Will There Be Cranes On The Horizon in 2009?
Jon Silversides of Carter Jonas Commercial Team in Oxford takes a critical look at the commercial property market.
Counting the number of cranes on the horizon can offer some insight into the level of activity in the commercial property market. Looking out of our office on the top floor of Carter Jonas in Summertown, there are still one or two to be seen, although in this county, the amount of new build isn’t the whole picture. There is, I believe, reason to be cautiously optimistic if you take a longer term view.
The level of activity we have seen this year at Carter Jonas is higher than the national trend. Although down on 2007, we have transacted more than 400,000 sq ft of commercial space, and if economic conditions stabilise in the coming months, there is enough in the pipeline to keep the wheels turning. Also, the Oxfordshire economy has its own microclimate and, as I will explain below, there are issues of supply in some sectors that could protect the county from the worst.
Notable industrial transactions this year have included pre-lettings by Naus Albion to Stagecoach and Nedschroef Fasteners of 1 acre and 30,000 sq ft respectively at their Network Oxford scheme. There has been a good level of activity at ING’s Nuffield Centrum scheme in Abingdon with five lettings jointly totalling 50,000 sq ft, including PTS and Sally Hair & Beauty. We acquired 9,000 sq ft for Ashby Engineering in October and in Bicester, following a reduction in quoting terms by Equity Estates, the 14 unit scheme - Arena 14 - is now all under offer or sold. We have also just completed the letting of the 20,000 sq ft former Mercedes Car Dealership at Shipton-on-Cherwell to Bonhams Auctioneers, which is setting up its largest UK auction centre.
In the print industry BGP has completed its new £30m web offset ‘supersite’ and, as advised by Livingston Gunn, has also taken an additional 75,931 sq ft for its bindery at Tingewick Road in Buckingham. For Fineprint, we acquired 15,000 sq ft in Witney, where they have invested heavily in establishing a new print facility.
The office market has seen less activity, although the ‘stand out’ deal is the sale of the 40,000 sq ft former Yamanouchi Institute at Littlemore Park by RO Developments to the SAE Institute. They will use the building as flagship headquarters and as a centre for creative technology research. Milton Park has let the second floor of their new building 97 to Petroleum consultant Neftex, and for UCO we have just completed letting of 10,000 sq ft at The Quadrant, Abingdon Business Park to software company Tessella.
What of the retail market? Despite the disappointment over yet another set back for Oxford’s Westgate redevelopment, construction of Marriotts Walk in Witney is now well under way and we have successfully achieved pre-lettings to M & S, Debenhams, Cineworld, Starbucks, Café Rouge and several fashion chains. We understand that the developers of Bicester Town Centre, Stockdale Land and Sainsbury's Supermarkets Limited, working in partnership with Cherwell District Council, are looking to move ahead as soon as possible with the development of the shopping centre and are hopeful of making announcements shortly. Whilst reports of trading problems remain widespread in the wider market, at least these two key schemes offer a ray of light.
Looking forward to 2009, it is worth noting that a large amount of investment money is waiting in the wings which, although this money alone will not affect the occupier market, it is encouraging that investment confidence remains in the built environment.
There are other factors which can protect Oxfordshire from the economic worst. Unlike the Thames Valley which is suffering from oversupply, particularly in the office sector, Oxfordshire has a relative lack of new stock in both office and industrial sectors. This should help soften us against the full effects of a downturn and, although not completely insulated from external factors, a strong presence in the biotech, publishing and education sectors should also help the region counter some of the ill effects.
In speculative terms, only MEPC at Milton Park, Blenheim Estates at Combe and Albion Land at their Network Oxford scheme will be building new office, industrial and trade units to be available in 2009. Each of these schemes will offer the very latest in sustainable technology, which remains a long term necessity, and each is to provide accommodation in either a proven sector or location.
We continue to closely monitor the effect that increases in second hand stock is having on pricing and tenant incentives. Interestingly, the market is responding to deals, such as at the Arena 14 scheme in Bicester where prices have dropped from £110.00 per sq ft to £85.00 per sq ft, resulting in a flurry of activity. Also, enterprises who need to find accommodation are finding low availability in certain size ranges, building quality and locations, such as Oxford City Centre.
At Carter Jonas we are taking a long term view, hence our investment this year in bringing our teams together at the Summertown office where we now offer a ‘one stop shop’ to our clients. My appointment to the commercial team also makes us the largest and most experienced agency team in the county.
So in Oxfordshire the indicators for 2009 are not so much the number of cranes on the horizon, but whether the economic conditions can align to free up the liquidity that’s clearly there. As property agents we are natural optimists and doubtless the year will bring both uncertainty and challenge, but it will, we strongly believe, also be a year of opportunity.
Partner - Head of Commercial Agency Oxford
Jon heads up the Oxford Commercial agency team and is involved with all aspects of commercial agency throughout Oxfordshire and further afield. Jon has been involved in commercial property since 199...