Secondhand space lettings may have given landlords the upper hand in Redhill and Reigate. Cheryl Freedman reports.
International jet-setters based at Reigate or Redhill have an easy trip to catch their flights. Proximity to Gatwick and Heathrow Airports and junction 8 of the M25 means the towns are popular with regional businesses. “We get enquiries coming in every day,” says Tony Fisher of Chesterton.
Nick Woodman of Maxwell Brown believes that what was a tenant’s market has turned into a landlord’s market. “Now the boot is on the other foot,” he says. “We have let a lot of secondhand space over the past two years. There’s been a comprehensive take-up of space.”
But despite heated interest, agents report a subdued market. Deals are few and far between – mainly because both towns are suffering from the familiar problem: a lack of good-quality stock of all sizes. Vacancy rates in the towns stand at about 6%, while there is particular demand for stock of 139m2 (1,500 sq ft) and above. “The market could do with some decent smaller buildings,” says Chesterton’s Fisher.
The only new building in Redhill is the 790m2 (8,500 sq ft) Crown House, on Gloucester Road, developed by NIG Sheridan. Completed in June, joint agents Chesterton and James Andrew International are quoting £253 per m2 (£23.50 per sq ft). Fisher says: “There have been rumours that it is under offer, but it is still very much available.”
Perhaps the chunkiest space around is the 2,230m2 (24,000 sq ft) secondhand Somerset House on London Road. Chesterton is marketing it jointly with Michael Rogers. Rent is being quoted at about £215 per m2 (£20 per sq ft).
Meanwhile, Maxwell Brown and St Quintin are marketing the 927m2 (9,974 sq ft) Clarendon House on Clarendon Road, which will be vacant at the end of the year. Rent is being quoted at £237 per m2 (£22 per sq ft).
Even though there is a shortage of space, developers still seem shy of taking the plunge and building speculatively. Says Fisher: “It is a combination of Redhill, in particular, not having a great time five or six years ago, and planning restrictions.”
However, Redhill may soon take on a new dimension in the form of Foxboro Court, a new £50m new business park on a 14.6ha (36 acre) site just off St Ann’s Drive, close to the rail station and town centre. Knight Frank, Richard Ellis and Stiles Harold Williams are acting for developer Anglo Lamron, which is working with Schroder Exempt Property Unit Trust.
Outline planning consent has been granted for 13,006m2 (140,000 sq ft) of offices and 13,935m2 (150,000 sq ft) of industrial space. Prelets are now being sought. Emma Goodford of Knight Frank says that the aim is to find a single occupier: “It’s a good opportunity and a fantastic location in an established town.
“There have been very few buildings coming through, so I think it’s quite an exciting story.”
Aspeculative scheme is also on the cards. Canadian & Portland Developments is planning to build the Moorings on Clarendon Road, providing 1,301m2 (14,000 sq ft)of offices.
The Royal British Legion has sold its building on Clarendon Road to New Capital Properties. Consent for 743m2 (8,000 sq ft) of offices was granted last month, reports Woodman.
Departure deals blow
Yet news of the departure of high-profile motor manufacturer Toyota One came as a blow to Redhill. The company was originally considering an extension to its Quadrangle building in the town, but decided instead to purchase a 5.7ha (14 acre) site north of Reigate, at Great Burgh, off the A217 at Burgheath, from SmithKline Beecham.
Toyota One plans to develop a 12,727m2 (137,000 sq ft) headquarters building there. Stiles Harold Williams acted for Toyota in the deal. Jones Lang Wootton and Walter & Co represented SKB. Hillgrove Properties and Portland Properties are buying the remainder of Great Burgh, including a Grade II listed building which they plan to refurbish and extend, providing 4,181m2 (45,000 sq ft) of office space.
And earlier this year, Grantchester signed a joint-venture agreement with Hepworth Properties to develop a 16.2ha (40 acre) industrial scheme at Holmethorpe Quarry, off the M23 and next to an existing industrial estate.
While Redhill is seen as more of a commercial centre, Reigate enjoys the benefits of a main-line railway connection and is also still seen as rather more of a “character” market town.
However, demand is equally strong in both towns. Fisher says that the best office rents in Reigate are £237 per m2 (£22 per sq ft), and Goodford at Knight Frank comments: “Demand has been good. We could easily see rents in Reigate going above £269 per m2 (£25 per sq ft) in the next 12 months.”
One of the town’s most significant recent deals took place at West Street’s Priory Court, a development by Clonlyon and Belvedere Smith. Agents Maxwell Brown and Gooch & Wagstaff let the 559m2 (6,016 sq ft) building to Crowe Chizek, represented by Fuller Peiser, at £248 per m2 (£23 per sq ft) on a 15-year lease.
However, the largest recent deal in Reigate occurred at the start of the year. Fidelity took 2,820m2 (30,358 sq ft) on an 18-year sublease from Legal & General at the refurbished Windmill Court in Lower Kingswood. A rent of £205 per m2 (£19 per sq ft) was achieved. Some 3,066m2 (33,000 sq ft) is still available, although about 702m2 (7,560 sq ft) of this is now firmly under offer, according to Woodman.
Reigate is also experiencing a glimpse of that rare beast – speculative development. Knight Frank and Michael Rogers are marketing the 673m2 (7,243 sq ft) St Andrews House on Bell Street in the town centre. The site was sold in January by London & Metropolitan to developer Cooper Estates.
The latest major new property built in Reigate is the 1,655m2 (17,815 sq ft) Fonteyn House in London Road, which went to Kimberly Clark last year at £242 per m2 (£22.50 per sq ft) on a 25-year lease. Hillier Parker acted for developer Taylor Woodrow. Emma Goodford comments: “Kimberly Clark has been one of the most active companies in the area recently.”
Meanwhile, the freehold of Fonteyn House was acquired by BZW Property Investment Management earlier this year for £6.1m, setting a benchmark yield of 6.1% for the area.
Now Kimberly Clark has taken the 2,137 per m2 (23,000 sq ft) Douglas House, across the road from Fonteyn House – the company’s fourth in the area. Freeholder Abbey Life accepted a surrender of space by existing tenants Canon and AXA Equity & Law. George Trollop acted for Kimberly Clark. Weatherall Green & Smith advised Abbey Life. Market rumour puts the rent at £226 per m2 (£21 per sq ft).
Prelet rumours
There may soon be some action at Reigate’s Castlefield Road, where planning consent for 3,252m2 (35,000 sq ft) of office space has been given. St Quintin is acting for Barwood and Hampton Trust. Some agents working locally believe that a prelet to actuary Watson Wyatt may be a possibility.
As in Redhill, Reigate is saying goodbye to an occupier. Redland is departing from Redland House in Reigate and moving to Dorking (see p120).
A £2.5m office scheme may go ahead next to Reigate BR station in a joint venture between English & Overseas Properties and Wates. Consent exists for 1,115m2 (12,000 sq ft) of offices. DTZ Debenham Thorpe is joint agent with Stuart Edwards Fuller Moon.
