Centuries of tradition will draw to a close as BAE Systems ends naval shipbuilding in Portsmouth. The city isn’t taking the loss lying down but will investors support the fight back? Simon Donohue reports
For naval shipbuilding in Portsmouth to be torpedoed after 500 years seems a cruel blow at a time when the economy is showing signs of buoyancy. Creating uncertainty for 940 BAE Systems employees and thousands more in the supply chain, the announcement also risks denting confidence in an area with a reputation anchored in maritime tradition.
Invest In Portsmouth reacted to the blow with a presentation outlining £1bn of investment and development opportunities (see panel, page 72) including retail, residential and infrastructure plans. Portsmouth has also been granted City Deal status by the government, helping to underwrite regeneration and provide support for the long-term unemployed.
But will private investors provide the backing Portsmouth needs?
Key among Portsmouth’s plans is the £300m city centre Northern Quarter redevelopment.
It might have been scaled back from the £500m pre-recession plans, but with no new retail development since the 1980s and a dearth of good quality retail space, the Northern Quarter plan could prove attractive to retail and leisure operators.
John Marsh, a director with Centros, which is behind the Northern Quarter project, says it intends to apply for planning permission early this year, with the scheme scheduled to open in 2018.
Acting on behalf of funds advised by Delancey, Centros is working with Portsmouth council to deliver the scheme, which will feature a department store, 50 or 60 other shops, a central leisure hub with a cinema, restaurants and cafés and residential apartments.
“The loss of naval shipbuilding won’t affect the regeneration of Portsmouth,” suggests Marsh.
“The loss of around 940 shipbuilding jobs, while sad to see, needs to be viewed in the context of the new City Deal and the large number of inward investment initiatives. These are set to generate many thousands of new jobs in the next few years, including 3,000-plus by our Northern Quarter development alone.”
Local agent Tom Holloway of Holloway Iliffe & Mitchell says there is also growing optimism among local firms, many of whom had put plans to move on hold in recent years.
He says that there is already capacity to meet demand for office space with Lakeside North Harbour, a 101-acre office campus offering 600,000 sq ft of office space and now owned by Highcross, one option which is proving popular.
But he doesn’t rule out future development. A major business park is already being planned outside the city at Dunsbury Hill Farm on land in Havant owned by Portsmouth city council.
Portsmouth council leader Gerard Vernon-Jackson condemned the decision to end shipbuilding, but points out that Portsmouth is still home to the Royal Navy, with more than 10,000 maintenance jobs remaining in the dockyard. With its City Deal status, strong skills base and prominent waterfront position on the affluent south coast, he says people in Portsmouth are disappointed but optimistic too.
The council is already pushing ahead with highway improvements which will benefit the entire town centre, including the Tipner park-and-ride scheme. It is hoped that Northern Quarter will complement the success of the Southsea and Gunwharf Quays shopping and leisure destinations.
A city famous for its dockyards is literally making new inroads in other ways. A new motorway junction will improve access between the M275 and Tipner East and Tipner West, creating a new gateway to Portsmouth.
Among the benefits of City Deal is the transfer of Ministry of Defence sites on Tipner-Horsea Island to Portsmouth council for a nominal fee, unlocking £831m of private and public sector investment. Portsmouth Council will soon launch a competition for developers interested in becoming partners in a £700m plan to provide 2,370 new homes and 624,000 sq ft of employment space.
The competition will be launched in the next 18 months, according to Kathy Wadsworth, director of strategic regeneration at Portsmouth council.
“We are going to make business space available for the supply chain and we want the private sector to build quality houses and a business park,” she said.
Wadsworth says the council established that they would need £650m from the private sector, but that it would only come if the initial infrastructure investment spend came first. “In 2014 ?or 2015 we are going to have a competition to get the best quality and investment from the private sector,” Wadsworth adds.
“We want to have more quality and executive houses, as well as places for people to work. We want people to come and live here. We are fortunate that we have a great skills base to build on.”
There are signs that Wadsworth might get her wish in spite of the shipyard blow. Vedrana Riley, vice-president of European Acquisitions at Bridgepoint Ventures, says that many of the people whose investments the company manages in Portsmouth had been concerned about reports of the end of shipbuilding.
However with ship maintenance set to continue and a vibrant business and leisure marketplace, she says that Bridgepoint’s plans are still full-steam ahead for Number One Portsmouth (below), which will become the first of five Urban Villa hotels in the country.
Bridgepoint researched the impact of BAE Systems’ decision and says that it does not skew its projections for the £20m hotel: “Portsmouth as a whole is very vibrant.”
A £7.2m investment by Schroder Real Estate Investment Trust in December in a block of retail property adjacent to the Northern Quarter site suggests others believe there is money to be made in the city.
Phillip Holmes, associate, business space, at commercial property specialist Vail Williams, says there is a history of investor appetite for Portsmouth, with Threadneedle recently acquiring a large portfolio of industrial estates in the area from SEGRO.
He says there is every reason to believe that Portsmouth council will be successful in attracting the private investment it needs.
“Look at the bigger picture and there is good cause for genuine optimism in Portsmouth,” he adds. “The Northern Quarter retail development could do for Portsmouth what WestQuay has done for Southampton – the Portsmouth Gateway improvements will make a difference too. There is a lack of quality development sites in the area and there is demand for space. In the context of a long-term plan in the next decade, I can only see optimism for Portsmouth. ”
Portsmouth’s £1bn-plus ?investment pipeline
? Northern Quarter: A £300m scheme led by Centros in partnership with Portsmouth City Council, which will deliver new retail space centred on a large anchor tenant and served by the new Tipner park-and-ride. Centros Miller signed John Lewis to anchor the scheme in 2004
? A super-connected city: £11m for wireless internet connectivity for major parts of the city
? Highways: A £16m spend on city-centre road improvements will benefit the whole area while the new M275 junction will also ease connections
? Dunsbury Hill Farm Business Park: £85m development on land owned by Portsmouth City Council in the borough of Havant. To be delivered in two phases, it will deliver around 650,000 sq ft of employment space and 50,000 sq ft of hotel space over a 50 acre site.
? Naval base improvements: £400m spend on improvements by BAE Systems
? Seafront strategy and sea defences: £158m spend
? City Deal: £831m investment will lead to the redevelopment of former Ministry of Defence sites, including construction of 2,370 new homes and creation of 3,742 permanent new jobs at Tipner. Portsmouth council is to launch a competition for development partners in the next 18 months.
