Industry insights from the heart of Howard Group
hive issue 06 Autumn 2017
KEEPING INNOVATION AT THE HEART HOW CAN WE RETAIN GLOBAL COMPANIES IN CAMBRIDGE?
The deals hitting the headlines
The challenges and opportunities for Cambridge
The latest from the Howard community
hive - EDITOR'S NOTE
RESILIENT AND REFOCUSED Howard Group Chairman, Patrick Bushnell
Chairman Patrick Bushnell shares his insight on the property investment market amidst economic uncertainty. I’ve been on the non-executive board here at Howard Group since 2009, having joined after I’d finished working for one of the fund management houses in London, then stepping into the role of Chairman a few years ago. Something I have particularly enjoyed over the past eight years or so has been the willingness of the shareholders to make strategic changes to the portfolio to advance the business. When I joined, the property portfolio was fine for the scale of the business at the time, but it wasn’t going to weather any economic downturn especially well. I realised early on that there were no ‘sacred cows’ in terms of long-standing legacy properties. This approach is particularly important now, 15 months post-Referendum,
As we continue to work on our business today, we keep one eye on the future.
Image credits: Cover: Abcam's new headquarters on the Cambridge Biomedical Campus, © Cambridge CGI NBBJ architects P3: Abcam's new headquarters, © Cambridge CGI NBBJ architects P4 & 5: The Works office space, © Sawston CGI NBBJ architects
On the cover... Abcam's new headquarters on the Cambridge Biomedical Campus will bring over 450 employees together. Global architects NBBJ designed the building to reflect the company's non-hierarchical organisation and collaborative cultures.
as we operate amidst continued uncertainty. It has been a surprisingly strong period since Brexit in the investment market – due to a sharp increase in international investment as the pound weakens – but there could be economic shocks in the future as this unwinds. At Howard Group, we are in a very strong market and are resilient to negative movement – we’re well placed to weather any market correction, both in terms of location and position of the business. We are equipped to withstand a downturn as we have no high borrowings and have plenty of activity in our development portfolio, which we are able to progress in a very measured way. We’ve also made a conscious and significant shift away from the retail market, which continues to have well documented challenges. We sold St John’s Retail Park in 2015, allowing us to refocus on developments in more robust markets – including the
private student accommodation scheme at Mount Pleasant House in Cambridge and the Surrey Canal Trade Park in London. We’ve also been able to capitalise on future business park opportunities at Sawston, which is particularly exciting. As the market develops in the coming years, it should leave Howard Group in a strong position – especially if investment valuations drop significantly in the future – allowing us to add to our portfolio in a less competitive environment. As we continue to work on our business today, we keep one eye on the future. We are long-term, strategic thinkers and our priority is to remain financially robust throughout our future years. We will continue to act cautiously in our endeavors, ensuring that we remain strong, yet agile enough to deal with any market changes.
COVERING THE ENTIRE SPECTRUM OF PROPERTY ACROSS THE SECTORS, THESE ARE SOME OF THE DEALS THAT ARE CREATING A BUZZ.
SUPPORTING THE FUTURE OF A CAMBRIDGE COLLEGE Howard Osborne LLP is working in partnership with St Edmund’s College, Cambridge to redevelop Mount Pleasant House into much needed, affordable student accommodation. Located to the north of the city on Huntingdon Road, the development has been let for 47 years to St Edmund's College, who will then own the rights to acquire the property on expiry.
The new scheme will be known as Mount Pleasant Halls and is in a prime Cambridge location close to the St Edmund’s College main campus. Demolition of the current site has begun, with construction set to reach completion in spring 2019. Occupancy is expected to commence in summer 2019.
BREAKING GROUND: A FIRST-CLASS BIOMEDICAL CAMPUS A hub for world-class biomedical research, Cambridge Biomedical Campus is moving from strength to strength, maintaining its position as one of the leading international biomedical centres. Supporting this reputation, Abcam has broken ground on the construction of its global headquarters at the site. The new headquarters has been designed by architects NBBJ and will
03 hive - HOT PROPERTY
bring together 450 employees currently operating from three office hubs. Focusing on creating a connected and collaborative workplace, the building will unite the firm’s laboratory, production and distribution divisions. Funded by Tesco Pension Fund, the building will comprise 100,000 sq ft. The development is expected to complete in late 2018.
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BOOSTING HAVERHILL’S ECONOMIC GROWTH Haverhill Retail Park launched in September with national retailers Lidl, Pets at Home and Home Bargains opening their doors to the public. The retail park, situated on Ehringshausen Way in Haverhill, adds to the town’s retail offering – bringing further investment to the area. Haverhill has previously suffered from a ‘retail leak’, which has encouraged local people to go further afield to neighbouring towns and cities to spend their money. Howard Group hopes that this new shopping facility will restrict this leak and – with the arrival of national retailers – boost the local economy.
hive - OFFICE FOCUS
THE WORKS AT UNITY CAMPUS WILL FOCUS ON CREATING A SENSE OF COMMUNITY
GROW & THRIVE Cambridge’s growing reputation as a renowned hub for some of the world’s best science and tech companies has been recognised and documented across the globe. With a seemingly limitless supply of new ideas and the brightest talent to develop them, it is easy to see why the city has become a destination of choice. However, if you put the impressive accolades to one side, it’s a community creaking under strained infrastructure with a shortage of commercial and residential space. According to a recent report by Savills, Cambridge is at risk of slowing its growth due to insufficient laboratory and office space. The ‘Cambridge: building its global future’ report highlights some sobering facts. The city only has 1.3 years of this space remaining and is struggling to keep pace with the
With rental costs on the rise and huge global demand, can Cambridge keep the most innovative businesses in the city?
demands from larger-scale occupiers. Ofﬁce and laboratory space take up has rocketed over the last three years, with a phenomenal 620,000 sq ft swallowed up through burgeoning businesses making a global impact. That’s a 59% increase over the 10year average. Rob Sadler, head of Savills’ Cambridge office, said: “The pressure on office space in Cambridge is reaching breaking point. To maintain a competitive edge over rival cities, we must act now to support our tech and science industries. Future growth has to be supported by strong infrastructure, implemented in a timely manner.” Although, occupiers tend to be less concerned about the cost of property and put greater emphasis on recruitment, environment and staff retention. “Although average
Savills forecast that an additional 2,200 office and lab jobs will come to market over the next five years.
earnings in the city are above average for the UK, the cost of labour here remains affordable for global occupiers. The average salary for a software developer in Cambridge is still 32% lower than in Chicago,” says Rob. Further growth for the city is being compromised by the availability of infrastructure, affordable housing and supply of commercial space. Savills forecast an additional 2,200 ofﬁce and lab jobs will come to market over the next ﬁve years, and there is a need for 300,000 sq ft of additional ofﬁce space to accommodate them. This pressure on space has pushed rents in Cambridge well beyond other UK cities, with prime rents at £37 per sq ft for ofﬁces and £32 per sq ft for lab space. Cambridge is seeking to address these challenges in a number of
Workspace of the future
FLEXIBLE WORK SPACES ARE KEY TO A PRODUCTIVE ENVIRONMENT
260,000 sq ft of high spec office and lab space
Fully connected A1301, M11, A505 & cycle path access to city centre
644 multi-storey car parking spaces
575 Cycle spaces
ways. With science and tech clusters popping up across the region, it’s making businesses less reliant on city centre accommodation. This trend brings the advantage of easier commuting by bike or public transport, and creates opportunities for staff to locate closer to affordable accommodation within reasonable distance of their workplace. Howard Group’s commercial space in Sawston is building on the growing demand for lab and ofﬁce space to the south of the city. A planning application has been submitted for Unity Campus, a 260,000 sq ft business park to service and complement the south Cambridge cluster. Combining its ownerships at Iconix Park and the Sawston Trade Park, the unique campusstyle environment will provide collaborative, exciting and engaging business space at the heart of the Cambridge cluster. The first phase at Unity Campus will comprise The Works, a 70,000 sq ft building aimed at clean-tech, office and R&D users. Housed in the original pre-cast concrete frame, the building offers cutting-edge design
A DYNAMIC AND MODERN SPACE THAT WILL SUPPORT COLLABORATIVE WORKING
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The businesses driving our economy want to be able to collaborate, join forces and share knowledge.
and flexible accommodation for ‘grow-up’ businesses. The Works is expected to be ready for occupation in spring 2019. Colin Brown, director of portfolio development at Howard Group, said: “With Unity Campus, and specifically The Works, it’s not just about addressing shortage of supply, but the shortage of appropriate supply. We want to create an environment people want to spend time in, so the design of the estate and the buildings within it are intentionally about encouraging interaction, connecting businesses and inspiring people throughout the day. The way our tenants engage with their business space has changed dramatically and we want to create something that addresses these demands. We’re already experiencing high levels of interest, which demonstrates Cambridge’s appetite for a different type of work space.” It remains to be seen how the rest of the demand for space will be met beyond the 1.3 years, but one thing is certain – sitting on the problem will take Cambridge nowhere.
hive - OFFICE FOCUS
THOUGHT LEADERSHIP CAMBRIDGE'S ECONOMY GOES FROM STRENGTH TO STRENGTH
hive - estates gazette
The rise of THE SILICON FEN Howard Group will be amongst those leading the conversation for the second consecutive year at Cambridge's Estates Gazette Question Time, alongside some of the most influential businesses in our region.
THE FULL PANEL Martin Curtis Curtis & Co
Nigel Hugill Urban & Civic
John Miu ABP
Michaela Henson Howes Percival LLP
William Jewson Howard Group
Derek Carr PEM
Rob Sadler Savills
November will mark the return of Estates Gazette's celebrated debating event Question Time to Cambridge. Amassing a crowd of over 300 of the city’s greatest minds in 2016, the event is held in key UK growth locations and brings high-level issues affecting potential economic development to the fore. Cambridge’s reputation as an incubator for the technology and bioscience sectors continues to increase. As demand for space in the city rises, it is faced with the challenge of accommodating this growth within and beyond its borders. With investment opportunities in the city scarce and in high demand, this growth poses a range of challenges
for Cambridge – but with challenges, opportunities are always close behind. We’ve asked some of those we work most closely with to share their thoughts ahead of the debate.
The Questions How important to Cambridge is the East West Corridor from Oxford via Milton Keynes? Will increased supply address the city's affordability problems? What transport infrastructure should be prioritised to ensure continued growth of Cambridge's economy? Do you believe we radically need to change the way we live and work to cope with the shortage of housing and infrastructure?
Richard Dickinson DIRECTOR AT ONE NUCLEUS
r In thei words
EAST WEST CORRIDOR There's a huge opportunity to expand this area by introducing more housing, as families settle in this corridor to commute to Cambridge or Oxford. As this area grows in popularity, it has potential to help stimulate the cross fertilisation of the life-science sectors in Oxford and Cambridge. INFRASTRUCTURE Most new houses are being developed north of Cambridge. This poses a challenge as the only road to
CREATE SUPPLY Developers have the opportunity to redevelop their existing portfolio. Howard Group recognises this and is proposing to redevelop its assets in Sawston. This redevelopment
VIRTUAL WORKSPACES It seems that more companies will become virtual, allowing employees to work from home. We are also seeing a rise in the life-sciences sector outsourcing laboratory activities to service providers, due to cost and space.
PROPERTY DIRECTOR AT HOWARD GROUP DEMAND FOR SPACE One of the challenges for developers is providing space for occupiers at short notice, as Cambridge businesses are often growing rapidly and are forecasting their space requirements 12 -18 months in advance.
the south of the city – where many of the life-sciences companies are moving to – is the M11, which is at capacity. The city needs a new ring road, as well as an additional two lanes connecting the A428 to the A1.
DIRECTOR AT SHRIMPLIN BROWN
will see Sawston Trade Park transformed into a campus aimed at businesses looking to locate to south Cambridge. DIVERGENCE There's a split between the north and south of the city. The north predominantly facilitates tech companies, while the south houses lifescience businesses. There's an opportunity to provide work space that caters to both. This will promote integration and stimulate knowledgesharing, which is key to modern business.
HOUSING DELIVERY To support growth, housing supply is key. There has been a fundamental change in how housing needs are assessed and met. This shows signs of increasing supply in parts of the UK, but it is hard to do in Cambridge due to the Green Belt and historic environment constraints. AFFORDABLE HOUSING In a planning sense, affordable housing is being squeezed by the Community Infrastructure Levy (CIL). CIL is essentially a tax on development and is
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not negotiable. Affordable housing is negotiable and as a result it is being reduced. CIL hasn’t been adopted in Cambridge yet, but will affect the delivery of affordable housing when it arrives. STUDENT ACCOMMODATION The relationship between student accommodation and housing is complex. Closer working between the council, colleges and the private sector is needed to understand and address this.
hive - estates gazette
hive - THE BUZZ
All the latest activity in and around the Howard Group community.
Cambridge Music Festival Howard Group is sponsoring the Cambridge Music Festival for the fifth time this year. With scheduled performances from many renowned artists, as well as celebrating new talent, the Group is proud to be associated with the festival. Headliner acts this year include American violinist Joshua Bell, who will be performing with the Academy of St Martin in the Fields, Gabrieli Consort’s ‘Venetian Coronation’, and Chineke – a vibrant new minority ethnic orchestra.
VIOLINIST JOSHUA BELL
Going electric With sustainability and forward-thinking in mind, Howard Group has installed electric charging points at Iconix Park. Now in regular use, we are pleased to offer charging facilities for electric vehicles to improve efficiency in energy saving. The landscape of UK charging point infrastructure is continually changing and we are proud to have been able to provide our tenants with these facilities.
Howard Group sleeps rough for YMCA THE TEAM ENJOYING A RIVER CRUISE The Howard Group team travelled to Lewisham, London for its annual away day. The team was able to take in three of the Group’s developments – Elizabeth and Juno Way Industrial Estates and Surrey Canal Trade Park – before enjoying a river cruise along the Thames. These estates have been transformed over recent years through active asset management and first class development. The day was an opportunity for all team members to explore the developments first-hand to celebrate the success of these schemes, whilst taking some time to unwind with a cruise along the river.