by Terry Cunnew
Portsmouth and Southampton are cities born of the sea, and the sea still plays an important part in their economies. But in recent years there have had to be changes — for Southampton, the days of the great ocean liners are gone, while for Portsmouth the huge Royal Navy which served the needs of empire is a thing of the past.
As a result, the two cities have had to find new areas of activity in order to create a greater diversity in economic activity in the face of declining returns from traditional port activities.
And by all accounts both cities are now enjoying considerable success in their diversification, although this has not been achieved without some heartaches.
Not so very long ago there was a surplus of almost everything but shopping — a glut of industrial and warehouse space, along with office space which the developers could scarcely give away.
But things are very different now, so much so that agents locally are bemoaning the fact that while new development in the office sector and in some areas of the industrial market is needed, it is proving difficult to entice the funding institutions away from the fleshpots of London.
Much of the change that has come about has been the result of the greatly improved road communications via the M27, linking the two cities and creating what is being dubbed the South Hants Corridor. Communications will be even more improved when the final section of the M3 between Winchester and Southampton opens in 1989, completing the London link.
There is also to be a motorway link road from the M27 to the centre of Southampton, to match the M275 link which already serves Portsmouth.
The improved road network has done much to encourage the take-up of industrial space, both in traditional sheds and in modern high-specification developments which have been very popular with developers and investors alike. Indeed, the “in” description in the area now appears to be “business park”, with few developers admitting to building anything so vulgar as an industrial estate.
However, the popularity of high-specification schemes has been such that some agents are now complaining that there is beginning to be a shortage of simple, straightforward sheds at simple, straightforward rents.
Southampton agents Neilson Associates estimate that the industrial vacancy level is only about 5% of total stock, with quite brisk activity over the course of this year. They make the point that, with few substantial traditional developments in the pipeline, shortages in some sectors are emerging. And the problem is made worse by both the reluctance of funding institutions and the shortage of suitable privately-owned sites within the city boundaries.
Over in Portsmouth, agents D M Nesbit & Co report that the city has in the past suffered from something of a down-market image. The local economy was dominated by the naval dockyard, while the city itself — the second most densely populated in the country — was regarded as being not very prosperous.
But all that has changed, say Nesbit. There is money around now, along with important high-technology companies such as Marconi and IBM. As a result, from its former position of being seen as a poor neighbour, Portsmouth has now in many areas caught up with Southampton.
From the point of view of industrial development, Portsmouth suffers the same shortage of suitable industrial sites already noted in Southampton, if not more so. The difficulty is that the city is on an island — a fact that is often forgotten — and there is not much of that island remaining undeveloped.
The city’s former airport, which is now under development, was one of the last sites of a substantial size to become available within the city boundary, and the prospect of more large areas becoming available for development seems slim.
As a result, as L S Vail & Son point out, there has been the growth of the corridor of activity along the M27 which is closely associated with, although not actually in, the two cities. This has given a boost to areas such as Waterlooville, Fareham, Chandler’s Ford, Eastleigh, Botley and Hedge End, all of which have seen increased activity in recent years.
However, there are still developments going on within Portsmouth, including two projects by Bilton.
One of these is the Bilton Business Park, which is being carried out on part of the former airport site on the eastern side of Portsmouth. The development, on Eastern Road, is being undertaken by Bilton M-Tech, a company formed in 1983 to carry out schemes meeting the needs of modern technology and which neatly avoids the still ill-defined and increasingly devalued “hi-tech” label.
L S Vail are the agents for the 30-acre development, on which the first two buildings are just coming to completion. The buildings are named Seafire and Seahawk, after aircraft which were flown by the Royal Navy, and each provides two-storey accommodation. Each building in turn has two sets of entrances and loading doors — Seafire totals 20,800 sq ft and Seahawk 25,900 sq ft.
L S Vail are also agents, with Healey & Baker, on Bilton’s new development at North Harbour, Portsmouth, hard by Junction 12 on the M27, the Holiday Inn Hotel and IBM’s large North Harbour UK headquarters facility.
According to Vails, work will start shortly on developing the 3.2-acre site with a two-building complex which will total some 57,000 sq ft on two levels, capable of subdivision down to single-level units of as little as 4,500 sq ft.
Back on the former airport site, Biltons have just two units remaining on their Mitchell Way Estate, which again is being marketed by Vails. This scheme consists of eight units from 3,480 sq ft.
In the same airport area, the last available unit on Hargreaves Developments’ Portfield Industrial Estate — a two-storey building of 4,268 sq ft — is going under offer to the Co-op. The rent is understood to be around £3.25 per sq ft.
On this development, which has Whiteheads Commercial and L S Vail as letting agents, the 20,000-sq ft building previously known as Block A is half let and half under offer to Edmundson Electrical and Avis car hire, while the 24,000-sq ft former Unigate unit has been taken by adjoining MFI.
New enterprises active
Close by is Portsmouth City Council’s Portsmouth Enterprise Centre on Quartremaine Road, providing units from 359 sq ft to 1,138 sq ft which is marketed jointly through the city itself and L S Vail. This is a highly successful scheme designed for new enterprises which would probably have problems proving themselves an acceptable covenant elsewhere, and in any case would almost certainly not want to be burdened with a full 25-year FRI lease.
At the enterprise centre they can occupy on licence, on just two weeks’ notice and paying a rent that is inclusive of everything but the electricity bill. According to the centre management, there is a waiting list for units and when one is vacated the grapevine is so efficient that the next would-be occupant is rattling the door the minute the previous user leaves.
Another airport scheme is the Pyramid Centre, developed by the Mead Group to cater for the owner-occupier market which, say Parkinsons Commercial — who are joint agents with Young & White — is a growing trend. This is a development of eight units ranging from 2,500 sq ft to 6,750 sq ft of which one has been sold and another two are under offer. Prices range from £76,000 for the 125-year ground lease of the smallest units up to £215,000 for the largest.
Young & White, incidentally, look likely to be the selling agents of what may well prove to be the last major industrial site in the city. They are to sell by auction later this year the former Ministry of Defence ammunition dump at Hillsea Lines, covering 22.5 acres next to the M27.
Railway Triangle draws tenants
Back in the realm of what is, rather than what will be, is the Railway Triangle development carried out by the Universities Superannuation Scheme in association with Portsmouth City Council. This important scheme is at Cosham to the north of the city. Totalling 310,000 sq ft, it provides units from 2,150 sq ft up to 124,000 sq ft and is being let through joint agents Jones Lang Wootton and L S Vail.
So far, say Vails, the development is about 80% let at rents from £2.75 per sq ft on the larger lettings up to £3.25 per sq ft for smaller units.
One user moving to the Railway Triangle development is Cope Allman Plastics, who have taken 120,000 sq ft but have in turn released two existing buildings on to the market through Vails and Whiteheads. Both are in Fitzherbert Road, to the north of the city — one is a mid-1940s building, extended in the late 1960s to total 55,820 sq ft, while the other is a modern 24,550-sq ft warehouse.
Whiteheads are also agents on another building that is being released by relocation, in this case by Nurdin & Peacock’s move to new premises at the former airport. They are releasing a 34,315-sq ft unit in Claybank Road, on the Burrfields Road Industrial Estate, which is currently in use as a cash-and-carry warehouse and adjoins a Texas Homecare retail warehouse.
The building will be vacated by November, and the owners are taking of either letting it on a new 25-year lease at £90,000 pa or selling the long leasehold interest of 99 years from 1966, with an asking price of over £750,000.
Returning to the airport, March saw the opening of Wilson (Connolly) Properties’ £40m Anchorage Park Shopping Centre, which was forward sold to TSB Life and forms part of their overall 90-acre Anchorage Park mixed development.
This scheme, say agents Hall Pain & Foster, has Safeway as the main tenant and provides parking for 330 cars. Aside from the shopping, Anchorage Park includes 177,000 sq ft on 10 acres let to IBM, another 5 acres on which marketing is about to start for a purpose-built scheme of up to 120,000 sq ft and over 700 houses, about half of which have been completed.
Moving to Southampton, Fox & Sons say that from a position of surplus almost all has now been let, with buildings that were regarded as white elephants even finding takers. What is more, there is a slim supply of sites for new development, with the result that areas outside the city, and particularly along the line of the M27 between Southampton and Portsmouth, are attracting strong interest.
One scheme that has found a good demand within the city is the Test Valley Business Centre in Test Lane on the western side of the city, developed by London & Edinburgh Trust. This is a development of 24 small units ranging from 750 sq ft up to 1,250 sq ft, with Hall Pain & Foster as sole agents on 20 of them. The remaining units were sold to a client of Pearsons Commercial, who in their latest letting achieved around £4.50 per sq ft on a 1,000-sq ft unit.
Pearsons are also agents, with Goddard & Smith, on two large warehouse units on West Quay Road, which is practically in the city centre. However, the units weigh in at 62,510 sq ft and 63,125 sq ft respectively and it appears that tenants for that size-range are so far proving a little thin on the ground.
Rather different in nature is Southampton University’s Chilworth Research Centre on the outskirts of the city, for which L S Vail are the letting agents. Two of the three units in the first phase of the 20-acre development were prelet at the end of 1985, with Ferring Pharmaceuticals paying a £265,000 premium for the 125-year lease of a 1.6-acre site to be developed with a 15,000-sq ft R & D unit, while K B C Process Automation took a prelet on an 8,000-sq ft building.
Some 46,000 sq ft of space at Chilworth is now close to completion.
On the more conventional side, Vails are also agents for the Centurion and Mount Pleasant Industrial parks on the River Itchen to the eastern side of the city.
The Centurion scheme consists of nine units from 5,000 sq ft up to 17,300 sq ft for sale or letting, along with a further 4 acres for development to clients’ requirements with up to 78,000 sq ft of accommodation.
Mount Pleasant is aimed at the smaller user, with units of 2,000 sq ft up to 5,400 sq ft either to let or for sale on long ground leases at a peppercorn ground rent.
Both developments are being carried out by local developers F Goulden & Sons, who acquired the Centurion site from Abbey Life.
Another scheme available for either sale or lease is the former warehouse depot at 179 Empress Road, about 1 1/2 miles north-east of the city centre, which is being marketed through Pearsons. This is a building of some 70,000 sq ft which has been split up into units, most of which have now been sold. All that now remains is a unit of 20,500 sq ft, which can either be sold as a whole or further subdivided.
To the east of the city at Junction 9 on the M27 is what L S Vail say is the biggest scheme in the area — Arlington Securities’ 150-acre Solent Business Park.
Fletcher King and Strutt & Parker are joint agents with Vails on this scheme, which will ultimately total some 2.5m sq ft. The £4.5m first phase is currently being built by Sir Robert McAlpine & Sons, with completion scheduled for November. This will provide two buildings, of 52,000 sq ft and 42,000 sq ft, for letting in units from 15,000 sq ft.
Also on the M27 is Taylor Woodrow’s Nursling Estate at Junction 3, which totals 110 acres and which was started in the 1970s.
Humberts, who are joint agents with King & Co, say that rents at Nursling have reached £3.30 per sq ft on some of the larger units, with tenants including Marks & Spencer, Debenhams, Pye and Share Drug Stores, of whom the last named are talking of a large expansion of their existing 70,000-sq ft unit.
Of the original site, around 50 acres are currently available for further development.
Yet another major project on the motorway is Hampshire County Council’s Segensworth development on the M27 at Junction 9 which is being marketed jointly through the council’s own estates office and Hall Pain & Foster.
Over the past five years the 64-acre scheme has seen the creation of over 500,000 sq ft of floorspace let to companies such as Makro, GUS Transport, Palmer & Harvey and Yeowart Steel providing nearly 1,700 jobs.
Motorway is tenant lifeline
Currently the agents are marketing sites for purpose-built developments, with the 60-acre second phase recently introduced to the market.
A little way down the motorway, between junctions 10 and 11, is the Bryant-Samuel/Standard Life Assurance Fareham Industrial Park development, which is being let through Phoenix Beard and L S Vail. Only a handful of units are now left on this estate, where rents have been achieved at close to £3 per sq ft.
Another site being marketed by Vails is the Omega Enterprise Park, a project by Anchorglade Developments at School Lane, Chandler’s Ford, close to what will be the junction of the M3 and the M27. Mason Owen & Partners are joint agents for this project, in which one of the three units in the first phase has been prelet and the other two will be ready in the autumn.
These speculatively built units will provide 17,825 sq ft and 10,850 sq ft respectively, and the asking rent for the smaller unit is £3.40 per sq ft. The estate will provide units for both sale and lease, with individual buildings up to 120,000 sq ft on its total 6 acres.
Moving eastwards to Havant, Marples Ridgway Properties have their Kingscroft Centre development at the junction of the A3(M) and the A27(M). Hillier Parker May & Rowden and Vails are agents for this project, of which the first phase is fully let and the second is scheduled for completion in October.
Phase two consists of 10 units from 1,350 sq ft to 8,040 sq ft gross and is to be known as Kingscroft Court.
The scheme is being marketed for purchase on 999-year ground leases at a peppercorn, and the largest unit has in fact been presold at around £375,000. At the same time, the two smallest units — of 1,350 sq ft and 1,400 sq ft — are apparently under offer.
Asking prices on the as-yet-unsold units range from £64,750 for the smallest up to £199,300 for the largest remaining, which totals 4,428 sq ft.
Shifting back to the M3/M27 junction, Capital & Counties started work at the end of last year on the £2.8m second phase of their Hampshire Corporate Park, an office campus scheme which — inevitably it seems — is being marketed through L S Vail.
Phase one of this 20-acre development, amounting to 86,000 sq ft, was prelet to B&Q as their new headquarters, and this is scheduled for completion ready for occupation in September.
The second phase, extending to 43,000 sq ft, will be ready in November and further phases will add another 63,000 sq ft. B&Q agreed a rent of around £7.50 per sq ft and the expectation is that the next phase to come on stream will fetch closer to £8 per sq ft.
Of the further phases to be built, B&Q have an option on phase three, which would extend to 43,000 sq ft.
Tenants want sheds, too
Reverting to the industrial as opposed to the campus projects, Vails underline the point that there is a good market for conventional units with the example of the Wyvern Property Unit Trust’s Murrills Estate on the A27 on the outskirts of Portsmouth.
Elliot & Co and Drivers Jonas are also agents on this development, which consists of 17 units ranging from 3,550 sq ft up to 11,590 sq ft. Lettings have been quite brisk, with all but five units taken at rents between £3 and £3.50 per sq ft.
Another major scheme is Crowngap’s Brambles development at Waterlooville, close to the A3(M).
On this former Tarmac site GEC Marconi have a 300,000-sq ft R&D facility, leaving some 16 acres to be developed in three phases.
40% office content design
Suttons Commercial are joint agents with St Quintin and Weatherall Green & Smith for the first phase of development at Brambles, consisting of a 35,244-sq ft building funded by Crown Financial Management and a 28,510-sq ft building funded by Royal Insurance Group Pension Fund.
Both blocks are designed for up to 40% office content and part of the smaller building has been let to an R&D user at £4.25 per sq ft.
Back with the more basic style of building, Pearsons expect that Unit 2 on the Boyatt Wood Industrial Estate in Goodwood Road, Eastleigh, should go quite quickly. Hillier Parker are joint agents on this 22,250-sq ft factory, which was built in 1976 and is now being marketed on a new lease.
Indeed, Austin & Wyatt argue that the supply of industrial units is such that premiums are becoming increasingly common. At the Chandler’s Ford Industrial Estate, say Austin & Wyatt, they have assigned the lease of a 3,000-sq ft unit with a review next May for a premium of £6,500.
There was strong competition for this unit, and the agents predict that such is the shortage of speculative development that premiums will become the norm, while they would have been unheard-of less than a year ago.
More out of the ordinary is the Southampton Free Trade Zone, which in its first four months of operation reached a throughput of over £1m weekly.
One of the attractions of the Free Trade Zone is that it provides very high security levels, which in turn result in lower insurance premiums. At the same time it gives the opportunity to defer payment of VAT and Excise duty.
So far the FTZ provides about 500,000 sq ft of warehousing, with up to a further 900 acres available for development.
On a more modest scale, Fairlie Robertson have won the instruction to sell Common Barn Farm in Cheshunt Avenue, Eastleigh, by tender closing on August 19. The site adjoins the Carrefour hypermarket and is seen as having potential for retail warehouse, campus office, industrial or even residential development.
Currently the site carries no planning consent — indeed, it is zoned as public open space within the local district plan and was subject to a section 52 agreement. However, the vendors are mortgagees and were not party to the agreement, so being free of restrictions.
The land will be sold either without planning permission, with the buyer taking on the risks involved, or under an option subject to permission being obtained, with the buyer paying an option fee of £250,000.
Turning to the office sector, there seems to be a general agreement among agents in both Portsmouth and Southampton that demand is better than it has been in years, while the supply of new good-quality space reaching the market is inadequate to meet that demand.
Indeed, in Portsmouth the vast bulk of the office stock is, according to Young & White, at least 15 years old and showing its age. What is more, say the agents, although the demand for medium-sized buildings is proven, the institutions still remain to be convinced to commit resources to development in the city.
This reluctance, say Young & White, is understandable at first glance, since although lettings at £6 per sq ft have been agreed on modern offices in Guildhall Walk and Kingston Crescent, there have also been recent lettings in Isambard Brunel Road at as little as £2.75 per sq ft for a modern — although not new — suite of 6,300 sq ft.
Forgotten city for investors
The trouble for Portsmouth is that the market was so bad for so long — until recently office rents were frequently below what could be achieved for industrial space — that developers and funds have in a sense forgotten the city. However, in Young & White’s view, the strength of the increased demand, with the accompanying growth in rents, will ensure that Portsmouth will again start to attract developer and institutional interest.
Meanwhile, it appears that areas outside the city are benefiting from Portsmouth’s slim supply of modern quality offices. An example was Wellesley House at Waterlooville, a 7,300-sq ft building which came on the market at the beginning of the year. Y&W, who acted for assignors Vickers Systems, experienced strong interest and ultimately assigned at a premium to International Gemma Group.
Fareham has seen a reasonable supply of new accommodation reaching the market, at rents of just over £6 per sq ft. Similarly, in Havant, De La Rue — represented by Y&W — have taken a prelet of a 30,000-sq ft development by Penview. The building, which is expected to be ready late this year or early next, was let at around £200,000 pa.
In another Havant deal both the lease and the freehold of the 8,120-sq ft Station House in North Street were acquired by Parkinsons on behalf of Schubert Systems. The price paid was apparently around £438,000, with Whiteheads acting for former tenants Norsk Hydro and Oxborrows for freeholders Fisons Pension Fund.
Portsmouth offices reborn
However, at the start of the year central Portsmouth produced some of the strongest evidence of the revival of the office market in the area with the news of the preletting of Leading Commercial Holdings’ Hippodrome House development in Guildhall Walk. The 23,500-sq ft building was taken by Zurich Life Assurance at a rent believed to be over £6 per sq ft, justifying LCH’s decision to undertake one of the first speculative schemes in the city since the early 1970s.
L S Vail were the letting agents, with Mellersh & Harding representing Zurich Life.
Hall Pain & Foster say that there has also been a trend towards owner-occupation, which is perhaps inevitable given the fact that the funding for schemes for letting is proving hard to find. Among the significant owner-occupier schemes are Townsend Thoreson’s offices at Rudmore Roundabout and the Portsmouth Building Society’s new headquarters development at the corner of Churchill Avenue and Guildhall Walk.
However, the needed speculative schemes are emerging, one being the Sovereign Gate development in Commercial Road, to be carried out by local developers Brazier Securities.
The site was previously occupied by Tesco, who sold their lease to the head leaseholder, a local property company who also acquired the freehold from the city council and then sold on to Brazier. L S Vail introduced the site and have been retained to let and sell the completed development.
Work is scheduled to start on the 26,000-sq ft development in August to provide a five-storey block with a full-height atrium and internal wall-climber lifts.
The development has a capital value of around £2.4m, with an asking rent projected at £7 per sq ft.
As for existing buildings, Whiteheads are agents to assign the lease of Warrior House on The Hard, close to Portsmouth Harbour station. This totals 7,131 sq ft on five floors, held at a current rent of £19,750 pa, and the agents say they expect a premium of around £10,000.
The same agents are also acting jointly with Young & White in the sale of the long lease of the offices of Radio Victory in Fratton Road. This is a 7,651-sq ft Grade II listed building held on a 125-year ground lease from March 1983 and a price of around £350,000 is being sought.
A study by L S Vail shows that of 10 units available in Portsmouth only three were new, with work starting shortly on Sovereign Gate and in about 18 months’ time on Capital & Counties’ 80,000 sq ft of offices forming part of Arlington Securities’ Port Solent development at North Harbour.
In contrast, Southampton had considerably more new space available and in the pipeline, but even so the supply was falling markedly short of demand. The Vail study, at the beginning of May, indicated that there were 22 units over 2,500 sq ft available, totalling 153,220 sq ft. Of these, 10 units totalling 68,050 sq ft were new.
Looking to the future, Vails identified 21 speculative schemes in the pipeline, in a mixture of new-build, refurbishments, conversions and extensions. These projected developments totalled some 567,550 sq ft, a total which excludes the office content of the Town Quay and Ocean Village projects.
Against this, there are, say Vails, a number of inquiries around for buildings from 30,000 sq ft up to 100,000 sq ft.
Out of the city, along the South Hants Corridor, there are a number of campus-style office schemes, including Arlington’s 150-acre Solent Business Park at Whiteley on the M27, which can provide over 1m sq ft of office, industrial and high-technology space; Hampshire County Council’s 33-acre Kites Croft project at Fareham, which will take around 250,000 sq ft of hi-tech and office development; a planned 140,000-sq ft campus scheme incorporating the Grade I listed mansion.
An indication of the revived fortunes of the Southampton office market is the fact that, according to a study carried out by Myddelton & Major, rents within the city have risen some 40% over the course of the past three years and, on current projections, are likely to have risen a further 15% by the end of this year.
Neilson Associates note that the supply of suitable development sites is slim in the favoured office area around Cumberland Place, Brunswick Place, Carlton Crescent and London Road. As a result, they say, there is a new interest in the previously unfavoured southern area, an interest which has been boosted by projects such as Ocean Village, which have helped to encourage confidence.
Certainly the growth in rents has pushed the rate up to new record levels. Fairlie Robertson say that the level now is £7.50 per sq ft and rising, while Goadsby & Harding say that they expect the £8 barrier to be broken by the end of the year. Indeed, Capital & Counties are already asking £8 on their Corporate Business Park at Eastleigh, note Fox & Sons, who argue that the £8.50 per sq ft rent cannot be all that far off.
There is talk of a rent close to the £8 mark on the 2,800 sq ft remaining in Brazier’s Latimer House development in Cumberland Place. This is a Grade II listed building with a new extension at the rear, totalling 14,655 sq ft, for which Pearsons and Jones Lang Wootton are letting agents.
Two floors of the building are let to Equitable Life and another to Sun Alliance, and rents of £7.25 per sq ft were achieved on the property last November.
There seems little doubt of Brazier’s confidence in the Southampton office market, since they are also shortly to start work on a new development of 14,000 sq ft in Kingsway. To be known as Roman Landing, it is to be marketed by L S Vail, who say that when completed the scheme will have a rental value of some £100,000 pa and a capital value of around £1.6m.
Another new scheme is to be carried out by Park Commercial Developments on the site at the rear of Anglo-City House at Millbrook Road/Shirley Road. Park, who are advised by Anglo-City Project Management, plan a development of 25,500 sq ft in seven units which will be available for letting or freehold sale. Work on the scheme is planned to start towards the end of the year.
In the refurbished sector, Fox & Sons are agents for Capella House in Kingsway, which totals over 15,000 sq ft on four floors and is being marketed at £6 per sq ft. Capella House is the first of a number of office projects planned in Kingsway, forming the first phase of an overall development proposed by local developers Goulden & Sons.
Nearing completion is the Director General’s House at the corner of Rockstone Place and The Avenue. Formerly the home of the Director General of the Ordnance Survey, which occupied the adjacent site until 1969, the Grade II listed building is being restored and extended to provide some 8,800 sq ft of accommodation. Morris Dibben Commercial are agents for the scheme, which adjoins the new Crown Court development being constructed on the former Ordnance depot.
To the south, on Civic Centre Road, is Marland House, a 1960s building which was refurbished by Dares Estates. The 26,550-sq ft office building, with ground-floor retail space, was marketed through Fox & Sons and St Quintin and has now been sold for £2.4m, reflecting a yield of around 9.5% on the offices and 6.5% on the retail element.
Another refurbishment, carried out in three phases, is Equity & Law’s Brunswick House, which is being marketed through L S Vail. The second phase of this refurbishment, covering the eighth to 11th floors, totalled 10,260 sq ft.
Rebuilds for churches
More unusual is Graveldale Development’s conversion of the listed St Peter’s Church in Commercial Road. Humberts are sole agents for this project, which will provide some 10,000 sq ft of offices in the existing building plus an adjoining new block. The development, scheduled for completion by the end of the year, includes over 15 parking spaces and the agents are looking to sell the freehold for around £800,000.
Staying with the religious theme, Winchester-based developers Wessex Mede International have acquired 64 London Road, a site currently occupied by the Edmund Kell Church. Myddelton & Major, who are acting for the developers, say that the plan is to demolish the rear part of the existing buildings in order to build a new, smaller church for the Edmund Kell Institute.
Subsequently, the front part of the site will be redeveloped with a 9,800-sq ft three-storey office building with on-site parking. The office will be ready in the autumn of 1987.
Back on the new-build market, Suttons Commercial say that a preletting deal is close on 14,000 sq ft of Westminster & Country Properties’ Pentagon Centre scheme in Marsh Lane. St Quintin are joint agents for this scheme, which will total some 30,000 sq ft. Given the preletting, at around £7.20 per sq ft, and the current levels of demand, there is a possibility that the second phase of the development may go ahead speculatively.
Another new scheme which it is hoped will go ahead before the end of the year is Wickens Building Group’s Southbrook Rise Scheme in Millbrook Road East. This is a £4m project which will be marketed through Fox & Sons and L S Vail, and talks are currently in hand with a potential financial partner.
The scheme is designed to provide a total of some 43,000 sq ft gross in three linked buildings, with a total of 122 parking spaces.
Up at Eastleigh, Site Developments have let their Beacon 27 building in Southampton Road to Alders International. The recently completed 25,000-sq ft development is opposite the main line railway station and close to the site of the town’s proposed new shopping precinct.
Myddelton & Major acted for the developers throughout, letting the building at £6.75 a sq ft.
Out of town on the M3/M27 is the Hampshire Corporate Park mentioned earlier. Phase one of this 20-acre development, totalling 86,000 sq ft, was prelet to B&Q as their new headquarters at a rent around £7.50 per sq ft, while the 43,000-sq ft £2.8m second phase will be ready in November.
L S Vail are letting agents for the development, in which further phases will add another 63,000 sq ft, of which B&Q have an option on the 43,000-sq ft third phase.
Turning to the retail sector, a common factor in both Portsmouth and Southampton has been that for far too long both cities were strong on shopping development proposals but distinctly lacking in major development activity.
The result, in the view of many agents, is that Fareham, where development of town-centre shopping went ahead, gained at the expense of both cities.
Long-promised Cascades centre
Now, however, Portsmouth appears at last to be on the point of having the long-promised Cascades centre on the prime Commercial Road, while Southampton is getting two developments close to the prime shopping on Above Bar Street, which again had long been at the talking stage.
In the view of Nesbits, the Cascades scheme will enhance Commercial Road, although they fear that it will also displace local traders who will not be able to afford to get back in.
The scheme has BHS as its anchor tenant and Nesbit express the hope that the centre will attract some quality retailers as well as the multiples, while at the same time perhaps enhancing the existing Tricorn Centre, which has proved to be something of a disappointment.
One of the problems with the Portsmouth retail sector is that, although nobody disputes that Commercial Road is the prime pitch, there is an unusual diversity of strong shopping pitches within the city. What is more, Commercial Road is tightly held, so much so that estimates of zone A rental values are essentially a matter of educated guesswork.
Demand for representation on Commercial Road is fierce — it is rumoured that the Cascades development is massively oversubscribed — and on the basis of review evidence prime zone A rents are around the £60 per sq ft mark. Young & White suggest that, on the basis, a new lease ought to command some 15% to 20% over review evidence, but there are simply no examples to prove the point.
Aside from the prime central stretch, the city has a selection of very strong rival centres, not least in Southsea, the traditionally “posh” part of the city, where the prime shopping is centred on Palmerston Road. This is another tightly-held pitch with little new rental evidence on the prime pedestrianised stretch.
In a recent Palmerston Road deal, Young & White acted for Pratts Furnishers in a swopping of units with Share Drug Stores. Hales & Partners acted for Share in the deal under which they paid a premium of over £50,000 for the lease of the Pratts unit, which was held at a rent of £31,000 on a lease expiring in 2000.
However, the deal is complicated by the fact that it also included the passing on to Pratts of Share Drugs lease of their existing unit, held on a lease expiring in 1993 at a current rent of £18,750 pa.
It remains to be seen what an open market rental on a new lease in prime Palmerston Road would produce, but it is established that £20 per sq ft has been indicated by a recent deal by Parkinsons Commercial on the non-pedestrianised section of the street. Parkinsons have completed the sale of the freehold of 65 Palmerston Road to Alliance & Leicester Building Society at a price which, they estimate, equates to about £20 per sq ft.
Aside from that, the £20 per sq ft zone A level is also now established in both High Street, Cosham, and in London Road, North End, both of which have seen medium-sized new developments in recent years that appear to have gone well.
In Southampton the retail market is more closely concentrated on Above Bar Street, which is undoubtedly the prime pitch but is also tightly held and beginning to show its age.
Units to suit today’s prime-pitch fashion tenants are few, and it is this shortage which the developers of the two large new city-centre shopping schemes appear to be banking on.
Work is about to start on the Royal Life/Bargate Securities development, off East Bargate where High Steet joins Above Bar. This is a £25m controlled environment centre of 155,000 sq ft for which Suttons Commercial, St Quintin and Pepper Commercial are agents.
Shops at Bargate …
So far there has been no firm decision on a name for the scheme — it tends to be dubbed simply “the shops at Bargate”.
However, the aim is to have a small catering mainly for the fashion trade and another for speciality retailers, and the hope is that work will start shortly for an opening in the autumn of 1988.
The intention is to create a four-level scheme with a central atrium and multi-storey parking for 240 vehicles, providing 36 mall units and a further 12 smaller units around the atrium along with restaurant facilities.
Almost opposite, John Willmott Developments are carrying out a redevelopment of the Southern Electricity Board showrooms at 182 High Street. Willmotts have acquired the existing lease, which had 65 years to run, and at the same time negotiated a new 125-year ground lease from the city council.
In a £1.9m development, the property is to be partly demolished and refurbished to create three shop units, of which the electricity board will occupy two, while the third has been prelet to Athena.
Albany Property Fund are financing the development, which will produce a rental income of around £115,000 pa
St Quintin have acted for the developer on this deal, with Anthony Brown Stewart representing the fund and Weatherall Green & Smith the electricity board.
… and at Marlands
A short stroll to the north, just above the pedestrianised stretch of Above Bar Street, is the Heron Property Corporation/CIN scheme known as the Marlands Centre, where work is planned to start next spring. At the end of the day, Heron will own the freehold of the whole site, most of which is currently owned by Southampton City Council and a large part of which is occupied by a bus station.
In all the development will contain 250,000 sq ft of retail space, 75,000 sq ft of offices and a mix of residential units, and will include within its walls the listed and preserved properties on Manchester Street which will form a feature for the coffee and restaurant area at the southern end of the development.
Edward Erdman have been advising Heron from the outset of the scheme, with Healey & Baker advising CIN.
Understandably, on a scheme of this likely impact on the city’s shopping scene, there have been rumours flying around as to who the leading tenants are likely to be.
According to local rumours, the main contenders at present are House of Fraser, to take a departmental store of between 75,000 sq ft and 100,000 sq ft; Carrefour, to take a 65,000-sq ft store to be set back from the main covered centre (strongly rumoured); and Ranks Hovis to operate the main food/restaurant/cafe part of the operation.
How many of the rumours prove to be true is anyone’s guess, but the closer one gets to the actual start of development, the closer the guesses tend to get to the truth.
Meanwhile, north of the city at Eastleigh, Shearwater Property Holdings have put in a detailed planning application for a £31m town-centre scheme on an 8-acre site.
Shearwater plan a 300,000-sq ft retail scheme to include a major variety store, some 45 unit shops and an American-style food hall.
Parking for around 900 cars is proposed for the scheme, which will incorporate the existing Tesco store and will also contain restaurants, wine bars, creche facilities and, as part of the local council’s planning gain, a new library on the first floor.
Shearwater have been advised by Lunson Mitchenall, while Hillier Parker have acted for Eastleigh Borough Council.
Aside from shopping centres, another recent trend in both Portsmouth and Southampton has been marina developments. Portsmouth boasts Port Solent and Eastney Marina, while Southampton counters with Ocean Village and Town Quay. All the schemes include, apart from yacht facilities, various mixtures of residential and commercial development.
Ocean Village is a £70m project which is being carried out by RAPD — a joint company formed by Rosehaugh subsidiary Shearwater Property Holdings, alongside Associated British Ports Properties. Phase one at Ocean Village — the Canute’s Pavillion shopping centre — is scheduled to open shortly.
The Pavillion contains a total of 40 small retail units averaging 400 sq ft each, along with restaurants, wine bars, the seemingly compulsory foodcourt, areas for public entertainment and 9,250 sq ft of offices. So far some 75% of the retail space has been let, mainly to specialist fashion retailers, at rents of up to £19 per sq ft.
When completed, Ocean Village will contain some 650,000 sq ft on a site of around 75 acres. This will include 220,000 sq ft of retail — and particularly leisure — space, 270,000 sq ft of offices, 160,000 sq ft of R&D accommodation, 460 marina moorings and around 360 residential units.
And although Sykes Waterhouse Commercial in Liverpool are consultants, no agents have been appointed as yet. However, blasphemous it may sound, if you can let 75% of the first phase without an agent…?
To the west is the Town Quay scheme, which, say Suttons, will provide a similar mix of facilities. There will be a 450-berth marina along with a mix of commercial, retail, residential and leisure uses.
According to Suttons, the main emphasis on the quay itself will be on the leisure and retail side. On the landward side the listed Grade II former dock accountant’s building is to be restored and will be associated with commercial uses which could provide up to 45,000 sq ft of office space.
There is a probability that Radio Solent will choose Town Quay for their offices and that the scheme will also be the home of Lord Nelson, the Julbilee Sailing Trust’s Ship designed to cater for disabled as well as able seamen.
Suttons say that the hope is that the Town Quay scheme will be 80% trading by 1988.
Close by the Ocean Village scheme, John D Woods are acting on three projects, two of them involving the former terminus railway station. The station itself is being converted by Newphase Ltd to create a casino and a nightclub/restaurant on the ground floor, with 5,730 sq ft of offices on two floors. The office rents will be around £7 a sq ft.
Meanwhile, Shamrock Developments start work soon on converting the canopy of the former station to retail use. To be known simply as The Canopies, the development will provide some 14 speciality units on two levels. These are likely to be ready early next spring.
John D Wood are also advising Queens College, Oxford, the owners of a substantial part of the Oxford Street conservation area. There has been a running programme of redevelopment and refurbishment to provide small unit shops, offices and residential space, and the core of the college’s holding has been redeveloped by Crest Homes with 34 town houses. Woods have sold 30 of these already, at up to £76,500, which is good going in an area which was once very seedy and run down.
Over in Portsmouth, say Nesbits, there has been a growing emphasis on the heritage of a city with a great naval tradition. There is now the Naval Heritage area in the south-western corner of the existing naval base — the area which has for so long been the home of HMS Victory and more recently of the Mary Rose. Later this year it will add HMS Warrior to its attractions.
In addition to this are the D Day Museum and the Sea Life centre on the Southsea seafront, along with the two major marina projects at Eastney and Port Solent.
Marples International have begun work on the Eastney Marina scheme, which will include 336 berths and some 155 residential units.
This scheme, note L S Vail (who advised Marples in their negotiations with Portsmouth City Council), was funded by a business expansion scheme promoted through Guinness Mahon. Marina operators Langstone Yachting hope to have the scheme operational in time for next year’s sailing season.
Over on the other side of the city is Arlington Securities’ Port Solent Marina scheme on junction 12 of the M27. Arlington themselves will be responsible for the marina and retail element of the project, and the marina is scheduled for completion in July 1988. In addition there will be 430 houses to be built by Higgs & Hill, a hotel and an 80,000-sq ft office development by Capital & Counties which will be let through L S Vail.
Looked at overall, the recent performance of the Portsmouth/Southampton area has been impressive. There is proven growth in the various sectors of the property market, reflecting a corresponding strength in the area’s economy as a whole.
Many local observers see the area as one of the main potential growth centres in the country, and performance in recent years appears to support that view.
