Luton’s outskirts rather than its town centre have been attracting occupiers. Meanwhile, results and prospects are brighter in Dunstable, writes Geoff Tyler.
Luton has a problem – it appears that no-one wants to be in its centre. The improvement in industrial and office lettings on the outskirts in 1996 was in spite of, rather than because of, the town’s proximity. While its neighbouring towns enjoy healthy attention from newcomers, virtually all of Luton’s new occupiers are local firms expanding.
In 1996, Luton borough council’s economic development unit attracted 65 inquiries from companies seeking new premises. Some of these were indigenous, with only 24% coming from overseas.
According to Lambert Smith Hampton’s Lloyd Spencer: “If you take out Luton borough council’s and the university’s requirements, the town-centre office market is nearly stagnant. Inward investors still prefer neighbouring St Albans, Hemel Hempstead and Milton Keynes.”
There is more activity south-east of the town, where locations offer virtues unconnected with Luton itself. Road improvements completed last year have given the airport and the employment areas around it direct dual-carriageway access to the M1.
Chesterton’s Tony Fisher says that it is only partly coincidental that the first lettings at the giant 21,000m2 (226,000 sq ft) Wigmore Place office complex occurred at the same time. Local occupiers CableTel, Britannia Airways and OM Management took 7,618m2 (82,000 sq ft) between them, albeit at rents believed to be some £20 per m2 (£2 per sq ft) lower than the £86 per m2 (£8 per sq ft) which Chesterton is still quoting for the remaining 13,378m2 (144,000 sq ft). Fisher reports three further potential tenants who are involved in advanced negotiations; two are local and one is an incoming employer.
Chesterton’s marketing leans heavily on the proximity of the M1 and the airport, not that of the town. The same advantages apply at Capability Green, at junction 10 on the M1 – in many people’s eyes, the UK’s most elegantly landscaped business park. However, there has been no new development here since before the recession and none is likely.
Capability Green’s outstanding planning consents have now lapsed, and Patrick Vaughan, chief executive of the main freeholder of the built space, Pillar Property Investments, hints that the time has come for development of the remaining 13.8ha (34 acres): “We are talking to various parties about acquiring land for development here, but we are also talking to the local authority about the restoration of the planning consents. One cannot happen without the other.”
On the Dunstable side of the M1, results and prospects are brighter. At Houghton Hall Business Park, 1.5 miles from junction 11, 14,864m2 (160,000 sq ft) of office space has finally been let. However, the remaining 43,200m2 (465,000 sq ft) of office space for which the site has consent may not be built as offices. Alex Bignall of Weatherall Green & Smith forecasts that the remaining 8.1ha (20 acres) will become half B8 and half B1 light industrial. And he reports advanced negotiations with an investor optimistic enough to take the remaining development land.
Houghton Hall’s experience is indicative of the greater potential that industrial property can show. Nearby, Palisander Properties has bought the old Blue Circle cement depot on the A1520 north of Dunstable, and has sold all but 1.4ha (3.5 acres) of the 5.3ha (13-acre) site in B1/B2/B8 plots, again mostly to expanding local firms.
Dunstable attracted the only significant new employer last year. Office furniture maker Arensen is building a 27,870m2 (300,000 sq ft) factory on the former AWD Trucks site in Luton Road, Dunstable’s main access route to the M1.
Industrial lettings are recovering in Luton, too. A J Properties bought the former 19,330m2 (208,000 sq ft) ADC industrial building in Windmill Road, between the town centre and Airport Way, in November. Already, 6,500m2 (70,000 sq ft) has been let to local firms Metalan and Estil and another 1,858m2 (20,000 sq ft) is under offer via Lambert Smith Hampton.
Lee Mogridge of Alexander & Co, along with other local agents, believes that a lack of space will cause rents to climb: “The upturn in industrial lettings has led to a shortage of ready-built, quality modern space. Although rents have risen to around £48 per m2 (£4.50 per sq ft) and levelled, without new developments the rise will begin again, especially if new employers look to Luton as space in nearby towns dries up and Vauxhall continues to want suppliers closer to its works.”
Several longer-term development prospects may address the problem. The most prominent is Century Park, 44.5ha (110 acres) with consent for 140,000m2 (1.5m sq ft) of B1/B2/B8 space just north of the airport. However, a road access problem, which will cost £5m to cure, means that purchasers London & Metropolitan Securities and Rotch will probably await a good prelet.
While Luton has sometimes suffered from a down-at-heel image, which may have deterred potential employers, George Street was pedestrianised in 1989, and the council has smartened up the main shopping area. Now, it is negotiating with tenants for a planned cinema and leisure complex on the old Co-op site at the western end of the Arndale Centre, Luton’s prime retail pitch. Prudential has just finished refurbishing the Arndale Centre and, with only three small units remaining vacant, Knight Frank is achieving zone A rents of £1,600 per m2 (£190 per sq ft) again.
Transactions
Stuart House, Stuart Street: Offices. Luton borough council took a 1,133m2 (12,200 sq ft) office building at £71.50 per m2 (£6.63 per sq ft) on a new 10-year lease. Lambert Smith Hampton acted for owner Capital Properties Partnership. This is the latest acquisition by the council, which is preparing for Unitary Authority status in April.
Christchurch House, Upper George Street: Offices. Training organisation BPP Luton has taken a 592m2 (6,370 sq ft) building on a rent stepped to £70 per m2 (£6.50 per sq ft) over five years. Lambert Smith Hampton and Allsop & Co represented owner Pannell Kerr Foster. BPPwas unrepresented.
Woodside industrial estate, Dunstable: Industrial. Counter Kitchens took 2,032m2 (21,873 sq ft) on a 10-year lease without breaks at £53.80 per m2 (£5 per sq ft). King Sturge acted for owner Brixton Estate. Just two of 46 buildings are now available.
Blue Circle Cement depot, A1520, north Dunstable: Investment. Palisander Properties bought the 5ha (13-acre) site in mid-1996 and has sold all but 1.4ha (3.5 acres) in industrial plots. Prices achieved approached £593,040 per ha (£240,000 per acre). Alexander & Co acted in the acquisition and jointly with Knight Frank on the sales.
