How many property professionals does it take to organise the redevelopment of a brewery? Quite a lot, if a scheme in south London is anything to go by.
Two acres of prime residential development land in the middle of Wandsworth is home to Young’s Brewery and is the oldest site in Britain on which beer has been brewed continuously.
Developers have long cast greedy glances at the site, seeing not just the 19th-century home of the Ram Brewery but a cash cow. Finally, in November, the brewery announced what agents were longing to hear. It said it was in the middle of a review assessing the development potential of the site.
Residential development and its returns are not news on the London market. Currently, 227 schemes are planned or under construction in Wandsworth, totalling more than 9,500 homes (see table). The inclusion of the Young’s site could tip this figure well into the ten thousands, with the brewery set to pocket a sizeable lump sum.
However, commercial developers touring the site has got agents’ tongues wagging.
Those involved in proposals say there is a reluctance by Young’s to hand over the site to housebuilders – something that has surprised local agents. “I doubt whether there will be any major modern offices delivered. It makes sense for it to be primarily a residential proposition,” said one.
Charles Hart, a partner at Knight Frank, points to one unnamed developer that is considering a comprehensive redevelopment of the site. “The client was proposing putting 500 flats and around 200,000 sq ft of retail on the site,” he says, adding, however, that “it’s all gone a bit quiet”.
Young’s has yet to give any formal indication of its intentions. Michael Hardiman, spokesman for the brewer, says the review is part of an ongoing two-year feasibility study into development of the site, which started in November 2003.
While Hardiman confirms that both commercial and residential developers have visited the site, he maintains: “People have been to see the property to give us an idea of its worth, but it is no Dutch auction.” The outcome of the study will be assessed within the next six to 12 months, adds Hardiman.
A move by Young’s to relocate the brewery from its historic Wandsworth location would almost certainly mean the loss of its contract bottling business. This accounts for 20% of the total beer bottled on the site – although many commentators point out that this would not be so lucrative as housing a few hundred people.
The age of the site also means a change could be likely. Young’s has had a presence at the location since the 1830s. But, over the years, the brewery has started to fall foul of legislation.
In the chief executive’s 2005 annual report, Stephen Goodyear stated that recent health and safety regulations have started to compromise the efficiency of the site. For example, employees are now not allowed to walk through the yard to get to the stables, which are accessed from the street instead.
Despite this, Young’s says it remains open to investing in the 19th-century part of the property.
Choosing commercial development over residential could help to appease planners and retain the integrity of the site. Currently, Wandsworth’s UDP designates the site as industrial employment land in a conservation area. Putting in residential would require a change of use.
That said, a largely commercial development would put Young’s at odds with sentiment in the rest of the property market.
Last year, Berkeley Homes applied to decrease the commercial aspect of its Chelsea Bridge Wharf scheme in SW8. The application, which would reduce its commercial space by 100,000 sq ft, making way for 233 homes, was refused late last month, and the initial 30% commercial use remains in force.
Regardless of whether the Young’s site goes to commercial or residential, agents are already anticipating the prospect.
“The impact will be massive,” says Will Foster, partner in Knight Frank’s national offices department. “Redeveloping the site will give an immediate and enormous face-lift. If they develop high-value residential units, that will mean more money through the tills, and the local, duff old charity shops will become little cafés and restaurants. Soon, we’ll find a spin-off benefit in retail and leisure.”
That is already starting to happen to a limited extent, believes Foster. Over the past year, Wandsworth has gained more credibility as an office location, helped in part by an improved residential offering and, more important, the opening of Waitrose in Land Securities’ recently redeveloped 525,000 sq ft Southside shopping centre.
“As a suburban centre, it was long overdue a kick-start,” says Foster. “Waitrose was a bit like Harvey Nichols opening in Leeds. The ramifications have been huge.”
But the supply of offices has largely been led by developers’ willingness to commit to residential schemes, with a smattering of workspace coming on stream purely as a side-effect. Rents hover around “the early £20s”, says Foster, pointing to Scarborough Properties’ 16,700 sq ft RQ33 development at Wandsworth Park, which is now 70% let.
“It is still considered quite a bold location to go into and, at the moment, we are not going to see a major development of offices in isolation,” says Foster.
As a result, rental growth will be minimal, he adds. “Around £25 per sq ft is probably the limit for the moment. If we are going to generate higher rents than that, there will probably have to be further improvements to the area.”
The ball is now in Young’s court as to whether it can help deliver those much-needed improvements.
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