Challenges ahead Two key regeneration projects are wallowing in delays to site assembly, traffic issues and market conditions. By Melanie Smith
The weather might be starting to thaw, but can the same be said for Bedford’s grand regeneration plans?
The recession and collapse of the property funding markets has brought adverse conditions to the town’s two key projects. The first is a council proposed £130m mixed-use scheme called Bedford Station Quarter, which includes 250,000 sq ft of offices.
The second is St Modwen’s 19-acre Town Centre West project, which includes 400,000 sq ft of retail and leisure, a hotel and 330 homes (see p68).
Both are sizeable projects, but frosty market conditions have slowed progress. Indeed, last month the council extended its development agreement with St Modwen on Town Centre West to 2011 to give the developer more time to bring the scheme forward. And with market conditions unlikely to improve greatly this year, some are questioning whether the schemes are a bit too ambitious for Bedford, and maybe a little too complex.
At the Station Quarter scheme, there is still a long way to go before development can start, with site assembly yet to be completed, planning to be secured and development partners found. Other problems include the site’s challenging location vis a vis traffic congestion and last its commercial viability.
As one agent says: “There are other sites – such as Interchange Park just off the Southern Bypass – that lend themselves to being built quicker than Bedford Station Quarter because they are under single land ownership.”
The Station Quarter site is subject to a compulsory purchase order – a process which Andrew Clarke, director at local agent Douglas Duff says could end up being very lengthy and costly as many owners may “not want to sell at the bottom of the market”.
Key to attracting development partners will be convincing the private sector that there is a market for the proposed space, but the figures do not look encouraging (see below).
Nonetheless, the council is determined to forge ahead with the scheme, and is due to imminently announce the acquisition of a large part of the redevelopment site.
Technical reports
The planning application has been pending formal registration since February last year but, according to Mark Oakley, head of economic development at Bedford council, the council is preparing to submit technical reports to support the overall submission, including traffic and environmental assessments.
Dan Jackson, a surveyor at Lambert Smith Hampton, suggests that, once measures to reduce traffic in the town are in place, including the opening of the Western Bypass linking the often congested A421 to the A428, road travel will become less “tortuous” and could spark inward investment.
However, other commentators, such as Geoff Armstrong, associate partner at planning consultant DPP, point out that the road improvements could perversely have the opposite effect, and make it easier for residents to commute elsewhere.
It is not clear when the council will launch its search for a development partner. No doubt the market will be watching closely for the planning application to see if the scale of the proposals has not melted away with the icy weather.
Is office development required?
Bedford’s office market figures do not make pleasant reading, but the market is not without its successes, although these have been out of town.
A total 3,050 sq ft of grade A was let last year, down from 13,150 sq ft in 2008. The figures raise questions about the council’s ambition to develop 250,000 sq ft as part of its town centre Station Quarter scheme.
“There doesn’t appear to be a need for these offices at the moment,” says Andrew Clarke, director at local agent Douglas Duff. “There’s enough space to satisfy the types of enquiries for Bedford, which range from 2,000-5,000 sq ft.”
Total availability in Bedford is 233,070 sq ft.
“Most businesses are concentrating on trading down in terms of the amount of space needed,” Clarke adds.
He believes that a requirement of 40,000-50,000 sq ft would need to come forward in order to kickstart town centre office development, which, he says, is rare in Bedford. “Such a requirement would usually come from the public sector, but it is short of money,” he says.
Dan Jackson at Lambert Smith Hampton, says that a test to the development market could be how the 63,000 sq ft Kimberley building in Stewartby fills up. The building was completed in September for brick company Hanson, but remains empty.
In addition, prime office rents have fallen from £16 per sq ft to £15 per sq ft.
In Bedford’s favour is the fact that it has managed to secure some sizeable prelets out of town.
Carlyle recently prelet 200,000 sq ft data centre to TRE Global UK at its Twinwoods Business Park. The company will occupy a 120,000 sq ft centre to be built in phase one, after which it will develop additional call centre buildings to sublet.
On a smaller scale, Goodman and Unilever are about to start building at the Colworth Science Park, having secured £4.7m of funding from the East of England Development Agency and signed up two universities to the site. It already houses 550,000 sq ft of science-related businesses.
Goodman will build a 21,000 sq ft building for the University of Cambridge and the Cranfield School of Management and a 35,500 sq ft innovation centre for small firms, with a completion date of early 2011.
Clarke suggests that this more bite-sized development principle “might be the way forward” for Bedford, in the short to medium term at least.
St Modwen takes ‘pragmatic view’ on Town Centre West
Regeneration specialist St Modwen was recently given an extension until 2011 on its development agreement with Bedford council for the £200m Town Centre West scheme. It was initially chosen in 2005 to deliver the development.
Planning permission was granted for the scheme three years ago, but a section 106 agreement has not yet been signed.
There are no plans to start building imminently, and the developer says it is taking the “pragmatic view”.
Rupert Wood, the developer’s regional director, says: “It’s not a case of plans being too big. Due to the size and scale of all our projects, St Modwen takes a long-term view and, in today’s market, the scheme is not feasible. But the aspiration for major regeneration remains.”
Andrew Clarke, director at Douglas Duff, says retail space is much needed, and the scheme is long overdue, but he questions the likelihood of signing up anchor tenants.
Wood adds: “We are looking at all options with the council to identify the best strategy, not withstanding the challenges these schemes have in current market conditions.”
Market at a glance
Total office take-up in 2009 was 52,790 sq ft, up on 2008’s 46,660 sq ft
Total office availability to the end of 2009 was 233,070 sq ft, slightly up on 2008’s 230,130 sq ft
Prime office rents fell from £16 per sq ft in 2008 to £15 per sq ft at the end of 2009
Zone A retail rents fell 24% from their 2008 level of £105 per sq ft to £80 per sq ft at the end of 2009
