Property
occupational market picked up a lot,” says Phil Dawes, Managing Director of BNP Paribas Real Estate in the Channel Islands. “If you have the right product then tenant demand is strong. Over the past three years, we’ve seen improved take-up yearon-year and looking ahead we can expect to see increased consolidation amongst the corporates.”
ALL TOGETHER NOW This move for companies to consolidate into a single building is driving the development of office space in Jersey. “A lot of large corporates are having to occupy multiple sites within St Helier as there is currently insufficient grade-A office space available, which naturally results in inefficiencies and increased cost for the occupier,” explains Dawes. This issue is now being addressed and several large, high-profile office developments are already happening. The first building of the Jersey Development Company International Finance Centre is well under way. In addition, Dandara hope to complete Gaspe House this year – a-six storey development on the Esplanade, much of which has already been pre-let to Royal Bank of Canada – and they have already started work on 27 Esplanade. Demand is strong enough to sustain
rental values in the face of increasing supply, with grade-A space in St Helier attracting headline rents in the mid-£30 per sqft range for 15-year leases. In Guernsey, where confidence may be lower, the lack of supply is helping to maintain rents. “There’s not much grade-A available for rent and the price is probably holding up well at about £35-36 per sqft,” says Baudains. As the larger companies move towards Jersey’s Esplanade area, they create space elsewhere in St Helier, something Chris Philpott, Partner and Head of the Property Group at Carey Olsen, sees as positive. “A lot of businesses in mid-sized 20- to 30-year-old premises are looking for new options,” he says. “I’m quite encouraged by that. If people leave secondary office space, it will release further development opportunities in St Helier.” “Going forward, landlords owning properties in secondary locations will have to be creative, and be able to offer occupiers flexibility as well as a quality product,’ says Dawes. “Flexibility is likely to become increasingly relevant, particularly as we’re seeing a number of companies expanding rapidly, and therefore don’t want to commit long term.” Baudains agrees with the need for improvements and believes that they are
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60 march/april 2016
While the two islands share many similarities, each has to plot its own path for development, and that could yet lead to two different futures
actively attracting companies. “Secondary space is about £28 to £32 per sqft and landlords are improving secondary stock in order to attract tenants,” he says.
BALANCING ACT Across the water, whilst activity may be less than in Jersey, the key point is that Guernsey’s commercial property market isn’t in decline and, according to Baudains, this is the case across sectors. “Guernsey’s high street is quite positive, with some lease renewals, so nobody is going anywhere else,” he says. “There’s a lot of enthusiasm in the restaurant trade. For instance, Randalls have taken the Old Slaughterhouse site, Burger King is going to Guernsey and other restaurants have opened up. Industrial space is also filling up again, bringing a balance to the market.” Marc Burton, Managing Director of Jersey-based building firm Camerons, is upbeat about the extent of activity in Jersey and points out that there may be perfectly understandable reasons why Guernsey is not quite so busy. “There’s a significant amount of activity in the town centre in St Helier,” he says. “Charing Cross and Hilgrove Street are going to have new buildings and we’re seeing the first wave of redundant office blocks being converted into new flats.” He adds: “The islands operate on different economic cycles and Guernsey’s completed most of its primary office redevelopment. They’ve completed a number of significant infrastructure projects and Mare de Carteret School could be on site in 2016. Guernsey made its investments during the recession
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