Paul Strohm finds that Nottingham’s shortage of new offices has resulted in a spate of prelets and proposals for speculative development.
After an inquiry lasting several years, the government is finally on the point of deciding the location of its new East Midlands government office.
The office will combine the functions of the environment, transport, trade and industry and employment departments. But, according to Paul Marlow of Lambert Smith Hampton, which has the region’s Property Holdings contract, the size of the requirement has shrunk from 85,000 sq ft to 45,000 sq ft (7,897m2 to 4,181m2).
The government’s choice has been restricted by the lack of new space in Nottingham. Pickering Developments’ 44,500 sq ft (4,134m2) Belgrave Centre on Talbot Street is the only new building available. At one time, the university was rumoured to be taking space here and a new marketing campaign has begun with the appointments of Chesterton and Innes England who are looking for a rent of £11.50 per sq ft (£123.79 per m2).
Demand for new space has resulted in a number of substantial prelets. Comfort House Investment Properties has prelet 31,000 sq ft (2,880m2) to law firm Eversheds Wells & Hind at Standard Hill, the redevelopment of the General Hospital complex where 250,000 sq ft (23,225m2) of offices, a hotel, a private medical facility, restaurant and leisure element are planned. An existing building on the site is being refurbished by the Nottingham Health Authority for use as a headquarters. Royal Life has put up £28m to fund the development.
Elsewhere, Simons of Lincoln has prelet 65,000 sq ft (6,039m2) to the Health & Safety Executive and Benefits Agency in the redeveloped former Pearsons store. And the Royal Bank of Scotland has prelet the 10,000 sq ft (929m2) 13-19 Derby Road, a scheme by Monk Estates. Philip Giles of Natrass Giles says that a rent of £11.50 per sq ft (£123.79 per m2) was agreed and the building should be completed by Easter.
There are rumoured to be more than 10 unsatisfied requirements for space in Nottingham and, for most of these, new developments are likely to be the only option.
Several sites are available for large office requirements, including the Landmark site and the Island site, and with the remaining space at Standard Hill there is almost 900,000 sq ft (83,610m2) on the drawing board. “It is indicative of the market,” says Edward Hine of Chesterton. “People are actually buying sites speculatively, although they are not prepared to build speculative space yet.”
Having outbid AMEC, among others, Simons of Lincoln and Gulliver Property Fund recently won a city council and City Heritage competition to develop the 11 acre (4.45ha) Island Site on London Road. The land is heavily contaminated and a City Heritage Grant has been awarded to help clean it up. Work will commence this month and is expected to be completed by September. Bob Rowlands of Rowlands Short, joint agent with Innes England and Baring Houston Saunders, says that he is already in discussion with potential tenants. The site has outline consent for 340,000 sq ft (31,586m2) of space and the development will include units from 20,000 sq ft to 100,000 sq ft (1,858m2 to 9,290m2). Rowlands hopes that the site will create a new business district in the city.
Kingspark Developments has bought the so-called Landmark site, at the junction of Station Street and Trent Street, from the receivers of Bendigo Properties. The site is just over 1 acre (0.40ha) and has consent for 180,000 sq ft of offices (16,722m2), although Noel Roper of Connell Wilson says that this may well be toned down. He has inquiries ranging from 30,000 sq ft to more than 40,000 sq ft (2,787m2 to 3,716m2). The development’s parking ratio could be as high as 1:250 sq ft (1:23m2) when designs are firmed up and marketing commences later this year.
Other possible sites include Hooley’s Garage, where a 90,000 sq ft (8,361m2) office, to be known as Chatsworth House, is proposed on the Ford franchisee’s Derby Road site. John Proctor of Fisher Hargreaves Proctor says that the scheme will rival city-centre parking ratios, with an allocation of 2:1,000 sq ft (2:93m2).
Wilson Bowden is planning a speculative development of 16,000 sq ft (1,486m2), with 35 parking spaces, on a small triangular site next to the Inland Revenue’s new headquarters. Work will start early this year and is expected to be finished by the autumn. Proctor says that he is already in discussion with a potential tenant for all the space – the site is opposite the new magistrates’ court and may attract a law firm.
Park Estates’ Clarendon Park, where Commercial Union and Weir Group already occupy space, will be also developed to provide a further 26,000 sq ft.
Out-of-town space commands stronger rents than city-centre developments. Wilson Bowden is following up the widely acknowledged success of its Castle Bridge development at Castle Marina with a development near junction 25 of the M1, where 60,000 sq ft (5,574m2) of campus-style offices are proposed on a 5.2 acre (2.1ha) site. Wilson Bowden has agreed to buy the land from Forte and hopes to start on site early this year, once problems with widening the motorway have been resolved. Rents are expected to be between £12 and £12.50 per sq ft (£129.17 and £134.55 per m2), according to Proctor. This is higher than in central Nottingham, where Eversheds has agreed a rent of about £11.50 per sq ft (£123.79 per m2).
At British Coal’s Phoenix Park, on the site of the former Babbington Colliery close to junction 26 of the M1, a mixed development includes a 12,000 sq ft (1,115m2) site which, according to Roger Davis of George Hallam & Sons, joint agent with Grimley J R Eve, has been prelet to Computer Services for Industry at £12 per sq ft (£129.17 per m2).
Although there is no shortage of secondhand space in Nottingham, there are two distinct tiers. The existing space is soon to be augmented by approximately 150,000 sq ft (13,935m2) taken by the Inland Revenue as temporary accommodation until its new 450,000 sq ft (41,805m2) headquarters on Wilford Road is finished in the spring.
Older space in town includes Pearl Assurance House, which AMP Asset Management has refurbished at a cost of £2m. Here, 22,000 sq ft (2,044m2) is on the market at £10 per sq ft (£107.64 per m2), and Connell Wilson says that there is already an offer for part of the space, which has floor plates of 4,000 sq ft (372m2).
While brewer Bass is looking for space to build 30,000 sq ft (2,787m2) of offices, it is also trying to dispose of the 65,000 sq ft (6,039m2) New Castle House, on Castle Boulevard, through Fisher Hargreaves Proctor. Once a textile mill, the building was reclad and redeveloped in 1989. It includes 180 parking spaces and the agent is looking for £12.50 per sq ft (£134.55 per m2).
But much of Nottingham’s secondhand space is not in this class and prospects for slimming the bulk of the stock seem remote. However, according to Jake Chalmers of Connell Wilson, a more realistic approach by landlords is seeing some of the glut mopped up. He says that he has let 25,500 sq ft (2,323m2) in the past three months in lots of between 1,000 sq ft (93m2) and 3,000 sq ft (278m2). Landlords, he adds, are having to “take a hit on the headline rent – incentive packages are of little use when there is only a short lease under consideration anyway”.
The education sector’s demand for classrooms is removing some of the surplus secondhand office space on the market. Clarendon College has taken 15,000 sq ft (1,394m2) of former Prudential space on King Street as well as a 30,000 sq ft (2,787m2) former textile factory in the Lace Market’s Honey Street. The college has moved its fashion-design and art departments to the building.
While English Partnerships waits for Brussels to rubber-stamp the new coalfield enterprise zones, there is some speculation about the effect of the new zone at junction 27 of the M1 on the Nottingham industrial market. “Ten years’ rate-free is a tough one to beat,” says John Barker of Innes England. “But there will be some companies that just do not want to go there.”
Known as Sherwood Business Park, the enterprise zone will comprise 165 acres (66.78ha). The new zones were designated in January 1993 and they are unlikely to be ratified by the European parliament until March. Infrastructure could take a further 18 months, according to local sources.
In the meantime, developers are making hay while the sun shines and the considerable activity occurring around Nottingham is focused on the motorway corridor.
North of the enterprise zone, at junction 28 of the M1, Orchard Holdings is building one unit of 84,000 sq ft (7,804m2) and another of 40,000 sq ft (3,716m2) at Caladine Park. The larger unit has been prelet to an unnamed distribution company. Nearby, Wilson Bowden is planning the development of a 180 acre (72.85ha) distribution park, known as Castle Wood, adjacent to the factory-retail-outlet centre proposed by McArthur Glen.
Over the years, a number of developers including Clayform Properties, Grosvenor Square Developments and Birch Group have been involved with the 32.5 acre (13.15ha) Phoenix Park, formerly Babbington Colliery, at junction 26 of the M1. This is now being developed by British Coal. A 7 acre (2.83ha) site has been sold to Field Group for a 90,000 sq ft (8,361m2) factory, 2.5 acres (1.01ha) has been sold to Whitbread for a Travel Lodge and family restaurant, and British Coal is discussing another prelet on a 40,000 sq ft (3,716m2) factory, according to Davis. Birch Group has options on two sites, of 1 acre (0.4ha) and 2.7 acres (1.09ha) respectively, which it seems likely to exercise in 1995. Davis says that 13 acres (5.26ha) remain, although there are already signs of competition for this land.
Also close to junction 26, at Eastwood Central, Midland Estate recently completed 14,000 sq ft (1,301m2) of industrial space and 5,000 sq ft (465m2) of B1 offices. Asking rents are between £3.25 and £3.75 per sq ft (£34.98 and £40.37 per m2) for the industrial space.
Tight city boundaries separate Nottingham from surrounding boroughs within the conurbation and agents feel that the restricted supply of industrial land deters inquiries.
Giles explains: “It’s all very well for the council to say ‘what do you want and we’ll find it for you’, but agents believe that we’ve got to have immediate availability.”
To the east of the town at Victoria Park, Netherfield, Nottingham Group Holdings has taken a purpose-built 42,500 sq ft (3,948m2) distribution depot on a 2 acre (0.81ha) site next to Morrisons superstore, moving from temporary space in Lenton Lane. The land is in a simplified planning zone and joint agents Natrass Giles and George Hallam & Sons are selling a further 23 acres (9.31ha) at Victoria Park for liquidator KPMG Peat Marwick.
At Cotgrave Colliery, British Coal is marketing a 66 acre (26.71ha) former colliery where Ruscliffe Council has agreed a brief for B1, B2 and B8 development.
