How are the business parks of the North West coping with the increasingly strong competition in town and city centres? Neil Tague sees what’s available and where.
Business parks have got something of a bad name in recent years. The city centre is king, we’re told – developers have made hay on the back of the human desire for social interaction and the chance to do a bit of shopping at lunchtime. Business parks thus have a choice – evolve or die.
Peter Gallagher, partner at P3, says: “I don’t see the appeal of city centres waning any time soon, there’s been a step change in quality. It will be fascinating to see how business parks react. For me, the issues they have to address are accessibility by public transport, amenities, and an area that’s been overlooked – how they actually look. They’ve got to become urban in scale.”
Business parks are still seeing a healthy deal flow, despite the spin of the city slickers. Mark Niven, a solicitor at Brabners Chaffe Street, says: “It is certainly not the case that demand for space on business parks is drying up. In fact, in many areas it is increasing. The proliferation of business parks in the North West, including the ambitious approach being displayed by Warrington’s Omega, has always had at its heart a long-term goal, that of being able to create a truly sustainable and strong regional economy driven by inward investment.
“I would argue that the real boom is yet to come. In immediate terms, business parks may well indeed be affected by the current economic downturn, but with global economic confidence predicted to return as early as mid-2009, the North West will have the infrastructure to quickly capitalise.”
Business parks have been thick on the ground in south Manchester for years, due to airport and motorway links. Over the late 1990s they enjoyed a purple patch as technology businesses invested heavily – in 2000 south Manchester office take-up hit an incredible 827,000 sq ft, matching the city centre. Recent years have been more fallow, with that particular sector having trimmed its requirements, but there’s plenty of interest out there.
David Thwaites, associate director at Lambert Smith Hampton, says: “The boom time for south Manchester’s business parks came to an end some time ago. In recent years affluent towns such as Wilmslow and Altrincham, with their wide range of amenities and strategic transport links, have successfully combated the out of town business park market.
“But business parks that have offered the right kind of product have prospered. Over the past two years Oakfield at Cheadle Royal has enjoyed great success, responding to demand from smaller companies that wished to purchase and invest in their own building.”
It’s a fair point. Cheshire and south Manchester are largely well-heeled areas, with plenty of businesses having the know-how and confidence to take a punt on their own property. But with continuing uncertainty over what sort of state the banking industry is in, even this market could suffer.
Will Lewis of WHR Property Consultants says: “Changes are happening. South Manchester’s done well over the last 18 months - areas like Oakfield and Cheadle Hulme have seen good prices and quick disposals. But, with changes in bank finance, occupiers are getting nervous. Banks don’t want to throw money at occupiers any more.”
Jonathan Baucher, associate at agency Cushman & Wakefield, says: “Throughout the region, there aren’t too many developers speculating, and those that are at the smaller business end, rather than headquarters-style buildings. In some areas, we’re starting to see deals fall out of bed because the purchasers are struggling to get funding – the banks are changing the conditions. The market’s getting tougher.”
The market is watching Wilmslow Office Park with interest, a high-profile location on the A-road out to the motorway junctions and Manchester Airport. ROK Developments is expected to soon begin speculative construction on phase one, a 55,000 sq ft building that can be subdivided into units of 5,000 sq ft upwards. There will, in time, be four similarly sized buildings around a courtyard.
Baucher says: “We’ve had great interest, the freehold market’s still really strong in that area. It’s a scheme that’s got visibility and character - Stamford Lodge, the former home of Henry Boddington, is on the site.”
Baucher is also pushing Cheshire Business Park, the CDP Marshalls scheme near Northwich. There will be a series of speculatively built two-storey office blocks, as well as design-and-build opportunities for larger occupiers. Baucher says: “Again, the developer is prepared to speculate, which is encouraging in this market.”
Lewis works on the Towers Business Park in Didsbury, a typical south Manchester business park in that it was dominated by deals with technology companies in the late 1990s and early 2000s.
“We’ve had some success with Towers,” he says. “We’ve sub-divided floorplates and done four lettings in the last two months. At that size, there’s never been more activity. The owner is open-minded about the deals. There’s a strong community of recruitment consultancies, start-ups and satellite offices of major US technologists to be tapped into and, if you’re flexible, you stand a good chance.”
What about north Manchester? Historically dominated by industrial uses, the boroughs and towns to the north of the city aren’t short of brownfield sites. Ask Goodman’s Central Park is now a couple of years old and, although the lack of trams going to the park’s landmark station is clearly an issue, the developer has built grow-on space for tenants at the One Central Park incubator facility.
South Manchester is dividing opinion, and north Manchester’s still unproven. But everyone has agreed that Warrington is going great guns. With MEPC’s Birchwood Park to the fore, the area’s business parks have enjoyed a fruitful year, with record rents being seen. Lewis says: “Those schemes in south Manchester that still have room to grow haven’t speculated – and that’s understandable given uncertain demand and rising construction costs. But MEPC has had the confidence to do that, and commit to design as well. It’s been richly rewarded.”
Peter Crompton, director of BE Group, has authored the Warrington Annual Property Review for ten years. At the launch of the 2008 report, he paid tribute to Birchwood Park.
“Birchwood is the symbol of Warrington’s current success. In eight of the last ten years, Warrington’s largest deal has been at Birchwood and it generally accounts for around half the deals in the area,” he says. Birchwood’s accessibility by train doesn’t do it any harm. Less than 15 minutes from Manchester Oxford Road, it’s actually far more accessible than most of south Manchester, with the added bonus of being closer to Liverpool. And Gallagher’s point about business parks becoming more urban in scale rings true as well.
The jewel in the crown is Bridgewater Place, a BDP-designed plot of four office buildings with high quality public realm and a central water feature that was victorious in the British Council for Offices awards in the commercial workspace category.
2007 saw more deals at the scheme. Managing director Jonathan Walsh says: “In addition to the BCO recognition of excellence we now have four great names to endorse the quality and location of this scheme – the Department of Work and Pensions, wind turbine manufacturer Vestas Celtic, GB Oils and now David Wilson Homes.
“We’re confident that the remaining building at 37,556 sq ft will draw more major private and public sector occupiers attracted by the location, its accessibility and the amenities that Birchwood Park can offer.” The park is also working towards a deal to bring a Ramada hotel to the site.
Coming up on the rails is Lingley Mere, at junction 8 of the M62, where Muse Developments (formerly Amec) and its partner, the landowner United Utilities Property Solutions, announced in April a 46,682 sq ft letting which will house the shared service centre for United Utilities, which will become the main administration centre for the UK’s largest operator of water and waste water networks. Work will start onsite immediately, with practical completion in March 2009.
Lingley Mere currently provides 380,000 sq ft of office space within 100 acres of parkland with a further 40 acres available for development. Phil Mayall, Senior Development Surveyor at Muse, says: “United Utilities’ decision represents another vote of confidence in the business park.”
Mark Bamber, office agent at Lambert Smith Hampton, says: “While a number of high profile business parks have struggled to attract corporate occupiers in recent years, Lingley Mere has bucked this trend. With 35,000 sq ft let to the Office of Deputy Prime Minister for the North West Fire Control Centre and UU taking buildings of 27,000 sq ft and now this space, Lingley Mere has emerged as one of the North West’s premier office destinations.”
Wilson Bowden also has interests around the M62 in Warrington – it is progressing plans to move the Burtonwood service station to the eastbound carriageway, freeing up space for a mixed-use development.
Not too far away, Marshall CDP has unveiled a new phase at Daresbury Park. Cinnabar Court offers 80,000 sq ft of grade A accommodation across 17 office buildings. “This is the largest speculative scheme in the Runcorn area aimed specifically at smaller to mid sized occupiers”, says Chris Mulcahy, partner at agent King Sturge.
What then of Liverpool? Like north Manchester, it’s not short of brownfield sites, several of which are being taken forward by Priority Sites (PS), the joint venture between national regeneration agency English Partnerships and The Royal Bank of Scotland. PS projects in Merseyside include Vesty Business Park in Aintree, Turnstone Business Park in Widnes, Brookfield Business Park in Bootle and Dakota Business Park in Speke Garston.
Murray Carr, area development manager for PS, says: “Merseyside’s still showing real growth in optimism and investment. Being European Capital of Culture has seen investment in the city centre that is starting to have a positive impact on out of town locations. There is evidence of sustained demand for good quality industrial and commercial floorspace which will continue to grow as energy performance demands get higher.
Liverpool’s out-of-town market has been dominated by the southern area of Speke Garston, which was seen as an emergency case in the 1990s, being pumped full of European money. Now regarded as a regeneration exemplar, land values have sky-rocketed for plots at Liverpool International Business Park and others.
The thinking was that the success of the south would lead to opportunities to the north of the city. That’s the thinking behind Atlantic Park, a site comprising industrial and office use, along with a trade counter area fronting Dunningsbridge Road. Royal London Asset Management and Industrial Securities launched the scheme in April 2007, announcing plans to develop out 800,000 sq ft on the site.
The site received a blow when Rolls-Royce announced that it would be closing its existing 280,000 sq ft factory at the site, and the developer has said that it will not speculatively build any further office space until that already started has been let.
The scheme has been well marketed and it’s probably a case of timing as much as anything. With jitters throughout the property market, relatively unproven locations will struggle even more than those with a track record. In many markets, it looks like it’s going to be a case of watch and wait over the coming months.