Property Advantage West Midlands Issue 22

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

West Midlands

property advantage – your guide to regional development & regeneration

Bruntwood targeting a city deal.

As DCM director prepares for court scheme go-ahead

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Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Contents

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inside advantage From your Editor, Ian Halstead

Calling the upturn too soon is a way to the poorhouse, for developers and investors alike, but there are genuine signs of activity across the region.

Birmingham’s Big City Plan has been marking time for too long, so news that the massive masterplanning programme is set to enter its second phase is timely.

As Hammonds’ new office head, Nick Green, suggests in his Point of View column, it will be interesting to see if local authorities are still able to drive their core regeneration projects forward, when the squeeze comes on after the election.

Coventry MBC, as so often in recent years, continues to impress, and Cannon Kirk’s £1.5 billion Friargate scheme will ultimately provide much-needed connectivity between the train station and the centre.

Hereford, which has rarely seen development of note since the cathedral was built, is equally determined to transform its urban heart, and now Stanhope’s proposals have been tweaked, opposition to the ambitious plans appears to have ebbed.

Meanwhile, Wolverhampton is trying to shake off the disappointment of the longstalled Summer Row scheme, by renewing its focus on the complex transport interchange proposals, based around its West Coast main-line station.

Given the failure of the council’s previous canal-side regeneration strategy, it’s also good to see that the city’s dev co has brought in Colliers CRE, to take a radical look at the previous proposals.

Across the M6 though, the biggest challenge f acing Walsall MBC will be to find a new chief executive for its regen co, after the departure of Peter Cromar, especially as the relationship between the two hasn’t always run smooth.

Yours, Ian Halstead Editor, Property Advantage

Front cover image.

Site work is due to start on Birmingham’s new £80 million courts complex in Q2, and architects Denton Corker Marshall are confident that the building’s final appearance will be just like their CGI, as London director Stephen Quinlan explains on p27. The tower, commissioned by Her Majesty’s Courts Service, should be ready for occupation in 2012.

Contents 04 News & Deals.

– Carmalt sees slow year ahead.

– Council boss lands MIPIM role.

– Glonek’s new take on relocation.

08 Industrial.

– High St back into shed market.

11 Hereford.

– ESG desires ‘classic’ design.

– Stanhope eyes pre-let deals.

14 Local Government.

– Public sector targets MIPIM.

– New phase for Big City Plan.

20 Black Country.

– Neptune ponders phase two.

– Review for canalside options.

23 Sustainability.

– RICS focuses on bottom-line.

– BEP launch ‘feed-in’ project.

– Bruntwood eyes 2010 deal.

31 Point of View.

– by Hammonds’ Nick Green.

33 Property Finance.

– by Lloyds TSB’s Ian Martin.

35 Skills.

– BDC boss offers a helping hand.

Property Advantage is conceived, designed & produced for you by: Open Box Media & Communications 32–35 Hall Street Birmingham B18 6BS +44 (0) 121 608 2300 www.ob-mc.co.uk Contact.

Samantha Skiller sam.s@ob-mc.co.uk Stuart Walters stuart.w@ob-mc.co.uk Design & Art Direction.

Lee Murphy lee.m@ob-mc.co.uk Editor.

Ian Halstead halsteadian@aol.com The Publishers wish to emphasise that the opinions expressed in Property Advantage are not representative of Open Box and accept no responsibility for the views expressed by our contributors.

NB:

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All the latest...

News & Deals

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BCO visits Brum. The regional arm of the British Council for Offices held a tour of Birmingham City Council’s Lancaster Circus building this month, to allow members to examine the first phase of its refurb, spanning two floors, under the Working for the Future programme.

Carmalt pessimistic over 2010 prospects. Birmingham’s office market

is set for another tough year, despite a buoyant end to 2009, according to King Sturge’s office agency partner, Jonathan Carmalt [right]. Last year saw a healthy 657,280 sq ft of space let, inevitably down on 2008, but almost bang-in-line with 2007. However, the 2009 total received a massive boost by the city council’s decision to take 196,000 sq ft, at the Birmingham Science Park - Aston, which it now owns. Carmalt, who chaired the West Midland branch of the Office Agents Society for three years, until December, expects the 2010 take-up to fall from last year, despite signs of an upturn in market conditions.

“It’s true that the offering of significant incentives does seem to have bottomed out, and the cuts in rental levels have slowed, but confidence remains fragile,” he says. “I’d say new Grade A space would go for around £27 per sq ft, against a pre-recession high of £32.50, but the secondary market has been very badly hit, and is probably down 30% or more.” Carmalt is also concerned by the tight forward development pipeline. “Birmingham does have the availability of stock it did not have, but there is no new development bar BDC’s The Cube, and it has only about 55,000 sq ft of Grade A to go,” he says. “In the secondary market, although there have been two or three very decent refurbs, there is very little to differentiate the rest of the available stock.”

DJ spinning fast. The Birmingham

office of Drivers Jonas Deloitte expects phase two of Bath’s £360 million SouthGate mixed-use scheme to open on time at the end of May, following the opening of the initial retail phase. DJ has been on the scheme for three years.

Price is right. Andrew Price has been appointed partner by Lichfieldbased Kingston Commercial Property Consultants, two years after joining as a senior surveyor from Cannock’s Pritchard Group, where he spent almost two decades.

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News & Deals

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Glonek aims to revamp relocation strategy. A new Aiming for gold. Cost management

and consultancy specialist Rider Levett Bucknall has announced a formal partnership with the global Event Planning Group, after working with the organisation for the last year, on various projects for the 2012 London Olympics.

approach to targeting public sector relocations was unveiled at the Birmingham Office Market Forum. The group already works closely with the council’s inward investment service, Locate in Birmingham, which now operates alongside Marketing Birmingham.

Jack Glonek, the council’s assistant director for investment, enterprise and employment, already oversees both those bodies, and told the forum’s March event that the next stage of consolidation would be to develop closer ties with AWM and the regional Government Office. “The government has recognised that the relocation process is not working as it should, and we agree that it is both too slow, and not transparent,” he says. “We must respond to the new approach, by ensuring that our offer is more sophisticated and better co-ordinated. I don’t claim to have all the answers, but together, I am sure we can present a more compelling case for relocations to come here.”

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UK DOORSETS UK DOORSETS UK DOORSETS UK DOORSETS

round of public consultation on Argent’s proposals for the eight-acre Paradise Circus site in Birmingham, will be held in 2011, and outline consent will be sought in the summer, according to Argent’s Gary Taylor.

Coventry in the news. Coventry MBC’s chief executive,

Martin Reeves, was a keynote speaker at a major MIPIM seminar this month. Still short of his 40th birthday, and one of the country’s youngest local authority leaders, he was invited to co-host the event’s inward investment briefing, sponsored by Ernst & Young, and the research agency, Oxford Intelligence.Reeves used the high-profile opportunity to explain how Coventry was targeting overseas investment, to drive forward the city’s ambitious regeneration and development programmes. Underlining the council’s partnership approach, the event was held in AWM’s business suite, and chief executive Mick Laverty introduced the speakers.

www.makeitstaffordshire.co.uk

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News & Deals

A new green gem for the Jewellery Quarter.

The first phase of one of Birmingham’s greenest new developments, Newhall Square in the Jewellery Quarter, is now complete. Newhall Square is London-based RO Developments’ first scheme in Birmingham. The £63million mixed-use scheme, located on the site of the former Science Museum on Newhall Street, already boasts a 100bed Travelodge, the hotel chain’s best performing UK operation, a contemporary office building comprising 10,856 sq ft over five floors known as 6-7 Newhall Square which is currently the most energy efficient building of its type in Birmingham.

A new public square, the equivalent size of five tennis courts, is planned for the heart of the development. Office agents on the scheme are Colliers CRE and GBR. Robert Neaverson, associate development director at ROSB, said: “As we continue going forward with the development we will be able to offer bespoke buildings of up to 225,000 sq ft, ideal for large office requirements.”

Tender thoughts. Research by EC Harris indicates that construction tender prices will fall in the West Midlands for the next two years.

Birmingham office head Martin Silvester [below] expects a decline of 7% this year, and 1% in 2011, as construction orders fail to pick up, and as the property market continues to lag behind the wider economic recovery.

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Edgbaston buzzing. The head of agency at Drivers Jonas Deloitte’s Birmingham office, Philippa Pickavance, says half of the city’s office deals during 2009 took place outside the traditional core market, with Edgbaston particularly active.

Met thinks green. Birmingham Metropolitan College has launched a Skills for Climate Change and Sustainable project, aimed at working with employers to reduce CO2 emissions from existing buildings, after receiving funding from the European Social Fund.

Aedas on target. Aedas Architects has confirmed that is in on course to open its new Midlands regional HQ, in Birmingham’s Colmore Plaza, this summer. Chairman Brian Johnson says the office scheme - designed by the same practice five years back - will also become a national meeting hub for the company’s other regional, and international, offices. Aedas, which has ten offices across the UK, employing some 700 staff, appears regularly in the ‘Top 100’ league tables researched by industry magazines. Among its most notable recent projects are Manchester’s Bauhaus, Liverpool’s West Tower, and the Haymarket Interchange in Edinburgh.

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Industrial

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Energy comes back in as Tenens signs up for

The collapse of the retail sector brought the shed market to its knees. Ian Halstead sees what its prospects might be in 2010.

A sprinkling of sizeable industrial deals has been the catalyst for optimism about a gradual return to ‘normal conditions’, which begs the question of exactly what normal is.

Is it the over-heated market of the early 21st century, when speculative space came forward in giant chunks, throughout established locations - such as the Midlands and North Staffordshire - and even further afield, as labour shortages and rising wage rates made developers consider virgin territory?

Neil Starkie [right], Savills’ industrial director, has long been an assiduous compiler of data, and reckons those folk searching for a silver lining need to look back to the last century, to decide where the market might be going.

“When people talk about ’normal, do they mean the period between 2000 and 2007, or do we define that as abnormal? If you go back to the mid-90s, there were far fewer speculative schemes coming forward, they tended to be builtto-design,” he recalls.

“If the market returns to its pre-2000 state of activity, then 2010 will be very challenging, because the existing supply of quality stock is going quickly, and there is very little secondhand space coming back into the market, because it just doesn’t tick all the boxes which major occupiers now require. ”The boom in speculative space was fuelled by the availability of cheap finance, which obviously isn’t available now. In the medium-term, spec schemes have got to come back of course, but I suspect not in the way they did from 2000 onwards.”

Starkie admits some shed developers are already looking to 2011, having effectively written off this year because of the fragile nature of recovery.

“I can’t see anybody bringing anything forward during 2010, but at least, people are starting to go through the thought processes about the potential for new space,” he says.

Instead, Starkie believes the shed sector remains one where occupiers hold sway, although he does believe that their window of opportunity is closing.

“When the market was really depressed, some saw a chance to get a really knockout deal, but I think we are now approaching a tippingpoint, where conditions remain occupier-friendly, but are beginning to change,” he suggests.

“We’ve already seeing the impact of M&S deciding to reduce its distribution network of dozens of small centres, to perhaps three or four over the next decade, and much of what happens this year will - as always - be driven by the major retailers.

“GAP is another one to be looking at schemes in the Midlands, and they’ve even considered the Pro-Logis shed at Stoke. It doesn’t need many

companies of that size to take space, and suddenly people will start to be concerned about the development pipeline.“ Across town at GVA Grimley’s Birmingham office, Mark Fitzpatrick [below right] - an associate in its national industrial team - also believes that demand for sizeable amounts of space is on the up.

“We’ve been surprised at the number of inquiries coming in, since Christmas. Boots, like M&S, is looking to consolidate its distribution network, so it was no surprise to see it go for the Opus Land building at Burton-on-Trent,” he says.

“I know they looked at space in Corby, but given how easy it is to get from Burton to Nottingham, it isn’t a surprise that they went for the one closest to home.

“Marks had a look at the Opus space a year or so back, but at the time, didn’t quite have the confidence to take on 460,000 sq ft in one chunk, so it‘s interesting to see both them and Boots back in the market, and in a big way. Next are also looking for a site which could hold 600,000 to 700,000 sq ft of space. ”When major retailers start satisfying their requirements, it can make others concerned about doing their deals before the supply of new space begins to dry up. I really wouldn’t be surprised to see another big shed go before the end of Q1, perhaps a Pro-Logis one.”

In common with his fellow

shedshifter at Savills, Fitzpatrick admits that some developers are already ruling out a return to the speculative market for the shortterm, although he believes their mindset might change if more significant occupiers return.

He says those companies with decent chunks of new space are beginning to phase out the various packages of incentives, which have been readily available for the last eighteen months.

“We’re seeing the length of rent-free periods gradually reduced, and the number of developers offering free fit-outs is also shrinking. Both will inevitably continue to fall as stock levels decline,” says Fitzpatrick.

“We’re also having far more inquiries from overseas, mainly from China and India, but also from elsewhere in Europe, from companies looking for sites in the Midlands. Some are existing manufacturers who need more space, but some would be new to this country.

“Even the call centre market is starting to revive. The Office of National Statistics decided to take its 180,000 sq ft requirement for the 2011 census to Trafford Park, but there are a number of smaller requirements, which are equally footloose, and we still see North Staffordshire as a strong location for such centres.”

As February came to a close, there was another welcome sign of activity in the logistics sector, as an operator from the Midlands signed up for one of the UK’s most sustainable buildings.

Stroud-based Howard Tenens has taken a 10-year lease on Gazeley’s 233,000 sq ft Voltaic scheme, at the Dagenham Dock location which the London Development Agency wants to evolve into a sustainable industrial location.

Barking & Dagenham Council has already ‘adopted’ the building, which it uses as a case study for sustainable development to promote London Gateway.

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Industrial

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nto the shed market r Gazeley’s Voltaic Tenens, which is privatelyowned and has an annual turnover of some £70 million, operates nationwide from thirteen depots. The Dagenham space will be used exclusively for CocaCola Enterprises (CCE) which was impressed by Gazeley’s commitment to sustainability.

CCE’s vice-president (logistics) for its European supply chain, Peter Latham, said the company was determined to reduce its overall carbon footprint by 15 per cent by 2020.

The Voltaic building [right & below left] has numerous energysaving features - as its name

suggests - intended to save just over 120 tonnes of carbon dioxide a year.

Photovoltaic roof panels provide renewable energy and sky-lights cover 15% of the roof - against an industry average of 10% which is the maximum ratio of natural light which can be used, without damaging products stored in the warehouse.

A ground source heat pump supplies all heating and cooling

requirements for the 10,000 sq ft of office space, whilst solar thermal collectors create free hot water in the summer, and deliver substantial savings in the winter.

Tenens, meanwhile, is also

looking to become more environmentally friendly, and to help customers manage their waste more efficiently, having set up its own environmental division in 2008.

“We have investigated low carbon options, and are switching our transport fleet to dual fuel, using compressed natural gas and diesel, and are installing our first gas fuelling station at our Andover depot,” says its business development director, Eilis Cope.

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Hereford

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Stanhope helps Hereford map out its future strategy

Hereford’s image down the years has been of historic timberframed buildings, set in narrow streets, overlooked by one of Europe’s grandest cathedrals, and nestling on the banks of the River Wye. It’s certainly not the place where you could envisage a £650 million regeneration scheme, designed to transform the city’s urban heart, its retail and leisure offer, and its economic fortunes.

However, as Herefordshire Council’s director of regeneration, Geoff Hughes, points with animation to where each new element of the complex proposals will come forward, it does appear that the city’s time has come.

The crude data is impressive - particularly so for a city whose population is barely 55,000; the plans will affect 100 acres of the central area, 250,000 sq ft of retail and leisure space will be created, and 8,300 homes will also be delivered.

Hughes has a wider vision though, which sees Hereford enhance its traditional status as a sub-regional centre, to become a major strategic investment location for the Midlands, and the destination of choice for the county‘s shoppers.

“We have a catchment of about 250,000 people, many of whom already come here to shop, to go to the bank, to see football matches, to work and to go to college. Unfortunately, at the moment, we don’t have enough to persuade them to stay for longer, or to spend more,” he admits.

“We want to become a major economic driver for the county and the sub-region, so we need to improve our infrastructure, and to expand our population to pay for the necessary investment. We embrace housing growth because it is central to our future, and we need economic growth to lift the city’s wage levels.”

Hughes enthuses as he talks about plans for significant chunks of affordable housing, the Yazor Brook flood alleviation scheme, a new link-road, the new livestock market, and most importantly of all, the new retail and leisure space.

“If we are going to fulfill our role as a major economic driver, it is vital to strengthen our retail offer, and to attract some of the bigger brands. Once we have more of the High Street names here, the small independents will thrive from the additional footfall that they bring,” he suggests.

“We already have fantastic heritage, the famous cathedral, and the riverside location, but we need to persuade more people to shop here, rather than going to Cardiff, Bristol or Birmingham, and we need to attract more visitors to spend time here.”

The council chose Stanhope as its development partner in February 2008, with a brief to bring forward 450,000 sq ft of retail

and leisure space, but the plans were scaled back significantly, following protests from residents, business owners, and a disparate alliance of other objectors.

“I’m sure we’d all agree that there is no point building space you can not let, because without pre-lets the scheme could not proceed. Conditions change, and what might have seemed possible in 2007 does not now,” says Hughes.

Environmental impact assessments are underway for the new relief road, and

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Hereford

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the council hopes to make a decision by the end of 2010.

The proposals were launched to the public in January, under the ‘East or West’ banner, reflecting the options to construct the road to the east or the west of the city.

“There isn’t a house view about the best route. The only must is that the road is built, as without it we can not accommodate the 8,300 houses we need to bring here.

Hereford has needed this road for 30, perhaps even 40 years, and the consultations will be very interesting,” says Hughes, with a momentary lapse into understatement.

Another individual equally determined to drive the massive regeneration programme forward is Jonathan Bretherton, [left] chief executive of ESG Herefordshire, the local vehicle created in late-2005 by the county council and Advantage West Midlands.

He agrees that the original development brief needed scaling back, to reflect the changing economic conditions, but has been delighted to witness Stanhope’s commitment to the cause.

“We thought they were right for us for several reasons, and have no regrets. Their evident financial strength was important, but more importantly, they were passionate about design,” recalls Bretherton.

“We felt that many developers who pitched for the work were offering ’clone city’ proposals, which could have been built anywhere in the country. We needed something which was distinctive to Hereford though, which emphasised our uniqueness, and we felt Stanhope were in tune with our mindset. ”You look at classic designs, whether they are Dyson, or Apple, or Philippe Starck, and they aren’t just well-built, they are cool and distinctive. That’s what we want for Hereford, because we want to use all the great advantages we have, to build - and then to grow - the Hereford brand.”

However, Betterton shares Hughes’s belief that change must not be so great that the city’s core qualities are lost.

“We all understand that we can not thrown out the bathwater and the baby, which is why we trimmed back the retail and leisure proposals. The public reflected nervousness about what might happen, and we agreed,” he admits.

“The need for change remains though. We can’t just put a glass dome over Hereford and freeze it in time like a museum exhibit. Even the cathedral is changing, with its £5 million plans to restore Cathedral Close, and the greatest of cities stagnate if they don’t evolve.”

At the heart of the massive regeneration programme sits Stanhope, whose retail and leisure scheme, on the 12.5 acres of the old livestock market, weighs in at £210 million.

Even for a developer of such status, it’s a significant scheme, especially during the fragile recovery from recession, and city centre opportunities of this scale are rare.

LEDBURY HEREFORDSHIRE

By Direction Of European Aviation Ltd Contact:

John Goodwin FRICS 01531 634648 / www.johngoodwin.co.uk

A LARGE INDUSTRIAL COMPLEX COMPRISING SIX PRINCIPAL BUILDINGS OFFERING IN TOTAL IN EXCESS OF 200,000 SQ FT (19,000 SQ M) OCCUPYING A SECURE AND WELL FENCED SITE OF APPROXIMATELY 7.2 ACRES. Offers based on

£6,000,000 (plus VAT)

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Hereford

Intriguingly, Stanhope director Charles Briscoe [right] says the scaling down of the development brief has made it easier to proceed, regardless of the changed market conditions.

“To be honest, we always felt 450,000 sq ft would be too much for one phase, but had those proposals gone ahead, we’d have needed the link road in, before we could have developed the site,” he admits.

“If we only have to bring 250,000 sq ft forward though, then because the traffic flow will be reduced, we can proceed regardless of what is happening to the link-road. We could also bring additional space forward in the future, probably another 75,000 sq ft, on the same site.”

Stanhope is currently talking to Waitrose, which is eyeing up 23,000 sq ft of the new scheme, several major department store brands - who would take 60,000 sq ft - and two multiplex operators, who would mop up another 30,000 sq ft.

“It’s not just about improving the day-time economy, we need to strengthen the city centre’s leisure offer in the evening, and at the moment, Hereford doesn’t even have a cinema,” says Briscoe.

“We expect to agree heads of terms for the food store, and the multiplex, by the end of March, and although the third anchor will take longer, we‘d expect to complete those discussions by the end of the second quarter.

“Once the anchors are signed up, we’ll only have about fifteen shops to let, which we think is very achievable in the present conditions. Our research shows that people are going regularly to Cardiff, Bristol and Birmingham to shop, and are spending less than two hours in Hereford when they do visit it, so clearly the present retail offer is too weak.”

Stanhope and its architectural consultants are presently finetuning their proposals, to ensure that the new space integrates with the existing stock.

“We listened to what the public said last year, and are now bringing more of the retail space to the southern edge of the site, so the scheme hugs the city centre. We are only five minutes from M&S, as it is a very compact centre,” says Briscoe.

“As to the ring-road, whether it goes east or west, it would be fantastic for the city if it went ahead. We’d love to see it happen, but we’re not expecting it in the short-term.”

Does he believe the tide of public opinion, as demonstrated by its most vociferous members, is now beginning to turn towards an acceptance of the need for change?

“I think opinion is beginning to move, because people can see we are taking a sensitive approach. We take vacant possession of the old livestock market in April 2011, and I’d like to think everything had been agreed and settled by then.”

Development Land and High Speed Broadband now available at Rotherwas Thanks to the Rotherwas Futures project, a £19m joint venture between Herefordshire Council and Advantage West Midlands, Rotherwas estate has become fully Wi-Fi enabled. Following an agreement with wireless broadband provider Airband Community Internet Ltd, businesses on Rotherwas estate will now be able to access high speed broadband, with 4Mb, 8Mb and 20Mb services available.

Construction of the new infrastructure in the Southern Magazine is also underway which will release 14 acres of land for development for B1, B2 and B8 uses in summer 2010. The new access road completed in June 2008 has given the estate quick and easy access to the A49, M50 and the rest of the motorway network.

Currently home to over 125 businesses employing 3,000 people, Rotherwas is largest and the most strategically important employment area in Herefordshire. Companies interested in moving to Herefordshire can contact the Economic Development Team on 01432 383337 or economicinvestment@herefordshire.gov.uk

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MIPIM

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Pub pred ben from long loya MIP

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blic sector edicts big nefits m its g-term alty to PIM The debate about MIPIM was polarised long ago; between those who see the Cannes event [left] as a champagne-fuelled jolly, and others who consider it the most important and productive time of their year.

Advantage West Midlands remains convinced of its merits, although - as in 2009 - its delegation for this month’s event (correct for March publication) will consist of just chief executive Mick Laverty, and director of development, Stuart Kirkwood.

“From our perspective, it is still the world’s number one property event,“ says the agency’s head of asset management, Steve Holland [far right].

“We’ve hired our apartment, as usual, which will be effectively run as a business lounge, for meetings, presentations, and more informal discussions. It really is very intense, when I looked at Mick and Stuart’s diaries, they barely have free time between breakfast and midnight.

“Historically, a lot of people from the private sector did see MIPIM as a jolly. It used to be part of many contracts, so if individuals hit their targets, they could go.

“However, recession has completely blown the froth off the event, and we saw in 2009 how business-focused it had become, and I know that a lot of people who didn’t go last year have changed their minds this time”.

A key attraction for AWM and other public sector bodies - is the chance to meet many of the world’s largest developers and investment institutions, and their advisers.

“Many events are at the Palais des Festivals, but much of the networking and the really valuable contact happens elsewhere. The key is finding out who is going, and where they will be,” says Holland.

“We work very closely with developers from the West Midlands, such as Alan Chatham and Gary Taylor, because they can usually get Mick and Stuart in front of the people they really want to meet.

MIPIM

“For us, MIPIM is all about making high-level contacts, for the long-term, and making everyone aware of our major strategic schemes, such as i54 and Ansty.”

Coventry MBC is equally wedded to attendance; supported by an array of developers and organisations from the private sector.

In 2009, the council managed its costs so effectively that its partners contributed a shade over £150,000, to the total expenditure of under £180,000, including hiring the front of the famous Hotel Majestic to promote the Coventry brand.

Martin Yardley [above], the council’s director of city development and city services, believes MIPIM remains the best place to tell the property world what is happening in, and around, Coventry.

“We have a lot of good news, relevant to developers, investment funds and potential end-users, such as the fact that we were able to process plans for three million sq ft of office space, in one application, in just twelve weeks,” he says.

Cannon Kirk’s £1.5 billion Friargate mixed-use scheme, which gained outline consent in January, will certainly attract attention, even in the hot-house atmosphere of MIPIM, and Yardley admits that taking such developers to Cannes is a key element of its strategy.

“This year, for example, we’ll have Stoford with us, partly so they can tell people how we got their application for the Severn Trent building through in less than eight weeks. Last year, we took MCD who were doing the QCA building,” he says.

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“We can certainly tell our story, but I think it has more credibility from third parties, and you can tell when the message is getting across. In 2009, Coventry University came, with just two pretty drawings, and now both schemes are on site. ”Again, last year we told people what was planned for Friargate. Now we can show that a massive office-led scheme will come forward, alongside a main train station less than an hour from London.”

The Coventry approach is not to focus simply on grand proposals, but to stress the level of current activity, and the council’s focus on delivery.

“Nothing says more then cranes on the ground, and we are always careful to talk about projects of £40m, and £50m, and £60m. It can’t all be about the major league stuff,” says Yardley.

“Equally, one of our key messages is connectivity.

Coventry isn’t joined-up at the moment, especially between the station and the centre, so we need to demonstrate that we have identified the challenges, and that we genuinely do embrace the need for change.”

ST MODWEN LEADING THE WAY IN REGENERATION ACROSS THE REGION The UK’s leading regeneration specialist, St.xModwen, is the force behind an extensive portfolio of major mixed-use projects across the UK. Of St. Modwen’s 5,000 acre UK land bank, over 1,500 acres is situated in the Midlands, including the £1 billion regeneration of the former MG Rover works at Longbridge.

Here, the new £66 million Bournville College is currently under construction, forming the first phase of a new town centre for Longbridge which is also likely to comprise a food store, retail units, hotel, car park, and the four acre Austin Park.

The vision for the 468-acre Longbridge site also includes 10,000 new jobs, and nearly 2,000 new homes.

St. Modwen’s Midlands region also extends to include the £50million redevelopment of Hednesford town centre in Cannock. This 10-acre retail led scheme includes an 80,000sq ft foodstore, for which St. Modwen secured an operator in 2009, together with 35,000sq ft of additional retail and community facilities.

CGI of Longbridge Town Centre.

At Long Marston in Stratford on Avon, St. Modwen is progressing with its vision for the Long Marston Masterplan after recently being granted planning permission by Stratford on Avon District Council.

Spanning a 478 acre former MOD site in Warwickshire, the Long Marston Masterplan is a £100 million leisure-led mixed use development.

In Stafford, St. Modwen has planning permission for the £55 million redevelopment of AREVA T&D. The comprehensive redevelopment of the 57 acre site will provide over 335,000 sq ft of offices, research labs, design centres and test facilities. The existing Sports and Social Club will be refurbished, with the balance of the site, extending to around 20 acres, brought forward for a sustainable residential development.

John Dodds, regional director for St. Modwen in the Midlands, said: “With expertise in town centre regeneration, partnering with industry, brownfield land renewal, Innovation Centres and education projects, St.

Modwen is well placed to deliver complex redevelopment schemes. We continue to work closely with Local Authorities and development partners, including Regional Development Agencies, which appreciate the fundamental importance of regeneration.”

The neighbouring North Staffordshire region is also a key area for St. Modwen.

Based in Stoke-on-Trent, the North Staffordshire office was established 21 years ago and has since provided over £650 million of value for the region via commercial and residential development, creating developments providing over 11,000 jobs.

In the region St. Modwen has a reputation for delivering office and industrial/ distribution buildings, bespoke to requirements, in strategic locations. Major projects

range from the popular tourist attraction the Trentham Estate to leading business park locations including Festival Park, Etruria Valley and Trentham Lakes which together with its other projects in the region, have collectively provided over 3.7 million sq ft of retail and business accommodation.

Mike Herbert, regional director for St. Modwen in North Staffordshire, said: “Long term, St. Modwen has a sound business model which secures rental income from over 1,600 tenants across a diverse UK portfolio. The business operates a ‘hopper’ system, which has proven successful in ensuring there is a consistent land bank to draw upon, in turn securing a development pipeline for the future mixed use projects.”

www.stmodwen.co.uk

Largest new build office building in Stoke-on-Trent for occupier Vodafone UK at Etruria Valley Business Park.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Local Government

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Birmingham’s Big City Plan takes on a whole new dimension

Birmingham’s Big City Plan is about to enter a new phase; even before the city council’s regeneration director Clive Dutton is replaced.

The debate about the time taken to identify potential successors, for the individual seen as the ambitious plan’s architect has rumbled on since last summer.

However, with no appointment yet in sight, it has been decided that proposals for the massive programme, conceived to regenerate 2,000 acres of the city centre over the next 20 years, need to move towards the delivery phase.

The council’s assistant director, Waheed Nazir [right], is now driving the project forward, with council leader Mike Whitby.

Nazir hopes that by late summer, proposals for the next phase will be sufficiently advanced to go out to earlystage consultation, including formal definition of the boundaries of key strategic elements such as the Southern Gateway.

“It was always intended that Professor Michael Parkinson would identify a series of key themes for regeneration inside the middle ring-road, and that a consortium of urban thinkers, designers, architects and others would then flesh out his vision,” he recalls.

“However, it was originally thought that we would issue a new development prospectus in April 2010, which would formally identify key sites, and highlight opportunities. A core strategy would then be unveiled in July, which would be a substantive policy document.

“However, since December, we have been considering bringing forward a formal development framework - which would be a strategic policy document - in the summer and that is my preferred option.”

Nazir is convinced the strategic shift will be appreciated by the development community,

by offering the certainty its members require, particularly against a backdrop of fragile recovery from recession, and the political uncertainty caused by a general election.

“We have moved from the phase which was about having a vision, and then considering what aspirations we had for Birmingham. Now we are moving onto the substance, which will underpin the vision, and deliver those aspirations,” he says.

“We will define what we expect to see coming forward on our legacy sites, such as Paradise Circus and the wholesale markets in Digbeth, and put each site into a citywide strategic context.

“The BCP’s early stages created a forum for debate, but now we have to move into the delivery phase, and to provide more detail, and more certainty, for the development community, and our other partners.

“We recognise that we need to have a spatial dimension, and a single masterplan, whereas the original concept of the plan preferred to have separate prospectuses for different issues.”

The plan will also evolve to include such elements as infrastructure, economic development, employment and even the city’s skills agenda.

“Transport issues are absolutely critical to Birmingham’s economic fortunes, and we want to include such issues as the New St Gateway, HS2, the proposed Midland Metro extension, and the

runway proposal at Birmingham International Airport in the master plan,” says Nazir.

“Connectivity between different development sites, and between (for example) the city centre and the Jewellery Quarter, are equally important, as is the debate about increased pedestrianisation.

“We are also working closely with Argent’s Gary Taylor and the Broad Street BID team, to ensure that we can help deliver their aspirations, with regard to transport links, signage and improved public realm.”

Much has been made of the departure of Dutton, but whilst Nazir regrets his departure at both personal and professional level, he believes the timing was right.

“No-one could criticise Clive

for the tremendous work he did on the plan‘s concept, and raising its profile; in the UK, in Europe, and, of course, in China.

He worked harder to bring the programme forward than anyone, except perhaps Mike Whitby,“ says Nazir.

“However, it’s also true that different people suit different times. Clive had tremendous aspirations for Birmingham, but wasn’t really into the fine detail, as I‘m sure he would admit. There are times for visionaries, and times for those with a more practical and pragmatic approach.

“The recession, and its huge impact on the property markets, also meant that even had Clive stayed, his vision for the plan would have required finetuning. You can’t spend three years preparing a document to inform, guide and deliver city centre regeneration, when the market dynamics change in twelve months.”

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Black Country

Site works start at Neptune scheme as dev co eyes up canalside options

Wolverhampton has long been a market where too little has come forward, in any sector, so February’s report, from BNP Paribas Real Estate, that it had more empty shops than any other major retail location was no surprise.

Since the Irish investors who had promised £150 million walked away from Multi-Dev’s long-delayed £300 million Summer Row scheme, the plight of the city centre has been painfully evident, with boardedup shop fronts and tatty signage commonplace.

However, despite the gloomy analysis, there are positive signs; particularly regarding the city‘s two other largest schemes, Advantage West Midlands‘ i54,and Neptune Developments’ transport interchange.

The former would see 220 expensively remediated acres, close to the M54, developed as a technology park, which could ultimately house 6,000 people.

There remains no official sign that a preferred development partner has been chosen, although the city council was in advanced talks with four companies during 2009, and a decision was expected by Christmas.

However, it would be no surprise if Advantage West Midlands chose to announce the successful applicant during MIPIM; given the scheme‘s long gestation period, and perceptions that progress has stalled.

Neptune’s £174m scheme would create new bus and train stations, alongside serious chunks of Grade A office space, plus retail and leisure units, and a grand new public square.

The developer’s managing director, Steve Parry, admits that the original approach has been reversed, because of the global financial crisis.

“Initially, of course, we planned to begin with the train station, but when funding dried up, and the market changed, we had to start with the bus station, and thanks to the Department of Transport’s grant of £13m, we expect to start on site for the main works this month,” he says.

“Phase one also includes a lot of infrastructure for phase two, and there will be a small commercial building, with retail and offices above, of 12,000 or 13,000 sq ft. It’s only a dot on the landscape, but does enable us to create the plots on the side of the bus station.”

Neptune’s second phase will differ from the original proposals though. “It was proving a very complex process, largely because of all the different people and organisations involved, so we decided towards the end of 2009 to put the designs for the next phase on ice,” admits Parry.

“We’re now reviewing everything, as although we want to bring forward the same amount of space, it is clear that public sector funding will be scaled back, and both National Rail and Virgin Trains are not yet 100% clear about what they require.

“However, we still believe that Wolverhampton needs this development. It has the people and the catchment area, but now it needs product to put on the market, whilst many other places are suffering from over-supply.”

There’s a similar feel, of optimism tinged by caution, from Stephen Catchpole, the chief executive of Wolverhampton Development Company (WDC).

“Now the consent has been changed for i54, I think phase one is pitched at a level which is attractive, and the £11 million package of road improvements can go ahead,” he says.

“Once people realise that the surrounding infrastructure is being improved, it will make the location more attractive, as the infrastructure on the site is already very good. ”Neptune are proceeding with the bus station, and I’d expect them to get an outline

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application in for phase two, to the city council later this year.”

The original Neptune proposals envisaged 250,000 sq ft of Grade A, and with no suggestion that it is being scaled back to reflect the new economic realities, it remains an eye-opening amount for such a small market, although Catchpole remains confident.

“It is significant, judged by the level of office space in Wolverhampton, but transport hubs do tend to become destinations, and do stimulate interest from office occupiers who would otherwise not have considered that particular location,” he suggests.

“It’s almost like adding extra capacity to the motorway system.

Whatever the logic, or the data, about traffic flow, new roads do generate more traffic, and new transport locations do generate increased office activity.”

Is there a danger though, that in a few years, Wolverhampton’s sharply expanded office market will be competing head-on with similar new space coming on stream, just across the M6, in Walsall, where equally significant town centre regeneration is planned?

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Black Country

19

“I don’t think so, except at the most basic level, in that a potential occupier might consider both locations. It’s more about building up the availability of Grade A space, across the western side of the West Midlands, to ensure we have a wider range of office options than at present,” says Catchpole. ”We’re getting very positive feedback from companies in the area, because traditionally, the office market here has been based on either refurbished space, or new space on business parks, so there has been a real shortage of quality product in the city centre. ”It is very difficult to pick companies which will be winners, you have to make your locations more attractive, so they choose you. We’re always working hard to understand the companies that are here, and to encourage them to grow, and I think the interchange will help significantly.“ Elsewhere in the city centre, WDC has an option to acquire the Fox Hotel site, is looking to attract a developer to take the land on for a mixed-use scheme,

and - although gap funding would surely be required to bring space forward - it‘s likely that progress will be made during the second quarter.

Of course, there’s often uncertainty in the private sector about how such public sector regeneration companies fit into the development process, but Catchpole is bullish about his organisation’s relevance.

“If we look at our city centre strategy, which is detailed in our 2009-2010 business plan, we don’t take a Stalinist approach to planning. We prefer to give investors, landowners and potential occupiers, clear indication of what we would like to see come forward, but always with a little flexibility.

“For example, at the moment we have asked Colliers CRE to carry out a canalside study, roughly covering the area between Carvers DIY shed and the Neptune scheme, to see what uses would best suit that land, but we will still be open to suggestions.

“The Low Level Station is another important site, which has been helped by a very

good refurbishment, but of course the casino operator which was earmarked for there has pulled out. Again, if someone approached us with an innovative proposal, we would certainly consider it.”

It’ll certainly be interesting to see what Colliers might suggest for the sprawling canalside land, across the train tracks from the stalled Springfield Brewery resi scheme, and within sight of the new interchange.

The agency’s team is led by planning director, Patrick Clifton [right], with assistance from transport specialists MVA Consultancy, and urban planners, Townscape Solutions.

“There was a proposal for a canalside quarter in 2000, when it was seen as critical to the area’s regeneration. We are now reviewing the systems that were established, looking at the various locations, and reviewing the original approach,” says Clifton.

“We’ll also be studying the planning process which was created, seeing how the changes in the financial markets might have affected the development

proposals, and talking to relevant landholders, such as Taylor Wimpey, Wolverhampton University and Neptune.”

Clifton expects to present his initial report to WDC very shortly, containing draft proposals, and to then complete the final ‘Wolverhampton Canalside Quarter Delivery Plan’ by the end of the month.

The research will then be fed into the city’s area action plan, to become part of Wolverhampton’s local development framework.

Unique and dynamic business opportunities in Sandwell at 3 months notice subject to all rent being paid to date and the unit being handed back to the Council in a condition that meets with the satisfaction of Corporate Corporate Property Division Property’s representative. undertakes financial and non Units may be used for any financial management of a purpose within B1, B2 & B8 of defined investment portfolio the Town and Country Planning of land and premises leased Act (Use Classes) Order, 1987 by and to the council and also (as amended). Uses for motor undertakes management vehicle repairs, motor vehicle of defined portfolio(s) of breaking, tyre fitting and land and premises held for repairs, valeting, taxi services specific schemes or pending are not permitted or any other redevelopment/reallocation. use that may be deemed Corporate Property has inappropriate. a number of industrial units Shop premises are available and shop premises currently on a 5 year internal repairing available to rent across the lease and are available for uses borough. All units are available from A1-A5 subject to obtaining on a 3 year full repairing lease basis and range in size from 646 any planning permission deemed necessary. to 2500 sq ft.

Working in conjunction with Additionally, industrial leases Economic Development Services contain a three month break we can also provide access to option. This gives the tenant the opportunity to terminate the lease a range of business support “To optimise the use of land & property to benefit the Sandwell Commununity”

services to both established and new starts through the Council’s dedicated Business Engagement Team. These include :• General business support and advice; • Recruitment support; • Training support; • Access to both public and private sector procurement opportunities through Find It In Sandwell; • Access to business start up grants to a maximum of £1500.

The service provided by

Corporate Property Division and Economic Development Services is both unique and dynamic and provides a comprehensive package for established businesses wishing to relocate within Sandwell or to stimulate new business development within the Borough.

For further advice on the availability of industrial units and shops call 0121 569 3923 or for advice on the support available for your business call 0121 569 2101.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

20

Advertisement Feature: Mucklow

Last chance at flagship Yorks Park & Wednesbury One

Now is the last chance to snap up prime industrial and warehousing units in the Black Country by Midlands property developer and investor Mucklow.

Agents are marketing Unit 1, the last remaining unit totalling 23,104 sq ft (2,146 sq m) at Mucklow’s £11.6million flagship industrial and warehousing Yorks Park development near Dudley.

The 12-acre (4.9 hectares) site

on Blowers Green Road has been transformed into a prominent commercial park providing a total of 171,000 sq ft of high quality commercial space for light manufacturing, storage and distribution companies.

Companies already at Yorks Park include industrial products and services company ERIKS, international engineering specialist Revolvo Precision Products (ERIK’s bearings division) and Lathams Ltd - part of leading UK timber and panel products distributor James Latham plc and leading

European steel specialist Ovako.

Mucklow development director Jesse Stokes said: “This is a flagship site for Dudley being close to the Dudley by-pass. Yorks Park presents a real opportunity for occupiers looking for high quality, modern employment accommodation particularly in manufacturing and distribution sectors.”

Yorks Park has excellent links to the motorway network and is next to a proposed stop on the Midland Metro extension route.

Joint agents Bulleys (Oldbury)

and BNP Paribas Real Estate are marketing the scheme with rents of £5.00 per sq ft being quoted.

Meanwhile in Wednesbury, the last unit of 20,015 sq ft (1,859 sq m) is being marketed at Mucklow’s Wednesbury One development on Black Country New Road.

Unit 6 benefits from 5 per cent office content, a self-contained yard and rapid access to J1 of the M5 and J9 of the M6.

Mr Stokes added: “Wednesbury One is one of Sandwell’s most prominent commercial parks. Demand for prime, well located sites close to main arterial routes is growing in the Black Country and we aim to provide the right quality physical business infrastructure to industrial sectors.”

Joint agents Bulleys and Jarvie Bedhall are quoting rents of £5.35 per sq ft.

For press enquiries, please contact: Juliet Betterton, betterpr, tel: 01527 881965, fax: 01527 881985, email: juliet@betterpr.co.uk

An exciting new decade dawns for

Wolverhampton Working in partnership with the city’s urban regeneration company WDC, regional development agency Advantage West Midlands and private sector partners, Wolverhampton City Council aims to create a city of regional, national and international significance, by increasing the pace, scale and quality of development across the city.

Despite the economic slowdown, Wolverhampton still looks on course for a much more prosperous future. Investment interest in Wolverhampton remains patently strong and 2010 is shaping up to be a pivotal year in the city’s transformation into a successful 21st century city.

The Wolverhampton interchange will be the city’s transport hub - a showcase facility where road, rail, bus and Metro services come together in a single city centre location. Historic links between the city centre and the train and bus stations will be maintained and enhanced with a new footbridge built over the ring road.

Neptune Developments Ltd, the Council’s development partner has secured consent for Phase 1 of the scheme - the creation of a new ‘state of the art’ bus station - bringing significantly improved facilities for passengers and new commercial space. The development value of this phase amounts to £22m.

The plans for Phase 2, which will deliver the improved railway station and significant further commercial space, are now being worked on by the partners, with a view to making an application for planning consent in 2010.

Progress on i54, the technology park adjoining the M54 has also been made. South Staffordshire Council recently approved Advantage West Midlands’ application to vary the current planning consent for this flagship development site enabling developments of up to 50,000 sq ms as part of the first phase.

This should make i54 more attractive to developers, investors and tenants and will offer opportunities of sufficient size to companies wishing to locate on i54.

Advantage West Midlands, Wolverhampton City and South Staffordshire councils have now begun putting together an estimated £11 million transport package to minimise the traffic impact of a larger Phase 1.

The Bilston Urban Village site lies just off the Black Country Route in Wolverhampton. This flagship multi-million pound scheme is one of the largest regeneration projects in the Black Country and will create around 350 jobs during the construction phase and almost 750 jobs once the scheme is completed.

The urban village will incorporate the creation of around 900 new homes, brand new leisure facilities, a brand new primary and community care centre, the creation of employment opportunities, public open space, new roads and parking and some local shops. It will also be the site for a new building for the South Wolverhampton and Bilston Academy, provided as part of the Council’s Building Schools for the future (BSF) programme.

Planning for success. The Wolverhampton Development Company has commissioned a range of essential research including a commercial study for the city centre. This is intended to identify opportunities for commercial development/mixed use schemes in the city centre and to assist the city in meeting the challenging growth targets set out in the recently published draft Joint Core Strategy.

The agent, Colliers, has been appointed by WDC and the City Council to provide a detailed plan for the canalside area. Due to its close proximity to the facilities within the city centre and its attractive waterside location, this area has been identified by developers and investors as an ideal location for residential development.

Important planning consents were also obtained for developments at the northern end of Stafford Road for the CityGate and Treetops schemes, which will provide new hotel, office and industrial space.

A new bus station is a core element of Interchange Phase 1

The proposed business park at Treetops will create quality office space

For more information about regeneration & enterprise in Wolverhampton contact: Steve Boyes on 01902 555400 or visit www.wolverhamptoncity.co.uk

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Sustainability

New energy scheme set for launch as Masshouse complex gets lift-off

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The government’s renewable energy strategy has limped from disappointment to setback throughout its term in office, so perhaps it’s time someone from Whitehall took the train to New Street to see what’s happening in Birmingham.

The network of Combined Heat & Power (CHP) plants established by the city council, in a jv with Utilicom, certainly deserves close examination.

The latest ‘engine’, at Aston University, went live in late-2009, is now on course to save 4,400 tonnes of CO2 in its first year, and will ultimately supply lowcarbon energy to both Eastside and Masshouse.

A Green New Deal pilot scheme - devised to help up to 25,000 residents of Aston, Lozells, Newtown and Northfield retrofit their homes with new boilers, solar panels and insulation over the next five years - was launched in February, Now, the Birmingham Environment Partnership (BEP), a broad church of public, private and voluntary sector organisations, is about to unveil its latest contribution to the sustainable agenda.

Its manager, Keith Budden [below], has been waiting for the government to introduce a legislative framework for its feedin tariffs programme, and the Energy Act finally reaches the statute book in April.

As the fifth major chunk of energy legislation in barely a decade, it is inevitably complex, although the feed-in concept is deceptively simple.

“Essentially, it is about giving certainty to residents, property landlords, developers and anyone else with an interest in renewable energy,” says Budden.

“If you install equipment to generate green energy, you will now receive a guaranteed income per kilowatt, for the next 25 years, which works out at a return on investment (ROI) of 7%.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Sustainability

“We think that’s a very attractive rate, as it does not require you to sell your electricity.

You can keep your basic return for the long-term, and then either use the energy you have created, or sell it to get a higher ROI.” The aim is to increase micro-generation, so the return from equipment with a 1KW peak is higher than from one offering 10KW. “It’s a fundamental shift in approach, based on what has happened very successfully in Germany and Spain,” says Budden. “It’s perhaps more of an incentive to propertyowners, rather than developers, but I’m sure everyone in the property community will appreciate the change.”

Once the Act becomes law, owners of buildings - large or small - will also be able to rent, or loan, their roof-space to people wishing to install energygenerating equipment.

“There’s obviously no point putting photo-voltaic panels on your roof, if you haven’t already upgraded your loft insulation, but we could see the kit going up on

major public buildings in the city centre,” admits Budden.

“There is nothing new about setting up very sizeable arrays of photo-voltaic panels. Our own Alexander Stadium still has the largest number of panels on any public building in the UK, although it has been there for so long, it isn’t often mentioned.

“We’re working on how to offer incentives for the feed-in tariffs programme at the moment, and another real benefit will be working on more collaborative procurement programmes.”

The size of the council gives it enormous scope for bulk buying, and it is now opening discussions with companies who manufacture, and install, energygeneration equipment, to give confidence to an emerging market sector.

“It‘s too early to say if we might move forward via a joint venture, but clearly the more we can bring the price of kit down, the more people should be interesting in installing it,” says Budden.

He expects BEP to be ready to formally unveil its feed-in tariffs initiative in mid-summer, once his team is comfortable with the technologies involved, and has devised a programme of incentives.

The Green New Deal aims to reduce the £1.5 billion a year

cost of gas and electricity which ’leaks’ from Birmingham.

The scheme will also create, or protect, some 110 jobs and 170 apprenticeships, thanks to a contribution of almost £1.2 million from BeBirmingham, through the Working Neighbourhoods Fund.

Councillor Paul Tilsley, the council’s deputy leader - who has also driven forward the CHP project - believes home-owners will see the merit of slashing their future energy bills, without having to make significant upfront payments.

“Domestic properties account for a third of Birmingham’s carbon pollution, and another 46% comes from

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commercial properties, so the New Deal really is a central element of our CO2 reduction strategy,” he says.

His Cabinet colleague, Coun. John Lines, is equally convinced that people will be attracted by the combination of government grants and subsidies, and the lower equipment prices made possible by the council’s bulk purchasing.

“It’s a programme to improve the environment, eradicate fuel poverty and it will enhance the health and well-being of

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Sustainability

everyone who signs up. Even people not eligible for grants can pay back the cost of improvements from the savings they make on energy bills.”

If the New Deal targets energy savings on a domestic scale, the city’s CHP network will also provide low-carbon energy for Birmigham’s grandest and newest buildings.

The latest major scheme to go ahead in the city centre, the £80m magistrates courts complex designed by Australian architects Denton Corker Marshall (DCM), will be hooked up to Aston University’s engine, when it opens in 2012.

DCM’s London director, Stephen Quinlan, was in town recently, for an event hosted

by Bruntwood at its McLaren Building - close to where the 15-storey courts complex will be built at Masshouse.

It’s 20 years since the practice opened in London, and Quinlan recalled that refurbishing the McLaren, for Midland Bank in 1992, had been its first UK project.

Its first major public building - the new Manchester Civil Justice Centre - took rather longer, opening in late-2007, although its success did persuade Her Majesty’s Courts Service (HMCS) to use DCM for the Birmingham scheme.

“Wherever we are working, making sure our designs are sensitive to the local place is something we are very keen to achieve,” says Quinlan.

“We prefer to create something which is relatively simple, then to dress it up, and to create quality public realm.

“Often we you see what a building should look like, it doesn’t end up the same way, but we have a reputation for delivering schemes which have

26

an appearance and a finish just like the CGi.” Quinlan conceded that the designs for Manchester and Birmingham were challenging, given that courts by their operational nature are built as square boxes, but said DCM had used a ’cloak of curves’ for both schemes to create a sleek exterior, of aluminium and glass.

“The Birmingham building will have a much more efficient thermal skin than Manchester, and will be a sealed building, with no natural ventilation,” he added.

Quinlan said the HMCS approval process had six stages, and suggested that the Masshouse project was running somewhere between the fourth and the fifth.

“We expect everything to be signed off by the end of March, and the building should be ready for occupation during 2012.”

Sustainability is a key element of all DCM’s work - whether the proposed visitor centre for Stonehenge, or the new British Embassy in the Philippines - and Quinlan’s host is wedded to the same philosophy.

Bruntwood chief executive Chris Oglesby’s strategy is to identify under-valued assets, either in prime locations or offpitch, and to then given them a serious refurb.

The McLaren Building [below] typifies the Manchester-based developer’s approach, having enjoyed a much-needed renovation programme inside and out, costing some £7 million, which has left its 60,000 sq ft of space fit to stand alongside the Masshouse scheme.

Oglesby was determined to get a proper feel for the city centre during his visit, and - despite the attractions of a game at Villa Park - ran five miles through the evening gloom, with two colleagues.

“We can see plenty of opportunities here, there are some excellent products and public realm. One of the

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

biggest challenges will be to join everything up,” he says.

In common with DCM’s Quinlan, Oglesby [right] believes in creating a sense of place, linking schemes to their environment.

“We always do a lot of retrofitting of public realm. There’s no point spending millions refurbishing a building, then leaving the surrounding area as it was,” he says.

Bruntwood missed out on one of its earlier Birmingham targets, when it was the under-bidder on Alpha Tower, and Oglesby is determined that 2010 will see his company expand its portfolio in Birmingham, Leeds and Liverpool, having made no acquisitions during the previous two years.

“We’re a strategic business in one sense, but we’re also opportunists,” he admits. “When rents were so high in Birmingham, property values were too high for us. We looked at two or three possibilities here, but pulled back.

Now rents are off a bit, there are more opportunities here.

“We kept within our banking covenants during our last financial year, and still have significant

undrawn capital. We have done new-build, but the advantage of refurbs is the speed with which they can be brought forward, probably one year, against four or more for new schemes. ”There was as much bad architecture in the 80s and 90s, as in the 60s and 70s, so there are lots of opportunities. It is also much more sustainable to refurbish existing stock, given the amount of embedded carbon in a building’s frame.”

With capital available, and a desire to spend it, the Bruntwood boss admits he would be “very disappointed” if he couldn’t do a deal in Birmingham during 2010.

Sustainability

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Sustainability

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Walsh guides RICS through the sustainable maze

As the ‘climategate’ e-mail scandal revealed, debates about global warming, the merits of different energy strategies, and environmental change are intense and complex.

As public policy manager for the RICS in the West Midlands, Debbie Walsh [right] is tasked with deciding what elements should be pursued and which need more analysis, from the non-starters, which is clearly no easy matter.

“The sustainable agenda is obviously crucial to all our members, in different ways, but the first thing you must always decide is what is appropriate,” she says.

“On alternative energies, for example. If a developer wanted to add a generator to a scheme, should they make it a standalone, or link it into a CHP plant, or into a district heating system?

“Such questions are particularly relevant in urban settings, where you can often link different sites. For example, hospitals burn energy, but they also generate massive amounts of waste, which could - for example - be used to heat nearby swimming pools.

“In towns and cities, the suppliers and users of energy are often close by, but in rural areas you would need a different approach. A developer might work with small businesses, collecting organic waste matter from households or farms.”

Even once there is agreement about the use of a particular energy source, Walsh counsels that the fine detail of plans must always be considered.

“Wind turbines sound fine, but you need speed at a certain level, and the supply of wind needs to be sustainable. You also don’t want a residential scheme where you could see a host of little turbines on every roof,” she says.

“Many people are attracted to solar power, but is the building facing in the optimum direction, and can you generate enough energy for pay-back? For newbuild residential schemes, the challenges are significant.

“You can install all the latest energy-efficient technologies you can find in a house, but how do you recognise the value of what you have done, and more importantly, how do you change the mindset of potential buyers, so they are willing to pay for those features?”

Walsh sympathises with builders and developers wishing to think green, but whose margins are already squeezed waferthin by the recession, and the collapse of the housing market.

“Energy certificates for all commercial properties are certainly useful, but in the wider sense, how far along the route of energy efficiency should people go,?” she asks.

“Realistically, you would have to agree to build to Code Level 3, if not to Level 4, to get consent from planning authorities, but if you were investing so much in the properties, could you guarantee a reasonable return at the moment?”

Many observers believe incentives would help persuade buyers to pay the premium for an ultra-efficient new home, or even one which has been retro-fitted, but Walsh isn’t convinced.

“The biggest problem is that so much of the technology involved in generating

alternative energies is still emerging, and still evolving in terms of efficiency. Do you incentivise someone now, when they might well adopt equipment which will be outdated in five years,?” she asks.

“I hear the arguments in favour of incentives, but my preference is for tax breaks, or allowances. I think it makes more sense to allow someone to choose what kit they wish to install, rather than pushing them towards a very specific solution.

“Otherwise, they could be persuaded to adopt very new technology, which might then fail to evolve, and in two years, they’ll find that it is already obsolete, and no-one is manufacturing spare parts. ”I think, especially on design and build schemes, that people should go for bespoke systems, and not just install a standard system, as it may not be optimal for their needs.”

Sustainability debates can often seem to be taking place close to the real world, but not quite in it, and Walsh believes the bottom-line must always be key.

“Whether you are a developer, a home-owner, or someone looking to buy a house, or to rent a building, you must always factor in the genuine cost of all the energyefficient and energy-generating devices,” says Walsh.

“Wanting to help save the environment, by using sustainable energy, is an idea we accept readily at the intellectual level, but if you can’t afford to pay for the new systems, or to run them efficiently, it does not make sense.”

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Advertisement Feature: Warwickshire Investment Parttnership

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Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Point of View

Public sector must take up the slack to drive regeneration plans forward

By Nick Green.

Head of real estate, and head of Hammonds’ Birmingham office.

One of the most important issues for the property industry during this year, will be the shifting relationship between the public and private sectors.

For the last ten years and more, the regeneration of many urban centres - Birmingham, Stoke and Wolverhampton come to mind locally - has been driven by massive investment from the public sector.

The challenge over the next two to five years will be to see if – and how - the same level of funding can be achieved, given the enormous and increasing pressure on the public purse.

It will also be interesting to see how regional development agencies, if they survive in their current form, and the Homes and Communities Agency deal with the same challenges, and if local authorities can step up to the plate, to deliver their regeneration programmes, despite government‘s determination to cut the PSBR. From the perspective of the private sector, I do wonder where the new buildings will come from though.

Yes, the market is undoubtedly easing, and the

funds are starting to come back in, but you wonder what will happen to developers who have, over the years, built their business model upon the assumption that bank finance will always be available, and at an acceptable cost.

Obviously, there is no speculative development taking place in any sector, although two hotel projects I’ve been involved in have recently been ’unlocked‘, because they are being supported by funds.

However, there are still many schemes, which need perhaps £20 million or £30 million behind them, which remain stalled.

Without wishing to talk up the market, there is certainly a gentle upward movement, evidenced both by the increasing number of people at property auctions, and

the number who are starting to look at coming back in to the market.

We’re also starting to hear more optimism, even in the residential sector.

One client suggested recently that he might be able to ‘make a turn’ on a scheme, and those words haven’t been heard for eighteen months or so.

There has also been increased interest in refinancing schemes, particularly by funds from Germany and Canada, and you can certainly see the value in UK property for overseas investors, given the state of our property markets, and the currency movements.

Whilst it’s true though, that we are seeing people dusting themselves off, and wanting to talk about schemes and projects, which hasn’t happened for at least a year, the next phase of the upturn will come when we see commercial developments coming forward.

In terms of our business, we‘ve had a tough time, reflecting the downturn in the market, but I know we have been less scathed than many of our competitors.

Public sector regeneration has always been a major activity

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for us, with RDAs, and councils, and such bodies as the HCA, and we’re on the panel again for Birmingham City Council, which has been a long-term client.

Whatever happens in the wider market, I would expect the really big public sectorled regeneration schemes, such as Icknield Port Loop, to remain mothballed for quite some time, as even though the development balance will swing back towards the private sector, there just won’t be the funds available for such projects.

The major one-off schemes, which will have complex issues about CPOs, will always be the last out of the blocks, even when the recovery is fully underway.

One impact of the recession has been that many more people are interested in finance, in how the FT-SE works, and even to the point of having casual conversations about the latest LIBOR, and I hope that stands the economy in good stead for the future.

Traditionally, especially during boom times, markets have taken off, and too few people were interested in what was happening, and why, because they only thought about the potential for making a quick profit.

I think it can only be a good thing if a wider understanding develops about the relationship between business and property and finance, as too many had their fingers burned in markets they didn’t really take time to understand.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Advertisement Feature: Birmingham Research Park

Birmingham Research Park ––– A Centre for Clinical Trials

SYNEXUS is one of the largest multinational companies in the world who focus on the recruitment and running of clinical trials.

They have a range of dedicated research centres both nationally and internationally. One of which is located at Birmingham Research Park.

Birmingham is emerging as one of the major centres for conducting clinical trials in Europe so it’s no accident that Synexus are located here. The West Midlands region offers access to almost 1 million patents from an extremely wide range of ethnic backgrounds, which is very important when conducting clinical trials. Add to this one of the largest Hospitals in the UK and the highly rated University of Birmingham Medical School, which is on the doorstep of the research park and you

have a recipe for success.

In this environment managing growth is one of the key challenges for the business. As Mike Chevins (Site Director) points out “In the last 2 years Synexus has been able to expand and increase its space by circa 50%. This has been

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made possible by the flexibility of Birmingham Research Park (Ltd).

As a result we have been able to increase our working hours, bring in new equipment and expand our services. The impact on our business has been that we have been able to contact nearly half a million prospective patients in the last twelve months and talk to nearly 15,000 of these people.

We have then run bone density scans on nearly 3000 women to ascertain their propensity to osteoporosis”.

Birmingham Research Park offers a range of space and services to growing businesses, increasingly in the field of medical research and technology. As Mike says “It’s also a great environment in which to work.

The relationship with Birmingham Research Park staff and the way they help us is wonderful.”

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Finance

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Caution remains the watch-word as markets begin to edge upward

By Ian Martin Regional Head of Property Finance at Lloyds TSB We are now well over a year through recession. Finance, and the lack of it, no doubt had a part to play, although it appears from this side of the fence to sometimes have been blamed for all our property woes.

Finance into property has been very difficult to obtain in the last 18 months, as property values plunged, and funding institutions found their capital base working harder to support increased risk.

Now the market for property finance is showing signs of recovery, but have the lenders and the borrowers changed?

A return to more normal levels of activity will be fully achieved, only by a return to normal credit circulation, where borrowers repay debts, leaving capital available to lend again.

This is happening to some extent. Improvement in values are allowing borrowers to sell some assets that have breached Loan-to-Value covenants, and still return some equity to support new acquisitions, or other existing investments.

Some institutions are spotting that low values represent low risk, and also the lending commitments made which affect ourselves at Lloyds TSB. The market is not yet perfect, but there are opportunities to fund

property, at sensible levels of gearing and price.

Good news for borrowers is the lower cost of funds, as well as the increased availability from select sources. Margins are still influenced by the levels of risk, and availability of credit though, and are much higher than the standard 1-1.25% of two years ago.

I attended a King Sturge presentation recently where the current margin was put at 250 to 300 basis points, but loanto-value, and the quality and longevity of income flow, will mean finance around the 250 bps is more normal going forward.

Rates at 300 bps are more likely to apply to higher-risk profiles, and those that are already financed, rather than new propositions which could struggle to find funding.

Much of the reason for increased margins is because the global finance markets have restricted the availability of finance to the lenders.

There has also been a collapse in the commercial mortgage-backed securities market, and a requirement to hold more capital. as risk increased due to falling values of loan security, and because of increased regulation.

It has not been a great time for those seeking property finance, but many of those issues are being addressed. We should also remember that the cost of funds is still historically low, with base rate still at 50 bps and the LIBOR not far above that, the recent mis-match is almost eradicated.

With a five-year SWAP at c.310 bps today, then it is certainly possible that a good investment can be bought, and funded, off significantly less than 6% interest.

With many prime properties in regional cities trading at just over 6% yield, then this positive gap assists investors to increase

overall return on investments, and fund some level of loan amortization. The latter is normal now, as opposed to the more common interest-only structures at the height of the market.

Although we could consider quality investment property at a 70-75% loan-tovalue, there is little need to offer (and therefore price the risk) to match that level, with borrowers largely adopting more conservative loan-tovalue parameters for new acquisitions. It would appear that it is not only the lenders that have become cautious.

All of this must be frustrating for those entrepreneurial companies that require high gearing, but have excellent propositions.

There are opportunities to fund developments with strong pre-lets, however this frequently involves gearing against the future investment value - unlikely in the new world, as lenders like to see sizeable equity injected into a scheme to reduce the risk.

However, the gap between available equity and senior debt may well soon be filled with organisations offering mezzanine funding, although at the moment its cost seems to make schemes unviable.

With yields decreasing, or more likely now stable, the main worry is rental falls.

Stability and length of income is a primary concern, with general acceptance that values will rise.

The market looks good, with sufficient gap between funding costs and yield to account for risk, although concerns over income account for the improvement in prime asset fundability, and the lag of secondary assets.

The availability of debt may itself play some part in influencing the value differential, as debt purchasers are all but eliminated from the secondary market.

So, the property market is finally looking up.

Finance is more available, borrowers’ caution is in line with the lenders, and funding costs even on a fixed basis for the short to medium term - make property investment profitable, with the right risk premium.

Provided that interest rates do not increase dramatically (unlikely), yields do not compress, so that they are out of kilter with risk and finance costs (hopefully unlikely), then we should see a slow but sure and continuing improvement, encompassing both prime and secondary property.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Skills

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BDC boss puts MET student on the right road

The MET Academy is the business and enterprise arm of Birmingham Metropolitan College, and the only official UK academy to offer such skills.

It aims to provide talented young people with the entrepreneurial skills to succeed, and one of its students, Larissa Hyllam, was eager to learn more about the property community.

PropertyAdvantage brought her together with one of its most successful members,

Birmingham Development Company’s Alan Chatham.

Larissa: How did you get into property development?

Alan: By chance really, I was tempted by the promise of a company car into a succession of different construction jobs that were not very challenging.

This led me to look for something different, and into the property industry. I was not really qualified to work for the first property company, but promised I could read, write and count, and that secured me the job and an opportunity to prove myself.

Larissa: Did you think the Mailbox would be as successful is it is?

Alan: Yes, I only do things I believe in, and if I had thought it would not work I would never have started.

Larissa: What mistakes did you make, and how did you overcome them?

Alan: You cannot get through life without making mistakes and if you do, you are not being challenged. Embrace your mistakes, deal with them, move on, and try not to make too many big ones.

Larissa: What do you think would be the first step to becoming a property developer?

Alan: Get the right qualifications, become a chartered surveyor and develop an understanding of the property business, then find a job with an established property company and learn how the business works.

Most importantly, when you are ready to do your first deal, find a financial backer because you will need a lot of money. The catch 22 is that without a deal to prove yourself, nobody will lend you the money.

So gain as much experience as you can with a major property company, to prove you can deliver, and then when you are ready put together your own deals.

Larissa: Do you think that in 10 years the property market will be as successful as it is now?

Alan: I am hoping it will be much better than it is now. It has been really tough. but I think we will see a strong improvement in the next two to three years.

Larissa: Would you say it is easier to buy properties abroad, where the market may be better than the UK, and why?

Alan: It is easy to buy property anywhere, but buying good property is much harder. Local knowledge makes all the difference.

The Post & Mail building, our next major project in Birmingham, was bought in just 21 days because it is on our patch, and we know and understand how this area works. Moving into a new geographical area would take much longer and require a much greater investment.

Larissa: The recession has affected many organisations and businesses. Has it affected your business?

Alan: Yes, in a number of ways.

The Mailbox is a complex asset.

The people who bought houses here have seen their value go down. The hotels have seen a decrease in business travellers, although interestingly, not in their weekend trade, which is good.

Retail has generally declined, but surprisingly, the bars and restaurants have not seen a decrease in their income, so clearly we are all still drinking.

Larissa: What advice would you give me as I want to be a property developer?

Alan: Loads…….. although my daughters would say don’t ever ask him that question.

If you are serious find out who the big successful players are, understand the differences between the different sectors of property, and investigate them for yourself.

Prove that you have the level of determination to understand the business when you go for an interview, with the knowledge you have gained.

Know everything there is to know about the business that you want to work for, impress them with your passion.

One other bit of advice I always offer to young people is to read The Economist.

It is so wide-ranging in its coverage, about so many sectors from all over the world.

I recommend that you pick a subject, read at least six issues, and you will become seriously knowledgeable on that subject.

Property Advantage West Midlands

Issue 22 www.propertyadvantage.info

Advertisement Feature: Telford & Wrekin / Wyre Forest

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