Industry insights from the heart of Howard Group
hive issue 02 Autumn 2015
THE FUTURE DNA OF CAMBRIDGE THE RISE OF THE RETAIL PARK AND CLUSTER EXPANSION
HOT PROPERTY
THE BIG DEBATE
LOCAL LANDSCAPE
The deals hitting the headlines
Can out-of-town retail parks and the high street co-exist?
Is Sawston a hidden gem?
hive - EDITOR'S NOTE
02
EMPOWERED AND ENGAGED Howard Group CEO, Nicholas Bewes
People are at the heart of Howards, but we need to understand what matters most if we want to grow together. With a business that spans eight decades, we’ve experienced significant and often radical change in our history. These changes have usually followed some significant acquisition or disposal of a business or key group asset. What originally started as a company manufacturing lightweight Hemelite concrete blocks, is now an established property development and investment group with a private equity division. One of several significant changes for us this year has been the disposal of St John’s Retail Park in Bedford to Schroder REIT. This marks the closing of an important chapter in our history. This site, owned since the 1950s, used to be the site of our HQ in Bedford and was redeveloped during the 80s and 90s into a retail park. It was certainly an important change and one that reflects and demonstrates
If we want to retain outstanding people who will shape the next 80 years, we need to be an outstanding employer too
On the cover... The MRC Laboratory of Molecular Biology building located at the hub of one of the largest and most internationally competitive hive concentrations of healthcare-related talent and enterprise in Europe. Designed by RMJM architects, GE CAMBRID RE DNA OF TU FU E TH and built by BAM Construction.
from the insights Group Industry Howard heart of
HOWARD GROUP IS KEEN TO INVEST IN 'GENERATION Y' our desire to develop and evolve as an organisation in a fast changing world. It is this ability to react and change that has enabled us to remain competitive and attract the very best talent. At the heart of our activities has always been a strong set of family values – these values, forged through several generations, shape how we operate and manage relationships with those around us. As our business responds to the changing environment, we must think about how our culture and working practices should evolve to reflect the changes in our society. When CAEC Howard first established his business in 1935, the socio-economic context was vastly different. People entering the working world valued stability, financial security and long-term prospects, often devoting their entire working lives to one employer. Fast-forward to 2015 and we recognise that if we want to attract and retain outstanding people who will shape the next 80 years, we need
to be outstanding as an employer too. While our core values still stand firm, the balance in the relationship has certainly shifted, empowering the employee and putting an increasing company focus on staff retention in an ever-competitive and increasingly fluid job market. We have to present ourselves as an attractive proposition to potential candidates, being increasingly imaginative in how we manage our relationships and provide rewarding and challenging opportunities. It’s an exciting cultural shift and one that serves as a catalyst for further change at Howards. We are well placed to innovate and change in this important area but we need to continue evolving our organisation to both attract and retain the very best. We are learning fast and will need to make this an integrated part of how we do business over the years ahead.
issue 02 Autumn 2015
ION
THE RISE
AIL PARK OF THE RET
AND
EXPANS CLUSTER
SCAPE
THE
ERTY
HOT PROP
hitting The deals nes the headli
TE BIG DEBA
parks city retail Can out-of- street co-exist? high and the
LOCAL LAND
Image credits: Cover The MRC Laboratory of Molecular Biology building © Julian Claxton for Carter Jonas Cambridge P3 Grafton Centre Main Entrance © Grafton Centre Cambridge P5 Middlebrook shop fronts © Middlebrook Retail & Leisure Park P5 The Brewery Main Entrance © Dan Root for See Inside Manchester
on Is Sawst gem? a hidden
issue 02
COVERING THE ENTIRE SPECTRUM OF PROPERTY ACROSS THE SECTORS, THESE ARE SOME OF THE DEALS THAT ARE CREATING A BUZZ... CROWN PAINTS FIRST TO ENTER PRE-LET AT SURREY CANAL TRADE PARK Crown Paints, a top national trade counter occupier, is the first pre-let occupier to sign up at Howard Group’s Surrey Canal Trade Park in New Bermondsey, London. The high spec estate is one of the most prominent trade parks to have been built in London in recent years and has been established in an exciting regeneration zone, surrounded by 12,500 new homes.
Colin Brown, Howard Group’s Development Manager, said: “The Surrey Canal Trade Park ticks virtually every box a trade occupier could need. It has masses of passing traffic, a growing residential catchment, large-scale regeneration next door, excellent transport links and great visibility. Crown Paints is an excellent tenant who will no doubt encourage other trade counter occupiers to follow suit.”
NEW RETAIL PARK PLANNED FOR HAVERHILL Howard Group announced plans for a new £5m retail park in Haverhill in October. Pre-let agreements have been exchanged with Lidl, Pets At Home and Home Bargains to stimulate investment in the seven-acre site, which has been left undeveloped for six years. The land was previously home to Project Office Furniture.
HOWARD GROUP SELLS ST JOHN’S RETAIL PARK GRAFTON CENTRE PURCHASED BY LEGAL & GENERAL PROPERTY
Howard Group has completed the sale of the St John’s Retail Park in Bedford to Schroder Real Estate Investment Trust (SREIT). The transaction, worth almost £32 million, is the largest property deal in Howards' history and is a site that forms a major part of the company heritage. Tenants of the 130,000 sq ft estate include PC World, Homebase, Mothercare and Halfords.
The Grafton Centre in Cambridge has been sold by M&G Real Estate to Legal & General Property (LGP) for £99m. The firm is looking to refurbish the 500,000 sq ft shopping hub. According to LGP, the Grafton Centre is attractive due to the city's university, tourism and significant R&D industry.
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03 hive - HOT PROPERTY
hot property
hive - THE BIG DEBATE
04
The rise in popularity of internet shopping and the difficulties around parking provision mean the traditional high street is facing serious challenges. But what does this mean for Cambridge developers and what can be done to stem the decline in footfall?
INTERCHANGE PARK, BEDFORD
Views from those in the know...
William Jewson Development Director, Howard Group
Emma Thornton Head of Tourism and City Centre Management, Cambridge City Council
Edward Quigley BID Manager, Cambridge BID
High time for t According to research, one in six shops in the UK lies empty. 25,000 high street stores have closed since 2000. The Retail Futures 2018 report states that customers are increasingly shopping online or out-of-town, and that many shops are failing to adapt to the changing business environment. So what can be done to stem the decline or to ensure that sustainable out-oftown development complements and contributes to a healthier town centre? In a recent Retail Week report, it was stated that retail parks clocked the biggest increase in footfall for over a year with a reported 3.1% increase in shopper numbers, while the high street was down 1.1%. However, William Jewson, Development Director at Howard Group, believes that out-of-town retail need not be a direct challenge to the town centre, and that a holistic strategy and an appropriate retail mix
is important to ensure the prosperity of any town. “Retail parks tend to be attractive development opportunities,” says Jewson, looking at it from a developer and investor standpoint. “Construction limitations on cleared out-of-town sites tend to be far fewer and buildings tend to be larger, thereby creating more attractive and valuable investment lots. From a management perspective, these estates are often more straightforward and there are greater prospects of asset growth through rental increases and asset management.” Howards has recently completed the development of the Interchange Park in Bedford for M&S, Costa, B&Q and Motorvogue, and is due to submit planning for a new retail park in Haverhill for Lidl, Home Bargains and Pets At Home. "Out-of-town parks are also very attractive from a retailer and consumer point of view, as they are generally well
issue 02
located on the edge of good towns, with large amounts of car parking. This makes them easy to service and stock and, more importantly, easy to access,” adds Jewson. “There are signs, however, that high street retailers appear to have woken up to the possibilities available through e-commerce like click and collect services, and have a significant headstart when it comes to bricks and mortar stores. The distribution infrastructure they have in place means that they are well positioned to take advantage of the public desire to have access to virtually anything within 24 hours. When a proactive town centre is complemented by a quality edgeof-town offering, such as Howards' proposed Haverhill Retail Park, it helps to prevent ‘retail leakage’. This is where residents flock to neighbouring towns and cities because the local offering hasn’t responded to their requirements.”
01
Bolton
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Bournemouth
the HIGH STREET? 03 There are many others who share this positive outlook. Edward Quigley, Manager at Cambridge BID (Business Improvement District), says: “A mixture of approaches is needed. Firstly, smaller retailers need to be supported in making the most of e-commerce and services which consumers are increasingly using and valuing. Secondly, animating empty spaces with pop-up activity or ‘meanwhile use' can help to ensure that high streets that are struggling to find tenants are still vibrant. Property owners and agents need to see these options as valuable marketing tools for finding longerterm commercial occupiers.” Emma Thornton, Head of Tourism and City Centre Management at Cambridge City Council, similarly has faith in the high street, believing that it needs to be about more than just retail. She says: “You have to provide
Smaller retailers need to be supported in making the most of e-commerce
an experience; one that people can’t get from behind a computer or by going to retail parks. Cambridge provides that, and I think lots of towns and cities are recognising that the way to maintain footfall is to provide that positive experience.” Thornton does realise there are national retailers looking for larger units, which, given the historic nature of Cambridge, are hard to deliver. “That’s what makes the Grand Arcade a great innovation. It responded to that demand, but kept the character of the city in doing so. It is a challenge to provide stores at the larger end of the spectrum, but equally we have managed to retain the broad choice and variety that the smaller, independent retailers bring. Interestingly, city vacancy levels are less than 2%, so nothing is empty for long and retailers are prepared to be flexible to get into a Cambridge location."
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MIDDLEBROOK Total area: 646,661 sq ft Year opened: 1998 Region: North West
CASTLEPOINT Total area: 645,000 sq ft Year opened: 2003 Region: South West
CLIFTON MOOR York Total area: 587,091 sq ft Year opened: 1988 Region: Yorkshire & Humberside
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Rotherham
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Romford
PARKGATE Total area: 568,985 sq ft Year opened: 1987 Region: Yorkshire & Humberside
THE BREWERY Total area: 531,514 sq ft Year opened: 2001 Region: South East
05 hive - THE BIG DEBATE
THE TOP 5 RETAIL PARKS IN THE UK…
PRE-LETS PAVING THE WAY
hive - TOPICAL ISSUES
06
MORE AND MORE BUSINESSES ARE TURNING TO PRE-LETS
Why pre-lets are fast becoming the way forward for businesses struggling to find appropriate properties in the current climate
Pre-let
The credit crunch and the virtual shut-down of speculative commercial development between 2008 and 2014 has left a legacy of dwindling commercial supply amid a backdrop of a recovering occupier market. Finding the right building at the right price is becoming an increasingly difficult task for occupiers, resulting in a substantial rise in pre-let, design and build activity. The benefits to such agreements are obvious for a developer: a precommitted occupier, guaranteed income and long lease agreements, which all help to take the risk out of a project and reduce potential void periods. The Hive spoke with one of Howard Group’s pre-let tenants about the advantages from their perspective. Edmundson Electrical, based at the Raynham Road Industrial Estate in Bishop's Stortford, entered into a prelet agreement for 6,000 sq ft when
stats more than
400% increase
IN BUSINESS PARK SPACE CONSTRUCTION SINCE 2013
THAT'S OVER
square feet CURRENTLY UNDER CONSTRUCTION IN THE UK
55% OF WHICH ARE
PRE-LETS
land became available at the front of the estate. Edmundson has over 400 branches nationwide and is currently in the process of developing further new sites, some of which include pre-lets. Jon Bloom, Property Manager at the company, explained why they have embraced the concept: “One of the advantages we have is involvement in the design of new, modern, bespoke buildings. That helps us to create operational efficiencies, which we usually don’t get with a compromised, secondhand unit. Another benefit is the certainty of positioning going forward. So, with pre-lets, we have established our long-term future and have a solid programme of deliverable units.” Although Edmundson likes to undertake the internal fit-out of the buildings itself, it still enjoys the benefit of being involved in
issue 02
the design aspect of the project. “Primarily we like to get involved in the positioning of windows, entrances and services. As you’re getting a building built for you, it’s inevitable that it will suit your needs better,” added Bloom. “Working with a developer like Howards meant that we were kept informed throughout the construction process, and it also took away the hassle and stress of finding a site. Having signed an agreement for lease, we can know with a degree of certainty when we’re going to be moving in. Providing the construction process is reasonably smooth, we can schedule our recruitment, fit-out and store openings well in advance, and start the marketing campaign early. It’s not the only way we take new buildings, but it is a valuable and growing part of our acquisition strategy.”
LOCAL LANDSCAPE
Sawston - the next BIG thing? The Cambridge Cluster is ever-growing, with companies coming from all over the world to take advantage of the benefits of a CB postcode. With a serious lack of both commercial and residential stock availability, attention is increasingly being focused on identifying the right areas for growth in the region. It’s hard to say where the next location of choice will be, but an increasing number of pins are being stuck in a map of Sawston… The expansion of the Cambridge Cluster shows no sign of abatement. Substantial players in the knowledge industries – across biotech, healthcare, life sciences, tech, biopharma, R&D and advanced engineering – are all moving to the area to capitalise on the most advanced learning environments in the world and the availability of a highly skilled workforce. Historically, the tech and science cluster has predominantly populated the central and northern parts of the city. More recently, south Cambridge has become an attractive alternative for investors and developers looking to establish a presence. The Addenbrooke’s Biomedical Campus, Babraham Research Campus, Granta Park and the Wellcome Trust Genome Campus are some of the key sites contributing to the biomedical powerhouse in the south of the city, and Sawston is
Sawston is within a growing network of like-minded business and individuals
in a prime position to become the next big thing. This potential was recognised by last year’s acquisition of the 514 acre former Spicer’s site by Northwest Biotherapeutics, which is proposing to build one of Europe’s largest medical research centres, employing over 700 people once the facility is up and running. Iconix Park in Sawston was acquired by Howard Group in 2013 and currently has around 50,000 sq ft of office/R&D facilities. Companies such as Biocair, Xention, Transforming Pathology Partnership and AQDot are already tenants on the estate, with around 20,000 sq ft remaining available. Further land is available for pre-let opportunities with an existing planning consent in place for up to 66,000 sq ft of space. For employers, Sawston is an area that ticks a number of boxes. Lower rents/business rates, access to key arterial roads, proximity to
ICONIX ONE LOCATED AT ICONIX PARK, SAWSTON
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Addenbrooke’s Biomedical Campus, a growing network of like-minded businesses and individuals, plus the availability of skilled labour are all benefits that a south Cambridge HQ would offer. For employees, the advantages stack up nicely. Being situated on the southern fringes of the city, employees are able to commute easily, avoiding the worst of the congestion. And for people looking to move to the area, Sawston and the surrounding towns, such as Pampisford and Shelford, have properties at reasonable prices with close amenities. It is telling that while spaces remain in the car parks at Iconix Park, tenants have recently requested additional cycle parking. Only time will tell if south Cambridge’s leafy suburbs will wake up and join the trend that is present in Cambridge, but prospects are certainly looking promising.
hive - LOCAL LANDSCAPE
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hive - THE BUZZ
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THE buzz...
All the latest activity in and around the Howard Group community
FOCUS ON:
Simon Messervy PROPERTY SERVICES DIRECTOR Simon started working with us back in 2007 and heads up the portfolio management team. He’s a natural-born leader and has a great affinity with his team – traits that might have something to do with his military background… Simon joined the Army Reserve in 1986 and has been juggling his military and working lives for almost 30 years. “I spent the first 10 years in the infantry, rising through the ranks from Second Lieutenant to Captain,” says Simon. “I then transferred to the Royal Logistics Corps and am now coming to the end of a three-year stint with the Cambridge University Officer Training Corps.” There, Simon, who has the overall rank of Major, acts as Squadron Commander for
first-year recruits, teaching them the importance of leadership. “I’ve done numerous courses at Sandhurst, which is a world leader in leadership training." His training has enabled him to use his skills in his civilian life. "Being able to organise, plan and manage staff are all skills that I’m able to carry over into my working life.”
SIMON MESSERVY
Chariots of Fire!
National Recognition
On Sunday 20 September, we took part in this year’s Chariots of Fire charity relay race. Representing Howard Group were William, Alan, Chris, Stephanie, Jenny and Thomas, who together managed to raise just over £1,000 for the charity. The annual event was held in support of East Anglia’s Children’s Hospices (EACH). EACH supports families and cares for children and young people with life-threatening conditions across the regions of Cambridgeshire, Essex, Norfolk and Suffolk.
DHL DEVELOPMENT IN LEWISHAM We were honoured to have been shortlisted for the Deal of the Year award in the UK-wide IAS (Industrial Agents Society) Awards. This comes as a result of pre-letting our London-based 57,000 sq ft 'Tea Shed' development to DHL earlier in the year. The Tea Shed is one of the most exciting projects in our 80-year history, located at the heart of what is going to be one of the highest quality industrial estates in central London. The deal to bring DHL to Lewisham is the result of successful collaboration with the occupier, creative design and genuine 'can do' deal-making from Howards, and we are thrilled that this has been recognised by the very best in the industry. The facility is due for completion in November. The IAS Awards, which have been running for 28 years, celebrate the best developments, deals and investments within the industrial and distribution sectors in the UK.
issue 02
HOWARD GROUP’S CHARIOTS OF FIRE TEAM