Cardiff office agents should have been celebrating a bumper 2006. With a prelet to Barclay’s Bank subsidiary FirstPlus secured and take-up figures receiving an early boost with lettings to Ove Arup and Trillium, they were predicting a return of 500,000 sq ft pa.
Then, earlier this month, without warning, Barclays walked away from the 70,000 sq ft deal at Cardiff Gate. It was the second blow to the market after an enquiry for 160,000 sq ft by Legal & General “went quiet” in November.
Take-up at 412,000 sq ft is at its lowest for five years, according to Colliers CRE.
John James, director at Fletcher Morgan and letting agent on Cardiff Gate, is sanguine about the situation. “The fact that two large occupiers are obviously not doing anything is disappointing,” he admits. “But there is not an oversupply in Cardiff, and we’ve got detailed planning consent on 72,000 sq ft of office space.”
The ability to fast-track a building will indeed be a bonus. Agents have long bemoaned the lack of grade A stock. Without this, fresh deals are unlikely and take-up – at best lacklustre over the past couple of years – will not improve.
As for rental growth, agents say MEPC/Rightacres Callaghan Square is where the £20 per sq ft barrier is most likely to be broken. Lack of stock should help push rents up from the £18.50 per sq ft they have stood at for two years.
However, at Cardiff Gate, James says that, while the option to crack on speculatively is “being considered”, a prelet will be the favoured option. But with one prelet in the bin, that is not as likely as it may appear. Developers’ hesitancy is understandable, but maybe it is time for bold gestures.
Instead, it was Newport that led improvements in Wales. With a 123,000 sq ft prelet to EADS, take-up went into triple figures for the second year running. Yell’s announcement that it will take a call centre at the WISP-backed Usk House should ensure that is reached for a third year. Other developments are under way, including the 38,000 sq ft, £7m Dumfries House.
St Athan provides one bright spot on the Cardiff market. In January, the former RAF base won a £14bn MOD training contract.
St Athan was expanded in the 1990s after a service contract was signed. A superhangar was built, partly funded by the WDA. Roger Thomas, director at Cooke & Arkwright, says: “A few years on, DARA lost the contract, and the whole project never expanded as much as it should have.”
The creation of 5,000 jobs aside, a consequence this time is the construction of a better road. “This will benefit Cardiff Airport, form the A48 trunk road and the M4 motorway,” says Thomas.
Schemes awaited
Retail
Stagnation hit the retail market last year, with rents falling back in Newport and Cardiff failing to gain on the £285 per sq ft zone A achieved in 2005. Both cities are awaiting huge redevelopments, with Newport’s £200m Friars Walk shopping centre and Modus’s retail-led City Spires scheme (pictured right), and Cardiff’s St David’s 2.
Industrial
Further afield, Manhattan Loft Corporation, which is developing 300,000 sq ft of space at The Valley – a 1,000-acre former Royal Armaments depot in Trecwn five miles south of Fishguard – has received permission to reopen the railway line from Trecwn to the mainline in Fishguard.
Manhattan Loft hopes this will create a freight connection from Ireland through Wales to the South of England.
Vox Pop
Why does Cardiff need a conference centre, and where should it be situated?
“Cardiff has seen positive expansion of its conference market. One of our key venues, City Hall, has seen business grow by 190% since 2000. However, our research shows that the city would benefit from additional exhibition space in the centre. We have undertaken a detailed study and identified the most appropriate city-centre sites within easy reach of hotels and transport hubs, and with the configuration for a conference facility to take us further up the destination league. The council is also in discussion with interested parties. For a project of this scale, we need a partnership approach.”
Sally Edwards Hart, operational manager, tourism marketing and development, Cardiff council
“Cardiff already has the CIA – the former World Trade Centre and conference venue – which was intended to put Cardiff on the world stage. Well, that didn’t happen, but clearly there were, and still remain, benefits for the CIA being in central Cardiff. Cardiff is a European capital city, and needs to find ways and means to push this status, within both the UK and Europe. A conference centre must be in a central location. The Millennium Stadium has proved that a central location can work for big events. My vote goes to Central Square, the main public bus station. It adjoins a mainline railway station, it needs regeneration, it’s big enough and it is council owned, so the site could be procured quickly.
Stuart Ramsey, head of office agency and development – Wales, GVA Grimley
“Independent research by the University of Wales Institute, Cardiff, shows we are missing out on lucrative conferences to the likes of Glasgow, Manchester, Birmingham, Bournemouth and Harrogate, and on the opportunity to bring thousands of international business visitors to the city. The conference centre would need to be based in a city location because of transport links and access to accommodation and facilities. It would in turn generate a regular stream of midweek business for the city’s hotels and restaurants.”
Peter Cole, regional strategy director, Capital Region Tourism
“Cardiff Bay is the obvious choice for a conference centre, but I think not, as the A4232 link to the M4 would have to be substantially upgraded to cope with the extra traffic peaks and a rail link would need to be built to the city centre. Newport has to be the spot for a landmark conference facility and, more particularly, how about the empty 1m sq ft LG building? It’s close to the M4, has a nearby rail line and it’s nearly in Cardiff. Ideal!”
Sean Wilcox, director, Atisreal
“We have an ideal and strategically located site for a conference centre at the West Newport Business Park, around junction 28 of the M4. Being nine miles from Cardiff’s city centre, and less than four miles from Newport, it would offer the best of both worlds.”
John Burrows, chief executive of urban regeneration company Newport Unlimited
