Philip Smith finds that a combination of good communications and a lack of city-centre offices is driving up levels of activity on local business parks.
Movement in Coventry’s office market may not be spectacular, but agents take comfort from their belief that the major occupiers which the city has attracted have been lured by its communications.
“Coventry is well and truly on the map,” says Tim Heatley of Grimley. He points to the presence of occupiers such as Barclays, which has its administration centre at Westwood Business Park, and Cable & Wireless. According to Heatley, any company considering relocation will look at Coventry because Barclays went there.
“Coventry is at the very centre of the country’s communication network,” says Derek Cook of P&O Properties, which owns Middlemarch Business Park, situated 3 miles south-east of Coventry and next to Coventry Airport.
Ann Grahamslaw of Lloyd’s Register Quality Assurance agrees, citing this as one reason for her company’s relocation to Middlemarch Business Park from Croydon in Surrey. Another important reason for the move was “the fact that more than 45% of the city’s workforce has clerical, professional or technical skills”, she adds. Other major occupiers in the area include Powergen, the Further Education Funding Council and the National Grid.
The appeal of Coventry as a business location is independent of its proximity to Birmingham, says Robert Rae of North Rae Sanders. He believes that Coventry’s appeal in its own right can be compared with that of other medium-sized centres such as Nottingham and Leicester.
“In the 1990s, we have seen all the companies coming here and seen all these relocations … the place has been transformed. It has achieved a level of acceptability,” says Heatley. He claims that Coventry city council’s role has been crucial. Following the decline of the automobile industry, Coventry’s traditional manufacturing base, the council has been responsible for making land available and marketing the city.
Most new developments in Coventry’s office market are taking place out of town. “There has been a resurgence across the board in the business parks,” says Rae. “Incentives have declined due to a lack of space.”
Arlington Securities showed its faith in the area when it started work in January on-site at Coventry Business Park just 20 minutes’ drive from its well-established Birmingham Business Park, off the A45.
“We don’t see these competing in the same market-place. Coventry is a classic mixed-use park, whereas Birmingham has classically appealed to the office user – although there is some industrial on the site,” says Arlington’s development surveyor for the Midlands, Steven Rogers. He explains that site development and infrastructure work on Coventry Business Park started in March and land is now available for sale and for build-to-suit development on a leasehold or freehold basis.
“More than a third of the site will be opened up by the end of this year,” says Rogers’ colleague Simon Camp, Arlington’s development surveyor for Coventry Business Park.
Following the arrival of motor retailer Quicks, British Car Rental is to occupy an 8,500 sq ft (790m2) building in Elliott Court, a 43,000 sq ft (3,995m2) set of speculative office buildings. The site has also been boosted by a 65,000 sq ft (6,039m2) Sainsbury’s at the site entrance.
Planning consent has been secured for 1.5m sq ft (139,350m2), including approximately 700,000 sq ft (65,000m2) of office accommodation. The letting agents are Grimley and Strutt & Parker.
The University of Warwick Science Park is also showing signs of a healthy market. Since September 1993, 19 companies have taken space here. “There has been an upturn in demand for space on the park, especially in the start-up business sector,” says Tom Webster, the park’s deputy director.
In the town centre, however, there is limited top-quality space available for offices and car parking is still a problem. Coventry was largely built in the 1960s and 1970s and much of the centre is pedestrianised. Even though there are several public car parks, says Rae, parking is still an important factor.
“There is demand for very good space such as Waters Court on Salt Lane. Elsewhere, occupiers are more hesitant. It still comes down to building specification or car parking.”
He says that top rents in the city centre are about £13.50 per sq ft (£145.32 per m2) and the biggest deal for more than 12 months was completed at St George’s House, Corporation Street. A total of 15,500 sq ft (1,440m2) at £8 per sq ft (£86.11 per m2) was taken.
Even considering out-of-town business parks, available space is limited and only buildings like Stonecourt at Middlemarch, Sapphire Court at Walsgrave Triangle Business Park, and the 60 acre (24.28ha) Parkside development on Coventry’s ring road, are now available for companies immediately wanting 30,000 sq ft (2,787m2) of office space or more.
Sapphire Court was recently completed by Barclays Property Holdings at Walsgrave Triangle Business Park, junction 2 of the M6/M69. The development’s two 33,000 sq ft (3,066m2) buildings are available at £13.50 per sq ft (£145.32 per m2) and Richard Ellis is the letting agent.
The small amount of modern accommodation available has given developers the confidence to push ahead with Parkside, says Richard Ellis’ David Holt: “More than 2m sq ft (185,800m2) of office space has been built in the city since 1986, doubling the total stock, but little comes on to the market. Parkside offers the unique opportunity for Coventry to expand its commercial centre.”
However, the Further Education Funding Council has already moved into 40,000 sq ft (3,716m2) of purpose-built premises at Parkside and the next phase of development, featuring two buildings, one of 33,000 sq ft (3,065m2) and one of 72,000 sq ft (6,689m2), is scheduled to begin only some time in the next 12 months. In total, Parkside could provide up to 1m sq ft (92,900m2) says Holt, whose firm is joint letting agent with Knight Frank & Rutley.
Geoff Thomas of DTZ Debenham Thorpe believes that speculative development in Coventry will not take off until the supply of secondhand space, such as the 55,000 sq ft (5,110m2) Greyfriars Centre, which was left empty by the relocation of the Further Education Funding Council, is taken up.
Other office space available includes approximately 10,000 sq ft (929m2) at the 20,410 sq ft (1,896m2) Waters Court on Salt Lane. Joint agents are King Sturge & Co and Innes England.
Companies are responding to these problems by looking outside the city centre. Digital Microwave Corporation is based at Middlemarch Business Park and Barclays is building a regional headquarters at Walsgrave. Ashford Developments has announced that it will be developing 30,000 sq ft (2,790m2) of the Walsgrave Triangle speculatively, funded by Barclays de Zoete Wedd. Plots are available at the mixed-use Cross Point on the M6/M69, says Ray, for design and build between 40,000 sq ft and 250,000 sq ft (3,716m2 to 23,225m2). Letting agents are North Rae Sanders and King Sturge & Co.
P&O bought the 110 acre (44.52ha) site for Middlemarch Business Park in 1986 and knocked down the old industrial buildings. The first phase of development is now complete and Cook stresses that the site has been built according to a strict masterplan. He believes that Middlemarch is at the right stage of development, in terms of infrastructure and occupiers, to capitalise on any increase in demand: “We are ahead of the game,” he says. “If someone came along and said that they wanted 60,000 sq ft (5,574m2) of offices we could sit down and talk.”
A total of 17 acres (6.88ha) on the site have been earmarked for office development and these are available through letting agents Richard Ellis and DTZ Debenham Thorpe. But recent industrial deals on the park have, so far, failed to stir sustained office activity. For instance, the 36,500 sq ft (3,390m2) headquarters-style Stonecourt building, available at £14 per sq ft (£150.70 per m2), remains unlet. P&O is still hoping to let the air-conditioned building as a whole.
In August, however, P&O sold 14 acres (5.67ha) to an unnamed occupier for the development of a distribution unit which will include 20,000 sq ft (1,858m2) of offices.
The land was sold at a price rumoured to be £200,000 per acre (£494,193.22 per ha) and P&O claims that it is in talks with two other blue-chip organisations which are considering the park for expansion programmes.
Although offices are not letting well at Middlemarch at the moment, Cook hopes that industrial activity might still trigger more action. “There might be a spin-off from the distribution activity on the park,” he suggests.
