A dramatic improvement in office take-up has revitalised Bracknell’s property markets. Graham Parker reports.
Bracknell, for the first time in almost a decade, is facing a shortage of new office space. This is now a familiar story along the Thames Valley but, in Bracknell’s case, the turnaround has been most dramatic.
At the beginning of the 1990s, Bracknell had more than 1m sq ft (92,900m2) of empty offices. Now figures for available stock vary but Campbell Gordon puts supply at 424,000 sq ft (39,390m2). Figures from Fryer Gilbert & Jepps exclude the 1960s space which Simon Fryer describes as “unlettable” to leave a residue of just 277,000 sq ft (25,734m2) of available offices.
“We have already seen 162,000 sq ft (15,050m2) let or taken off the market this year”, says Fryer, “so, hypothetically, if nothing else came to the market, Bracknell would run out of offices in January 1995.”
And, according to Ian Rudland of Vail Williams, this tightening market is already shifting the balance of power between landlords and tenants. “Demand is still reasonable, so now we are seeing pressure on packages. Occupiers are still resisting long leases – and I expect a 10-year-commitment to become the norm – but rents could start to grow rapidly. They will be in the high teens before much longer,” he predicts.
The most recent deals to have contributed to these changes have been at Chiltern House, Sterling Court, where AT&T took 18,600 sq ft (1,728m2) of non-air-conditioned space on a 25-year lease with a break option at year five and a stepped rent rising to £15 per sq ft (£161.46 per m2). Campbell Gordon and King Sturge were the letting agents on behalf of Pension Fund Securities.
Berkshire Court, Western Road, has also seen a spate of deals in the past six months. Just before Christmas, Viewlogic Systems took a single floor of 8,525 sq ft (792m2) on a new 10-year lease with a break option halfway, at a rent of £115,238 pa. Subsequently, another floor of 9,689 sq ft (900m2) went to Standard Microsystems. This leaves 21,000 sq ft (1,591m2) available on the remaining two floors through letting agents Vail Williams and Nelson Bakewell. According to Rudland, there are two parties competing to take all of the remaining space.
And at Waterside Park, 10,000 sq ft (9,290m2) was let to Queensgate Instruments at £10 per sq ft (£107.64 per m2). Campbell Gordon was the letting agent on behalf of Scottish Provident.
More deals are in the pipeline. Canon is said to have agreed to take the remaining 16,000 sq ft (1,486m2) in The Braccans, and Norcros is believed to have agreed a deal with C W Car Leasing.
The strength of demand from IT companies, especially overseas-owned operations, can be seen in the success of the Asmec Centre, a served-office scheme which occupies 24,600 sq ft (2,285m2) on three floors of Eagle House on The Ring. According to managing director David Janes, the centre now houses 54 companies, and all that is currently available is a suite of about 1,500 sq ft (139ms).
The result of this activity is that Bracknell has just one new building of any size or prominence left. No 1 Arlington Square offers 84,700 sq ft (7,869m2). In the past, the scheme has missed out on some large requirements , including Computer Associates and Mobil, but letting agents Strutt & Parker and King Sturge are sticking to their quoting terms of more than £20 per sq ft (£215.28 per m2). Local sentiment seems to be that, with all the competing space disappearing, the building’s prospects of achieving a letting this year must be better than ever.
In normal circumstances, a rapidly tightening market would lead to a spate of new development but, so far, this is not happening. Nick Coote of Campbell Gordon says: “There is very little in the pipeline. There are a lot of outstanding planning consents, but these are largely for business park space aimed at big corporate relocations.”
This category includes the 13 acre (5.26ha) Bracknell Business Park, where Philips Sinclair Knighton is still holding out for a large corporate deal, plus the remaining 4 acres (1.62ha) at Park One, where Hermes and Bride Hall are offering design-and-build packages. And Arlington still has consent for the other three sides of Arlington Square, which could run to 450,000 sq ft (41,806m2).
In the short term only two new office developments look likely to happen. Fenchurch Securities has bought a 2.6 acre (1.05ha) site on Downmill Road from the Commission for the New Towns with consent for a B1 office scheme, but it is not yet clear whether funding for a speculative scheme is in place. “Speculative funding is very difficult at the moment and I expect the market to proceed by prelettings,” says Fryer.
A more likely prospect is Station House, over Bracknell railway station. Five Oaks Developments has secured funding from Phillips & Drew Fund Management for an ambitious plan to strip the 1960s building back to its frame and create 45,000 sq ft (4,181m2) of new offices.
Weatherall Green & Smith is currently marketing an 8 acre *3.24ha) site in Western Road, immediately opposite Waterside Park, on behalf of Ferranti. The site comprises 150,000 sq ft (13,935m2) of offices and industrial space. A number of developers are known to be considering bids for schemes which would involve new-build as well as the refurbishment of some of the existing offices.
But, apart from these exceptions, the name of the game in Bracknell is going to be refurbishment. The Commission for the New Towns has announced a £500,000 refurbishment of the former Honeywell House on Charles Square in the town centre. When complete in late August, the building will provide 21,285 sq ft (1,980m2) and it is to be renamed Highview House. Jones Lang Wootton and Connell Wilson will be quoting £14 per sq ft (£150.70 per sq m).
At Waterside Park, Scottish Provident is converting Avon House, a mid-1980s 17,000 sq ft (1,580m2) hi-tech building, previously occupier by Novell, into full-specification offices. Campbell Gordon and Colliers Erdman Lewis will be the letting agents.
Amalgamated Berkshire Investments has already completed a town-centre refurbishment scheme. The 22,000 sq ft (2,044m2) Amber House, Market Street, has been refurbished following the relocation of BET Catering across the road into the Columbia Centre. At the same time, the landlord bought more land at the rear to increase the building’s car parking allocation to 127 spaces. Campbell Gordon and Fryer Gilbert & Jepps are quoting £12 per sq ft (£129.17 per m2).
But while, for the time being, everything looks rosy for the Bracknell office market, there are good reasons for concern in the longer term, according to new research from Vail Williams. Throughout the 1990s, landlords have been granting their tenants break options, which could be exercised in the latter half of the decade.
And the threat does not come just from Oracle, which plans to vacate several large buildings in Bracknell when it relocates to Thames Valley Park, Reading, over the next three years. Rudland explains: “My view is that, if people don’t build now for delivery in 1996-97, then they could have missed the boat. A fair amount of existing space could come back to the market, and this would hit rents in 1998 to 2000.
Bracknell’s industrial market shows a similar pattern to the office market with dwindling stock. Campbell Gordon puts total supply at 360,000 sq ft (33,445m2), but this includes a large amount of older, effectively unlettable, space.
The most recent pointer to the current state of the market came with the letting of Arrow Point on Western Road. The 41,000 sq ft (3,809m2) building dates from the early 1980s when its grey cladding won it the nickname “the General Belgrano” – a name which has stuck ever since. The scheme has proved more successful than its Argentinean battle cruiser namesake, however, as Healey & Baker has just relet it to Esselte Meto at £5.30 per sq ft (£57.05 per m2). Campsie Commercial acted for the tenant.
This leaves the Astron Centre as probably the best of the available stock of industrial space. Developed by Axa Equity & Law and Pegasus Investments, the scheme consists of two units, of which only one remains. Joint letting agents Fryer Gilbert & Jepps and Lambert Smith Hampton are quoting £7.95 per sq ft (£85.57 per m2).
Two new industrial schemes are now joining the market. Schroder Exempt Property Unit Trust and Castle City Estates are putting the finishing touches to the Maple Centre on Downmill Road. The three units total 30,860 sq ft (2,866m2) and joint letting agents Healey & Baker and King Sturge are quoting £7 per sq ft (£75.35 per m2) for the larger units and £7.50 per sq ft (£80.73 per m2) for the smaller. Negotiations are under way for at least one letting.
The Maple Centre will soon be followed by Network Bracknell, a 68,000 sq ft (6,317m2) scheme on Eastern Road by Canynge Bicknell and Friends’ Provident. The scheme could be let in units from 12,000 sq ft (1,115m2) upwards and Savills and Rogers Chapman are quoting £7.50 per sq ft (£80.73 per m2).
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