Sleeping giant: Just as Brighton’s office market shows signs of kicking into gear, major regeneration plans in nearby Shoreham threaten to spoil the party
Brighton’s office market, it seems, has come of age. In September last year, Spannerworks, a local computer company, signed for 20,000 sq ft at Moore House at a rent of £22 per sq ft – the highest rent paid by anyone in the city since 1991.
Meanwhile, at QED’s 26 Stroudley Road, part of the vast station site known as New England Quarter, a tenant has been found for the 12,500 sq ft office building – the only such scheme under way in Brighton. It is not known who the occupier is, but it is thought to be paying £22.50 per sq ft, which would set an even higher record for this part of the south coast.
But, while Brighton’s occupier market has matured rapidly, its development market is virtually stationary. And there are some who dare to suggest that major regeneration proposals in neighbouring Shoreham-by-Sea may hold the answer.
Chris Mitchell, QED’s managing director, says: “There really aren’t any other new office buildings going up in Brighton. There are a few sites floating around, but no new speculative building. Demand has certainly been quite intense.”
With Lloyds TSB signing on Christmas Eve for 55,000 sq ft at Mountgrange’s 3 City Park – a building being sublet by L&G – vacancy is now at 8%, with very little of this consisting of high-quality stock.
The two big schemes earmarked for the city are quite a way off. McAleer & Rushe has just submitted a planning application for 30,000 sq ft of offices on site K of the New England Quarter – an increase of 5,000 sq ft on its previous consent.
Meanwhile, the council has selected Canterbury-based Cathedral for the 1.85-acre Circus Street municipal market site last year. It will be submitting a planning application in April. Its Grow Brighton proposal includes 180 flats alongside retail and offices, although the exact proportions are not yet clear.
Even more distant is the redevelopment of the Edward Street Quarter, a 2.5-acre site centred on Amex House. The council wants a major office scheme here – a “campus-type facility” – that will make “full and efficient use of the land” and form a “landmark in terms of urban design and sustainability”.
Although planning guidance has been issued, there has been little progress so far.
Martin Clark, partner at Stiles Harold Williams, says: “We have a real problem. We need to build some offices. Brighton is an old town with lots of tiny freeholds and fragmented ownerships, and it is difficult to assemble complex sites. The ones that do come up tend to go for residential or leisure.”
But this is beginning to change, and developers are realising that offices can be a good bet in Brighton. “Offices are coming up the hierarchy of land values,” says Clark. “Rents used to be at £15 or £16 per sq ft, with yields at 8% now, it is almost £25 per sq ft, with a yield of 5%.”
He adds that this quadruples the investment value of a unit of office space, and should surely hasten the arrival of schemes.
Solving the problem
Given the complexity of sites, though, the answer to Brighton’s problems may be found up the road in the relatively unheralded town of Shoreham, where the South East England Development Agency is once again attempting to regenerate the sprawling harbour.
The RDA has already agreed to grant £2.95m to the plans, which it says will deliver 7,750 jobs alongside 10,000 homes on the mile-long strip of land next to the port. At the time of writing, it is waiting to hear whether the government has allocated “new growth point” status to the plans.
Chris Moore, head of land and property, east, at the agency, says: “This is a 20-year programme, not unlike the scheme at Chatham Maritime. We have carried out 12 months’ work on this, and it will be another 18 months or two years before we have a compelling masterplan. But, alongside that, we will be preparing planning applications for particular parts of the site.”
Moore says a pilot scheme is likely to be drawn up during the next year, and will initially feature around 100,000 sq ft of high-spec offices.
“We would be looking at a mix of uses to complement the expansion going on in Brighton,” he says. “It doesn’t have very much good-quality office space, despite the fact that occupiers such as American Express and EDF have expansion needs.”
Although Moore will not be drawn on exactly how the overall development will pan out, he does emphasise that lessons will be learnt from the previous attempt to regenerate the site. The ill-fated “media village” proposal was conceived nine years ago and only finally abandoned last year in the face of insurmountable infrastructure costs.
Moore explains: “If we know what works in terms of gross development value, and over a 15-20-year period we know what has to be done, we can produce a scheme that will work.”
Key to this approach is the tariff system, which has government backing and has already been used in such places as Milton Keynes. Developers pay a set fee per sq ft of commercial space or per housing unit, calculated with a view to what infrastructure is needed.
Challenging issue
An equally challenging issue will be local opposition. Following a string of articles in the local and national press, hackles have been raised, particularly over the provision of as many as 10,000 new homes – the town’s roads already experience severe congestion.
Moore admits that there are significant challenges. “That is absolutely the key question,” he says. “We need to create something that is going to be highly sustainable, and some fairly radical measures on transport provision. We will look at examples of what has been achieved elsewhere, such as low-emission zones, to act as an incentive to reduce traffic.”
SEEDA will work with the local authority to ensure “restricted” parking provision, he says, pointing to houses in Brighton that are built without parking. “Brighton has a reputation as a green economy, and we are very keen on expanding this to Shoreham,” he adds.
But while DTZ associate director Stewart Barlow is another agent lamenting the lack of quality space in Brighton, he thinks only larger occupiers will be attracted out of town. He says: “There is a comparison with Southampton, which struggled for a long time with good occupiers in the town centre. They started looking at Solent Business Park, as it was the only place you could find 60,000 sq ft, or 20,000 sq ft on one floor.”
However, Barlow points out that competition could come from other big sites on Brighton’s fringes, such as Preston Barracks, which could house as much as 100,000 sq ft.
Shoreham may be in for more than one battle.
Brighter outlook for Brighton hotels
Despite the city’s reputation for being at the cutting edge of almost everything, Brighton’s hotel scene has remained relatively unchanged for decades, apart from the odd boutique operation opening.
However, there are signs that the city is beginning to polish up its act.
This month, Brighton became host to the first Myhotel outside London, with the opening of an 80-room, Karim Rachid-designed hotel in the heart of North Laine.
And Brunswick Developments has submitted a planning application for a 150-room hotel at Brighton Marina. Managing director Andrew Goodall says: “We have already had an offer from a four-star operator that we are taking very seriously.”
The company already has consent for a 40-storey tower and 850 flats designed by Wilkinson Eyre, and has begun infrastructure works.
Colin Brades, an associate at Cluttons, says: “Brighton and Hove has been crying out for additional modern hotel accommodation to meet the needs of the backpacker, and the budget and boutique customer.”
He is marketing the 15-room ex Charter hotel on the seafront, which has attracted bids from both national and local operators.
Brighton’s hotel offering may soon match the image of this fashion-conscious city.
