Demand is high but developers are hanging back on speculative schemes, reports Lauren Mills.
Canadian & Portland Estates’ plans to develop a 1,300m2 (14,000 sq ft) office building in Redhill – The Moorings, at 25 Clarendon Road – is one of only a small number of speculative schemes likely to get under way in Surrey. As C&PE director John Miles explains: “We’re likely to start building speculatively in the summer. I’m mega-confident about Redhill – demand is very high and supply is tight.”
Other potential developers may be put off by Redhill borough council’s recent planning initiative, which proposes a parking ratio of only one space per 200m2 (2,152 sq ft). Few occupiers are likely to settle for this new regime.
C&PE’s Redhill proposal has one space per 35m2 (375 sq ft) and, as Miles says: “The Moorings is right in the town centre, close to public transport. If people want to be in the town centre, [parking] won’t harm our letting prospects anyway.” Jones Lang Wootton and Stiles Harold Williams are joint agents.
Speculative start
Just one other speculative start is on the horizon, also in Redhill. NIG Sheridan has announced that Finch (GB) is to build 836m2 (9,000 sq ft) of office space at Crown House on Gloucester Road. Work is expected to start in May. Chesterton and James Andrew International are letting agents.
In nearby Reigate, Kimberley-Clark took a prelet of 1,654m2 (17,800 sq ft) in Taylor Woodrow’s Fonteyn House, London Road (see transactions), a deal which has boosted development prospects for the town. The investment was recently sold to BZW for an astounding £6m, setting a new benchmark for the area. Hillier Parker sold the investment.
Those brave enough to bite the development bullet seem certain to reap the rewards. In Leatherhead, one of the county’s most successful office towns, Royal London has taken the plunge by building the second phase of Regent Park in Kingston Road – entirely speculatively. The scheme consists of two buildings, totalling 2,961m2 (31,880 sq ft). Savills and Hurst Warne are the agents.
Royal London was obviously encouraged by the success of phase one, where Medeva, EMC Computer Systems and Quality Software Products occupy 3,716m2 (40,000 sq ft) in three buildings. Agents Jones Lang Wootton and Hurst Warne achieved a rent of £215 per m2 (£20 per sq ft).
“Leatherhead is a very interesting town because there are a number of available sites with planning consent – so Grade A space is focusing there,” says Stiles Harold Williams’ Peter Connolly.
One of the main proposals is 37 On Line, next to the station, where Glencarron has planning consent for 3,437m2 (37,000 sq ft). Dickens Watts & Dade is the letting agent. Funding for the scheme is believed to be based on 7.75% at a rent of £215 per m2 (£20 per sq ft).
Woking is another sparkling town so far as its office market is concerned. In 1994 the vacancy rate there stood at 20%. Now it is a different story – by the end of 1996, less than 10% of the town’s offices stood empty, according to Savill’s Peter Connolly.
Confidence in the town spurred Bridehall Developments into action. The developer has built a 2,230m2 (24,000 sq ft) headquarters known as Globe House at 31-43 Goldsworth Road. Knight Frank is the joint agent with Countrywide Commercial.
Knight Frank’s Emma Goodford explains the current lack of supply in Woking: “Developers have held back because the funds haven’t been in the market. But there has been a 12%-15% increase in rents, and we’ll see new stock coming along over the next 18 months.”
In Chertsey, a town benefiting from its location at the intersection of the M3 and M25, Welbeck Land, funded by Scottish Widows, has been sufficiently confident to build the 4,645m2 (50,000 sq ft) Eastworth House on Eastworth Road. Vail Williams and Edgerley Simpson are the letting agents.
Joint venture
Countryside Commercial has been active in Chertsey. With funding from Standard Life, it is speculatively developing the 2,053m2 (23,033 sq ft) Cranmer House in Pyrcroft Road. Completion is expected in May. The development is the first phase of the Chertsey Opportunity Revitalisation Initiative – a Runnymede borough council and Countryside Commercial joint venture to provide 21,275m2 (229,010 sq ft) of offices, plus shopping and residential. Holley Blake, Richard Ellis and Michael Le Gray & Co are the letting agents.
The other significant local project is P&O Properties’ 33,444m2 (360,000 sq ft) business park at Hillswood, on the site of the former Botleys Hospital. According to local market rumour, software company EDS is taking 2,230m2 (24,000 sq ft) in the speculatively refurbished Botleys Mansion. The letting agent is DTZ Debenham Thorpe and Vail Williams advises EDS. Neither agent was willing to comment on the situation.
Eye-catching project
In Camberley Watchmoor Park 2 is catching agents’ eyes. Friends’ Provident had the vision to forward-fund Helical Bar’s and Averley Wood Properties’ 10,820m2 (116,460 sq ft) development and has reaped its reward in the form of 7,771m2 (83,000 sq ft) already let. The occupiers are Dunlop Slazenger and engineering design group Fluor Daniel.
In one of Guildford’s biggest investment deals for about two years, an overseas investor has snapped up four buildings in London Square for £40m. The 11,612m2 (125,000 sq ft) development, built a few years ago, is multi-let to tenants including Arco British and Autodesk. Rents are about £312 per m2 (£29 per sq ft). DTZ Debenham Thorpe advised the purchaser.
Also, Knight Frank and Hurst Warne are marketing KPMG’s old building, Eastgate Court, High Street. And, just west of Guildford, Surrey University’s Surrey Research Park could see another phase. Moves are afoot to develop the remaining 3.6ha (9 acres) of land there.
This could provide competition for Canada Life’s Guildford No 1 and Guildford No 2 – two office buildings totalling 1,538m2 (16,550 sq ft) next to the station. The development will be carried out in association with Hartlake and Trinity Estates. Lambert Smith Hampton is quoting £269 per m2 (£25 per sq ft).
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Waiting for a prelet
The availability of industrial units in Surrey is at an all-time low, according to local agents, but developers remain reluctant to build without a prelet in place. Even in Camberley, which has a well-established industrial base at Doman Road, developers are cautious. Friends’ Provident, not known for holding back on speculative schemes, is waiting for a prelet before building its 4,645m2 (50,000 sq ft) Fulcrum development. Joint agents Matthew Pellereau and Atkinson Richards have been marketing the proposal on a design-and-build basis for six months. “We’ve got a very good chance of getting tenants. There’s not a great deal of stock,” says Matthew Pellereau. However, he is confident that completion of the Black Water Valley Road, from Camberley to Farnborough, will throw up a raft of new development opportunities. “This is very important. Camberley is short of good new stock. Developers should build speculatively – for mostly local companies who are expanding and relocating,” adds Pellereau. However, he believes that the M3 still holds the key to the area’s success. Other towns in the area appear to be faring less well, mainly because they are too far from the M25. |
Transactions
Fonteyn House, Guildford: Offices. In July 1996, Kimberley Clark took a prelet of the 1,653m2 (17,800 sq ft) building at £242 per m2 (£22.50 per sq ft). The investment has now just been sold to BZW for £6m. Hillier Parker acted for Taylor Woodrow, while Saxon Law introduced the building to BZW.
Victoria Gate, Chobham Road, Woking: Offices. Alexander Crane has taken 1,421m2 (15,300 sq ft) on a 10-year sublease with a break in 2002 at £150 per m2 (£14 per sq ft). Richard Ellis advised Alexander Crane. Knight Frank and Countryside Commercial were the agents.
Phillips Court, Goldsworth Road, Woking: Offices. PepsiCo Inc has moved into 4,180m2 (45,000 sq ft) on a 15-year sublease from Phillips Petroleum with a break at year 10 and 12 months rent-free, at £177.60 per m2 (£16.50 per sq ft). Weatherall Green & Smith acted for Phillips. Grimley advised PepsiCo.
Randall Research Park, Randall’s Way, Leatherhead: Offices. Cargill has taken 1,653m2 (16,973 sq ft) on a five-year lease at £215 per m2 (£20 per sq ft). Donaldsons and DTZ Debenham Thorpe were the letting agents for the Church Commissioners.
Randall Research Park, Leatherhead: Offices. Datatech has taken 1,533m2 (16,500 sq ft) at £148 per m2 (£13.75 per sq ft) on a five-year lease. Hurst Warne and St Quintin acted for headlessor Nynex. Fletcher King acted for Datatech.
Watchmoor Park, Camberley: Offices. Fluor Daniel has taken a 5,654m2 (60,000 sq ft) prelet at £215 per m2 (£20 per sq ft). Woodford & Co was the letting agent for Friends’ Provident; Vail Williams advised the occupier. Dunlop Slazenger has taken 2,117m2 (22,800 sq ft) on a 20-year lease with a 15-year break at £226 per m2 (£21 per sq ft). Dalgleish & Co advised Dunlop; Weatherall Green & Smith was the letting agent.
