties, the Canadian fund that has £485m invested in property there.
He is alarmed by noises from the Mayor of London’s advisers that suggest moving the capital’s airport east is an increasingly credible option and thinks others should be, too. “I think many people in the Thames Valley don’t think the closure of Heathrow will ever happen, so I want to make them aware that doing nothing isn’t an option.”
Looking at the latest TV ratings, a guest appearance on The Only Way Is Essex might be the best place to start.
LSC consortium gains ground
Last month saw the launch of the London Stansted Cambridge Consortium, a partnership that aims to join the dots between the booming tech hubs of north-east London and the growing life sciences and IT activity around Cambridge and so-called Silicon Fenn Valley.
With Essex’s key asset of Stansted airport in between it was perhaps unsurprising that the consortium’s launch conference centred on transport.
“We want Stansted to grow to its full capacity, but we aren’t lobbying for it to be the hub airport, though we are preparing for the employment and growth impacts if the decision goes that way,” says LSCC’s John McGill.
The consortium, which is co-ordinated by the North London Strategic Alliance, is at present dominated by public sector bodies, though McGill says that is due to change: “There are districts in Essex and Hertfordshire that consider themselves part of London but don’t have a formal mechanism for talking to London. So it made sense to pull them together first and now we are approaching the private sector in a more pro-active way.”
LSCC, which has grown out of an earlier proposal to create a Local Enterprise Partnership, is now working closely with the four LEPs in the corridor, including the area’s only Enterprise Zone, the 126-acre Enterprise West Essex @ Harlow.
“We don’t want to confuse what we’re doing with the strategies that the LEP’s are preparing,” adds McGill, “so one of our objectives is to give the corridor a higher profile – it’s fair to say it’s not punching its weight at the moment.”
The partnership may have its work cut out. For example, Essex chamber of commerce was not aware of the launch conference, though said it would happily join the consortium.
If LSCC succeeds there will definitely be benefits for local property markets– it reckons 6.9m sq ft of commercial space could be developed in the Essex part of the corridor alone.
New plans for Stansted
In two weeks’ time Ken Shuttleworth’s Make Architects will submit to the Davies Commission its independent proposal to develop London’s hub airport at Stansted. The details of Make’s plans emerged just after the House of Commons Transport Committee gave London Mayor Boris Johnson’s preferred hub airport option in the Thames Estuary a mauling and declared itself in favour of expansion at Heathrow.
“We’re taking what’s there already, rather than increasing flights and noise over London,” explains Make’s Cara Bamford.
That appears to be one of Stansted’s trump (and, for anxious politicians, vote-winning) cards: Make claims that no flights using Stansted would have to fly over the capital and disruption to local residents would be significantly lower than at other London airports.
Another selling point is delivery speed: Stansted is currently operating at around half its 35m passengers per year capacity and a second runway could be operational within five years. A whole new hub airport could be completed in just 15 years.
Make has considered – and costed – an impressive raft of predominantly rail-based connectivity options, including a new Stansted Express, connections to Crossrail (and the proposed Crossrail 2), and even an HS3 high-speed link to Cambridge and Peterborough. Make suggests that the Lea Valley will become the new Thames Valley.
Make’s Stuart Blower says: “We think it has massive potential and will build on the benefits of growth in Stratford and the Olympics sites, and in Cambridge. A large number of businesses don’t need to be beside the airport, but want to be within easy reach.”
Reactions to the Make proposal have been mixed. Manchester Airports Group, which took over Stansted earlier this year as part of the forced break-up of previous owner BAA’s London portfolio, is not commenting and has not released details of its own Davies Commission submission.
But Stansted managing director Andrew Harrison says connectivity is important: “The key for us is to improve the existing rail connection and we are campaigning to get the journey time reduced to 30 minutes.”
Local property professionals are perhaps least convinced. Tim Collins, senior associate at Kemsley’s Chelmsford office, says: “I’m relatively sceptical about Stansted as growth there has been promised for such a long time, though I’d love to see something happen on my doorstep.”
The Essex chamber of commerce says its members would prefer to see development at Stansted rather than a new hub in the Thames Estuary. The chamber’s director of policy, David Birch, comments: “The Make proposals might have come in a bit too soon, but on the other hand we’d like the Davies Commission to make a decision as soon as possible to end the uncertainty.”
