No.26 WINTER 2011 YOUR GUIDE TO REGIONAL PROPERTY, REGENERATION AND DEVELOPMENT IN THE WEST MIDLANDS W W W . P R O P E R T Y A D V A N T A G E . I N F O
BLOXHAM: BLOODIED NOT BOWED
your Editor, Ian Halstead
INSIDE THIS ISSUE
The conference season is inevitably time for grand strategies to be paraded, for loopy ideas to be debated and instantly forgotten, and for much wishful thinking, as politicians seek to lift their flagging poll ratings. The Conservatives didn’t disappoint, but it was hard to categorise the idea that local authorities should hand over their land assets to housebuilders - then wait for the properties to be sold before receiving payment. It‘s an idea which Housing Minister Grant Shapps just can not let go, having trailed it in various guises since March. As a populist wheeze for winning applause, its merits are clear. Even the Socialist Worker would be hard-pressed to criticise a plan to build homes. However, upon even minimal reflection, the ’build now - pay later’ concept appears more of a catchy slogan than coherent strategy.
Housebuilders are already sitting on massive land-banks, many of which have planning permission, so it should be obvious to Shapps that the core issue is not land, but the dearth of mortgage finance. Unless the oft-trumpeted Project Merlin can finally persuade bankers to loosen their purse-strings, it wouldn’t matter if councils did sacrifice their land assets on the never-never. The plan would also penalise authorities who use their commercial property holdings to restrain council tax increases. Birmingham City Council, for example, has acquired a significant land and property portfolio, which generates around £25m a year. Why should it be forced to lose a hefty slice of that income, by handing over land which successive generations of civic leaders have assiduously accumulated to benefit the city? Perhaps Mr Shapps will eventually explain … Yours, Ian Halstead Editor, Property Advantage
35 Newhall St. POV: Nigel Simkin.
News & deals.
Bishop Gate, Coventry. Urban Splash’s Tom Bloxham.
BHB Chartered Architects.
Business Birmingham’s Marek Dobrowolski.
Squire Sanders Hammonds.
Hotels: Sanguine / Bloc.
54 Hagley Road.
Icknied Port Loop.
14–15 16–17 18 19
Grant Thornton’s Dan Hartland. Thomas Vale. POV: Jason Jackson. Hereford’s Ray Stone. Loxton Developments. Middlemarch.
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Tariff talks critical to hopes for levy
NIGEL SIMKIN, A SENIOR SURVEYOR AT JONES LANG LASALLE
Nigel Simkin, a senior surveyor at Jones Lang LaSalle’s Birmingham office, takes a look at the Community Infrastructure Levy (CIL). “Although CIL was introduced in April 2010, few local authorities have been prepared to implement the levy, but I think it’s now time for developers and landowners to make themselves fully aware of its likely impact. “CIL can be levied on new developments by charging bodies - typically local authorities - after the government decided that a tariffbased approach would be the best framework to fund new infrastructure, and unlock land for growth. “It also believed that CIL provided more certainty up-front for developers about how much money they might be expected to contribute. “However, as finance from lenders to undertake development remains extremely difficult to secure, and developer confidence remains subdued, many wonder if CIL will
further undermine the viability of proposed schemes, and stall development, particularly where property values are low. “To address this issue, and in considering formulating a CIL charging schedule, the regulations require local authorities to have regard to the viability of development in the charging area to ensure that the CIL is deliverable, and does not deter developers from undertaking development, and landowners from releasing land for development. “In its overview of CIL, the Department of Communities and Local Government stressed that it was vital that the chosen levy ‘does not put at serious risk, the overall development of the area‘. “Local authorities will be required to gather a robust evidence base which assess not only the scale of infrastructure required - and projected CIL revenue that could be generated - but also the impact on economic
viability in the charging area. “This evidence should demonstrate that CIL strikes an appropriate balance between funding much-needed infrastructure, and the impact on development. “Developers and landowners must therefore pay close attention to each authority’s charging schedules in key land bank areas, to ensure that its charges are not prohibitively restrictive on future schemes. “With the economics of development proving challenging in many markets, developers and land owners are expected to scrutinise each council’s evidence on the viability of CIL charging levels at forthcoming examinations, to ensure that the implications for their sites are minimised where possible. “Equally, it is important that charging authorities ensure their evidence is both commercially sound, and robustly tested, to ensure it stands up to such examination.
“They should also consider if it is appropriate to levy differential CIL rates, in areas where values are low, and the viability of development may be compromised, and to look at the timing of CIL payments - especially when significant- to ease developers’ cash-flows, and improve the prospects of site delivery. “Once the CIL is in place, the regulations do provide some scope for a charging authority to grant discretionary relief under ‘exceptional circumstances’. “However, whilst one possible ground for relief is that the CIL would have an unacceptable impact on the economic viability of a development, it should be noted that this relief is entirely at the discretion of the charging authority. “The impact of CIL therefore will be judged very much on a case-bycase basis, and its success will be down to the successful negotiation of the tariff in each local area.”
The latest from the 26th floor
Nurton Developments’ Two Colmore Square A major British manufacturer is about to move its head office to Nurton Developments’ Two Colmore Square scheme in the heart of Birmingham. Talks are advanced for a letting of c21,000 sq ft, at the 157,000 sq ft building which overlooks Colmore Square. It’s understood that the tenant-to-be was impressed by the scheme’s BREEAM ‘excellent’ rating, the quality of its refurbishment from the former Priory House - and its location, close to both Snow Hill and New Street. Joint agents are GVA and CBRE.
IM PROPERTIES RELOCATES TO GROUP HEADQUARTERS IM Properties, one of the country’s largest privately owned Property Companies, has relocated to join the wider IM Group team at IM House in Coleshill, North Warwickshire. The 16 person IM Properties team, previously based in nearby Warwick, is now working alongside 150 IM Group colleagues at IM House. The purpose built state-of-the-art property houses the core of IM Group’s global operations. Situated in 200 acres of picturesque parkland, the hub of the company’s IT, Accounting and Business Development activities are based at IM House, together with the International Motors business. Bringing the entire IM Group together under one roof offers countless benefits to IM Properties as managing director, Tim Wooldridge explains: “Moving to IM House has not only provided the IM Properties team with a fantastic open plan working environment but has also enabled us to benefit from the integration of services provided across the Group. Having Group directors, management and executives all within the same building is hugely advantageous to all of our business streams and the new location provides IM Properties with the space required to accommodate our growth plans.” IM Properties’ has continued to strengthen as a business in 2011, most notably securing a total of £150 million of senior debt funding in July. With a strong focus on acquiring prime real estate and high quality properties, the company is implementing a strategy of increasing weighting in quality distribution investments and development opportunities in the UK, growing its residential development arm and expanding its presence in the US through retail development funding. “We are a driven and ambitious property company with the cash to invest now in quality property,” added Tim Wooldridge. “Alongside working hard to rebalance our portfolio we are also keen to explore new sectors going forward that offer opportunities for capital growth to compliment the strong income returns generated by our commercial portfolio. We want to deliver a strategy that will be of benefit to the business for the long term and are therefore placing an increased emphasis on the development aspect of the business. The future is hugely exciting for IM Properties, we have been investing heavily in North Warwickshire for years at our sites at Birch Coppice and Coleshill Manor, it feels right to take the next step and actually base ourselves in the region and at the same time share our successes with colleagues from across the Group.” Established in 1987, IM Properties Plc is one of the UK’s largest privately owned property groups with close to £1bn of property owned and under management within the UK, France, Germany and USA, the company’s land bank is in excess of 300 acres. IM Properties is well known for its consistent deliverability and performance. This deliverability is reinforced by the fact that all investments and developments are financed from existing cash resources. For more info: www.improperties.co.uk
ST. MODWEN SUBMITS PLANNING APPLICATION FOR NEXT PHASE OF ETRURIA VALLEY DEAL SIGNED WITH PRATER LTD AT ST. MODWEN’S QUINTON BUSINESS PARK St. Modwen has agreed a five-year lease for 3,600 sq ft at Quinton Business Park, Birmingham, with specialist building envelope contractor, Prater Limited. The Surrey-headquartered company, which delivers design and installation services, including metal roofing and wall cladding, has relocated from its current offices in Bromsgrove and Meriden, to Building Four at the 18 acre Park. The move is due to Prater’s requirement to bring its Midlands design expertise under one roof and be based at the heart of the UK’s motorway network. The Grade A office space benefits from Quinton Business Park’s strategic location, two minutes’ drive from Junction 3 of the M5, which is six miles from Birmingham City Centre. The car parking ratio is particularly attractive, with one space provided for event 210 sq ft of office space. Peter Rudd, senior development surveyor for St. Modwen, said: “We are thrilled to welcome the team at Prater Limited to Quinton Business Park. There is very little office accommodation of this quality in the locality, and with such a convenient location, the Park is proving popular to a whole range of businesses. “There is now only 9,700 sq ft of space available across the entire development of nine buildings, confirming its popularity in the marketplace and we are liaising with a number of interested parties for the additional space.” The available space is currently split into two separate offices of 3,205 sq ft and 6,413 sq ft, however, this could be divided further to create smaller suites to meet occupiers’ bespoke requirements. Flexible lease terms are available. Richard Morton, senior design manager at Prater Limited, said: “The location and quality of Quinton Business Park is perfect for our business. There are also a number of like-minded companies working at the Park and we are really pleased to have finally moved in.” Prater Limited has joined existing occupiers; RPS, Serco, the Highways Agency, Wates Construction, VTG Rail, Amey, St. Modwen and Linpac Allibert at Quinton Business Park.
St. Modwen, on behalf of Stoke-on-Trent Regeneration Ltd., has submitted an outline planning application for the latest phase of its growing Etruria Valley development. The application is for the development of the next 16 acres of the Etruria Valley Business Park located to the west of Forge Lane, Etruria, in Stoke-on-Trent. The site forms part of the wider Festival Park area which has been developed over more than 20 years on the site of the former Shelton Iron and Steel Works. Festival Park and Etruria Valley have grown to become the premier mixed use Business Park in North Staffordshire, developed by St. Modwen since 1988 with over 230 acres developed to date with more than 1.35m sq ft of major office and commercial development, retail park, leisure park, 4* star hotel, restaurants and housing. In excess of 6,000 people now work on the total area compared with about 3,500 who lost their jobs when the Steel Works and Rolling Mill closed in 1979 and 2000 respectively. Phase 2 of Etruria Valley commenced development in 2008 following demolition of the former Rolling Mill and extensive site reclamation and infrastructure works. A major 93,500 sq ft Contact Centre for Vodafone UK was designed and constructed by St. Modwen in 2009 as well a new factory for Wade Ceramics Ltd and head office for Hanley Economic Building Society. A total of about 60 acres remain for development with capacity for about another 1m sq ft of development. Mike Herbert, regional director for St. Modwen commented: “Etruria Valley has proven to be an extremely popular Business Park location and this latest phase will enable us to continue the creation of high quality employment spaces within this sustainable location. Etruria Valley has already proven itself to be a magnet for attracting inward investors and established local businesses and the latest phase will enable us to continue to drive new businesses and investment into the North Staffordshire region. Discussions are already progressing with major potential occupiers and the outline consent is a key step to be able to respond for confidence to market demand for design and build opportunities.” The detailed planning application proposes Phase 2A be approved for a mix of office, manufacturing and storage properties. It builds on the strategy agreed with Stoke-on-Trent Council and the Local Enterprise Partnership as part of the Enterprise Zone bid earlier in the year and St. Modwen is working with Stoke to create an accelerated development zone for the whole of the Etruria Valley area. This is a key part of the area’s strategy to create economic growth and attract inward investors. Etruria Valley is being developed by Stoke-on-Trent Regeneration Ltd., St. Modwen’s joint venture company with Stoke-on-Trent City Council, which was formed in 1993 to bring about major regeneration. It is run by St. Modwen’s team at the Regional Office at Trentham Estate and Gardens in Stoke.
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West Midlands winners take on the world Four West Midlands building projects will go head-to-head with others from the rest of the UK, Europe, Africa and the USA to be named best in category and achieve the ultimate accolade Global Project of the Year at the RICS Awards grand final 2011. The West Midlands hopefuls are: • Brockhampton Estate, Herefordshire in the building conservation category • mac/sampad, Birmingham for the community benefit prize • Dunston Business Village, Stafford for the sustainability accolade • Severn Trent Centre, Coventry for the regeneration award. The four projects were crowned winners across the four categories in the RICS West Midlands Awards in May, with mac being named West Midlands Project of the Year. They will all now show the rest of the world that the West Midlands produces world-class building projects at the glitzy global grand final at the Savoy in London on 21 October, hosted by TV presenter Julia Bradbury. The annual RICS Awards were created to recognise the achievements of land, property and construction professionals. Martin Perks, RICS West Midlands Chair and Divisional Director at Mott MacDonald, commented: “The exceptional quality and design of the four category winners of the RICS West Midlands Awards 2011 give these projects an excellent chance on the global stage. We wish them the best of luck.” About the West Midlands projects:
DTZ acquires space for Network Rail Real estate adviser, DTZ has acquired 29,996 sq ft of office space in Birmingham city centre on behalf of Network Rail. Network Rail has taken the space at Norfolk House on Smallbrook Queensway on a five year lease. GBR Phoenix Beard acted on behalf of the landlord, Moredun LP, representing Buccleuch Property, Edinmore and Dundas. Matt Long of DTZ commented: “DTZ worked closely with Network Rail to establish their spatial requirements and following a comprehensive search of the city centre, Norfolk House was identified.” Network Rail will be using the space to accommodate its administration and ancillary functions whilst New Street station undergoes redevelopment. Nick Waugh of Buccleuch Property commented: “Network Rail is clearly an ideal tenant for Norfolk House, which is situated just yards away from the backdoor of New Street station. We are pleased to be working with Network Rail on this flagship project.” John Griffiths of GBR Phoenix Beard, added: “Norfolk House’s strategic location adjacent to New Street station, coupled with its large, clear floorplates have again resulted in a rapid re-letting of this landmark building.” Derek Owen, Estates Manager at Network Rail, said: “We required good quality accommodation in close proximity to New Street Station and Norfolk House proved to be the ideal option whilst the redevelopment of the station takes place.” DTZ and GBR Phoenix Beard are marketing the fifth floor of Norfolk House which is currently being refurbished to provide smaller suites, available on flexible lease terms.
Brockhampton Estate, Herefordshire The restoration of disused former farm buildings at the Brockhampton Estate in rural Herefordshire to bring them back into use in a way that worked in harmony with the buildings and their environs. The scheme looked to honour the original buildings and the craft that has been used on them and local materials were used in the restoration where possible. Care was also given to preserve the rural quality of the site and high quality landscaping was also included. mac/sampad, Birmingham This project aimed to expand, enhance and refurbish one of the oldest, most important and liveliest arts centres in the country. Created in the 1960s, the mac looked to encourage people to embrace the arts and sports as key parts of their lives. The centre is also home to the sampad South Asian arts agency and continues to retain a strong emphasis on community engagement and nurturing new talent, while offering arts programmes for all and this is reflected in the redevelopment scheme. Dunston Business Village, Stafford Dunston Business Village has been the redevelopment of a disused and abandoned farmstead into a modern, thriving 21st century business park in rural Staffordshire. The project aimed to create a new and different kind of business park which blends the character of the buildings with the convenience and comfort of modern technology. All eight buildings on the site, three 18th century and five more modern farm structures, have now been renovated to a high standard and are equipped with fibre optic cables and a 100MB internet circuit. Severn Trent Centre, Coventry A 170,000 sq ft new office accommodation for Severn Trent PLC. The scheme was competed in September 2010 and forms the head office for the utilities company. It is the base for around 1700 employees and is the manifestation of the company’s low carbon agenda, archiving a BREEAM ‘Excellent’ rating and the first B rating on an EPC for a city centre office solution.
REGIONAL OFFICE MARKET SEES STEADY IMPROVEMENT YET UNDERLYING CONCERNS REMAIN The regional office occupier market has improved each quarter this year following a sluggish start, according to a recent report by GVA. The Big Nine regional centres according to GVA - Birmingham, Bristol, Cardiff, Glasgow, Manchester, Leeds, Edinburgh, Newcastle and Liverpool, all recorded the highest quarterly take-up this year. City and out-of-town take-up totalled 1,940,000 sq ft in Q3, 22 per cent above the quarterly average. The Big Nine, a quarterly review of the market by the UK’s largest independent commercial property adviser, indicates slow but continued growth in 2011 overall, yet points to a potentially more challenging 2012. Carl Potter, director and national head of offices, based at GVA’s Birmingham office comments: “Birmingham and Cardiff city centres and Glasgow, Manchester and Newcastle out-of-town markets have performed particularly well over the past quarter. The deals in the pipeline for the rest of the year will guarantee a solid year’s activity, although renewed economic uncertainty and patchy long term enquiries indicate a tough year ahead.” While headline rents and incentives have remained static this year, the shortfall in new supply has seen some deals becoming more competitive. Conversely, the glut of secondary property is causing average rents to weaken. Carl Potter continues: “Take-up in the nine city centres has been spread more evenly than usual this quarter, with no exceptional levels of take-up in any one city.” The out-of-town market took a greater proportion of activity than usual (42 per cent), as a result of strong activity in Glasgow. City centre take-up totalled 1.12 million sq ft in Q3, 10 per cent above the quarterly average. The 94,000 sq ft letting in Liverpool at the Plaza to Weightmans Solicitors was the largest in Q3. Availability of prime space continues to creep down in the city centres, particularly in the core. For further information on GVA’s latest Big None report visit www.gva.co.uk/research or contact Carl Potter on 0121 609 8388 or email@example.com.
LANGLEY POINT STEPS OUT WITH ITS LATEST GREEN CAMPAIGN One of Birmingham’s newest ‘green’ buildings is putting its best foot forward around the city centre to show prospective occupiers how they can reduce their carbon footprint. Agents and property professionals were drawn to Metro Bar & Grill in Birmingham for a taste of what’s to come from Langley Point’s new ‘welcome to a greener place to work’ campaign. Visitors to the popular watering hole were encouraged to download the latest Quick Response Code (QR code) from Langley Point – the only selfcontained building of its size and type in Birmingham - for an exclusive insight into the low carbon benefits of opting for a greener place to work. The campaign encoded just some of the ways Langley Point on Bath Row can help potential buyers reduce their carbon footprint with greener technology, improved efficiency and renewable energy. Trigram’s director Bill Houle said; “We’re aiming to make a big impact following the launch our latest campaign to lead potential occupiers to Langley Point. “The campaign is focused 100 per cent on delivering the green credentials on offer at the building. With the help of alternative social media channels, like QR codes, we’re able to get new buildings in front of wider audiences instantly.” Backed by venture partners Folkes Holdings, Corum and Trigram Properties, Langley Point is one of just a few new BREEAM-excellent rated commercial developments in the city. Strikingly angular in design, the 44,500 sq ft building uses the latest in cutting edge ‘eco’ technologies. It was purpose-built to keep running and maintenance costs for the occupier to a minimum, incorporating features including passive chilled beam cooling for high thermal performance, solar heated water technology and specialist boilers. An outstanding 85% of the building’s heat can thus be recovered for re-use and this is complemented with energy efficient lighting and other energy efficient measures. Secure parking comprises 90 car park spaces as well as 42 spaces for cyclists.
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CML Logistics to take full occupation of Brockton Business Park St. Modwen has secured the letting of Buildings 1 and 2 of its Brockton Business Park scheme in Brockton, Telford, to CML Fulfilment & Logistics Ltd. The dedicated logistics specialist delivers chilled, frozen and ambient goods to all of Aldi’s Regional Distribution Centres. It has signed a 15 year lease on the two units totalling 206,350 sq ft on a stepped rent rising from £100,000 for years 1-2 to £405,920 for years 3-5, with a rent review in the 5th year. Already headquartered at Brockton Business Park, CML is expanding from a 75,000 sq ft property which it leased in 2009 to assume full occupation of the 15 acre Business Park site in January 2012. The company’s new space will be utilised for warehousing, ambient chilling, freezing and distribution with over 100 delivery vehicles controlled from the Telford location. The company will also be managing its satellite depots in Scotland and Eire from Brockton Business Park. Dedicated to major client Aldi, CML’s expansion follows a steady period of growth for the German supermarket which has resulted in the CML team growing from 11 to 73 employees at Brockton Business Park. The company services all of Aldi’s regional distribution centres in England and Ireland. Managing Director Tim Middleham commented: “We are extremely proud of the on-going success of CML and St. Modwen’s ability to accommodate our business growth within our existing location enables us to expand with minimal disruption to business operations. We have fast established a reputation as ‘the Aldi specialist’ and are delighted that we have been able to expand alongside Aldi, providing our expanding primary client with continued logistical support across its UK locations. Going forward we expect to see CML continuing to expand both its client base and team at Brockton Business Park and the additional space which we will take occupation of in January will ensure we achieve this.” Jonathan Green, development surveyor for St. Modwen commented: “CML has a very strong reputation in the logistics sector and it is great to see a local business enjoying such success despite the current economic climate. The company first took occupation of Brockton Business Park because of the opportunities for future expansion which it offered and we are delighted to now be accommodating the business’ continuing growth here.” Situated within easy access of the M54, Brockton Business Park offers a great location for logistics based businesses. St. Modwen’s nearby Queensway Business Park is also a popular business location with just 7,000 sq ft of industrial space remaining, plus design and build opportunities up to 90,000 sq ft. Located adjacent to the A442 Queensway, four miles north of Telford town centre, the 20-acre selfcontained Queensway Business Park site has appealed to businesses looking for secure, well-managed space in the Telford area with good links to the motorway network.
Knight Frank acquire ExtraCare sale & leaseback Birmingham, UK – Knight Frank’s Birmingham investment team has advised Archaylen Property on the acquisition of 7 Binley Business Village, Coventry for £3.97m reflecting a yield of 6.35%. The ExtraCare Charitable Trust has signed up to a 25 year lease with 5 yearly fixed rental uplifts linked to the Retail Prices Index. The building, which is 10 years old, forms part of the established and popular Binley Business Village. At 20,395 sq ft, the two storey, detached building benefits from a generous parking ratio and contains a storage/workshop facility capable of conversion to offices. Jonathan Devaney, investment agent with Knight Frank, said: “Binley Business Village is one of Coventry’s premier business parks, benefiting from easy access to the A46 and boasting a strong range of corporate occupiers including; HSBC, Coventry Building Society, Nationwide, Jewson Plc and Orbit Housing Association. This, together with ExtraCare’s strong financial status, made this a particularly attractive proposition.” Archaylen Property is the operating name of a recently established family owned business, specialising in the sourcing and asset management of commercial and residential property. Managing Director, Andrew Screech, commented: “This acquisition provides a bedrock of secure income for the business from which to build. Moving forwards we will be seeking further modern properties in the office, industrial and residential sectors with genuine potential for rental and capital growth.” D&P Holt acted on behalf of ExtraCare Charitable Trust.
LONGBRIDGE TECHNOLOGY PARK REACHES 80 PER CENT OCCUPATION
Knight Frank grows Birmingham team with trio of appointments Birmingham, UK – Knight Frank’s Birmingham office is expanding with the recruitment of three new team members – Indi Sidhu, Charlotte Conyers and Harry Goodman – who have joined its Commercial team. Ashley Hudson, head of the Birmingham office, said: “As the last quarter of this year rushes past, we are in buoyant mood at Knight Frank, celebrating not only being joined by these three new members of the team but as a business we are on course to exceed our annual targets. We will continue to strategically recruit and will be aggressively targeting future growth, deals and client wins in 2012. “These appointments demonstrate our confidence and commitment to Birmingham and the wider West Midlands and show our strength specifically in the valuation market, which continues to be a growth area for us. We are also committed corporately to investing in the younger generation and giving opportunities to graduates and younger surveyors.” Indi Sidhu will be joining from CBRE, bringing a broad range of valuation experience dealing with lot sizes up to £80m in the retail, office and industrial sectors for loan security as well as portfolio valuations. Until recently he was also the regional chair of Birmingham RICS Matrics where he remains an active member. He added: “This is an exciting time for Knight Frank in Birmingham as we generate growth in every area of the business, leveraging off the excellent reputation and brand. This makes it the perfect moment to join Knight Frank and I am looking forward to not only developing my career here but working with a diverse range of clients and making a contribution to build the business.” Charlotte who joins Knight Frank as a graduate and Harry as an intern, are working with the Office and Industrial Agency teams which have respectively recently completed series of deals in the city centre, in the M5 and M40 corridors and Oldbury; while Investment agency is active in the wider region as well, marketing property as far afield as St Helier on Jersey.
St. Modwen has reported continued growth of the business community at its Longbridge Technology Park with over 80 per cent occupation of the first two completed properties. Situated off the A38 (Bristol Road South) St. Modwen’s commercial properties; the Innovation Centre and Two Devon Way form the first phase of the £100 million Longbridge Technology Park. Now over 90 per cent let, the Innovation Centre is home to 36 businesses employing approximately 240 people, while neighbouring Two Devon Way which was reconfigured to provide a range of office suites at the beginning of the year is already 81 per cent let. Just over 5,000 sq ft of space remains available at 31,208 sq ft Two Devon Way following a recent letting to UK electronics design consultancy, Bytesnap. The company is one of a number of businesses who have relocated from the start-up suites at the Innovation Centre to occupy more office space at Two Devon Way. Bytesnap has signed a three year lease for Suite 4 on the second floor of the property totalling 1,123 sq ft. A popular location for technology and innovation based businesses, Bytesnap joins existing occupiers Co-operative Web, Vecoplan and Kinnarps at Two Devon Way. All of the tenants have use of the range of state-of-the-art conference and meeting room facilities at the neighbouring Innovation Centre, which can accommodate up to 100 people. The building also provides 107 allocated undercroft car parking spaces and benefits from Longbridge Technology Park’s 24-hour security. Jonathan Green, development surveyor for St. Modwen commented: “We are delighted to have welcomed Bytesnap to Two Devon Way this month. The property provides occupiers with a range of office opportunities plus access to communal business support facilities at the Innovation Centre enabling growing companies such as this to seamlessly expand into Two Devon Way. It is clear to us that demand for office space at Longbridge is swiftly increasing and we aim to continue to meet this demand with future commercial developments at the Technology Park.” Longbridge Technology Park has been designed specifically to attract a nucleus of high technology businesses to Longbridge. The area is served by excellent public transport links, with Longbridge Train Station within short walking distance. Birmingham city centre is eight miles away and the M5 (junction 4) and M42 (junction 2) motorways are three miles away. The Technology Park is part of the wider £1 billion regeneration of Longbridge. More than 400 acres is set to be transformed by St Modwen and Advantage West Midlands on the site of the former MG Rover works, delivering a sustainable community with the creation of 10,000 new jobs and up to 2,000 new homes. A new town centre will feature the new £66 Bournville College, which will open in September, a Sainsbury’s foodstore and a new two acre park.
Tax reliefs continue to offer opportunity for redevelopment of city centre offices
MELANIE WILLIAMS, PARTNER IN SQUIRE SANDERS HAMMONDS’ REAL ESTATE PRACTICE
In the current economic climate it continues to be difficult to obtain funding for property investment. Investors are increasingly choosey when committing their funds to a particular project and businesses are finding their growth constrained by this. Whilst tax reliefs cannot transform a deal in which the property fundamentals do not work into one in which they do, tax reliefs can help to improve an investor’s returns and therefore can increase the attractiveness of one project over another. One such relief is Business Premises Renovation Allowance (BPRA) and the extension of this relief announced in the 2011 Budget will be of interest to all investors in, and developers of, commercial property. Business Premises Renovation Allowance BPRA is a tax relief available to taxpayers that was scheduled to expire in April 2012. However, in
the 2011 Budget the Chancellor announced that BPRA would be extended until April 2017. BPRA is intended to provide an incentive for those funding the refurbishment of commercial properties that have been unused for at least a year and are located in “assisted” areas to bring them back into commercial use. For the purposes of the relief, much of Birmingham city centre is classed as an “assisted” area. BPRA provides an initial capital allowance of 100% for qualifying expenditure. This means all qualifying expenditure is tax deductable in the year it is incurred. Qualifying expenditure is expenses incurred in converting, renovating or repairing a qualifying property. However, BPRA is not available for expenses incurred in acquiring or extending a property. For example, buying the property, adding another storey to or creating a basement for a property is not qualifying expenditure.
JON STEVENS, PARTNER IN SQUIRE SANDERS HAMMONDS’ TAX PRACTICE
The current surplus of office buildings within Birmingham city centre presents an opportunity for developers to look for other, more profitable, uses for properties, for example converting offices into hotels. BPRA offers a tax efficient way for the renovation or conversion of properties in Birmingham city centre to be carried out.
a 224 bedroom Holiday Inn Express hotel (under negotiation). We have also advised on a number of other projects utilising BPRA for office renovations or office to hotel conversations, both across the wider Midlands region and further afield. Squire Sanders Hammonds was formed by the merger of Our experience Hammonds and Squire, Sanders & Squire Sanders Hammonds is the Dempsey on 1 January 2011 and market-leader in this area. Our recent is a leading commercial law firm with lawyers in 36 offices and experience in Birmingham includes 16 countries around the world, advising syndicated investors on the providing the Birmingham office acquisition and development of the with the ability to provide seamless following properties: • 3-6 Waterloo Street – conversion legal counsel for both local and global transactions. of an office block into a 152 bedroom Premier Inn hotel (open) Jon Stevens is a partner in our • Cumberland House, Broad Street Tax practice and Melanie Williams is – conversion of an office block into a 285 bedroom Hampton by a partner in our Real Estate practice. Hilton hotel (under construction) Both have extensive experience of • Kennedy Tower, Snow Hill Plaza – advising on property development conversion of an office block into and investment.
Equality on the agenda as Louise makes her plans Planning consultant Louise Brooke-Smith is in line to be the global president of the Royal Institution of Chartered Surveyors. She talks to Ian Halstead about life, work and ambition.
It’s always entertaining to spend time in Lou’s company, although a little unsettling to discover just how many topics it’s possible to discuss over one - tastefully small - mug of coffee. Even the simplest of questions generates a whirlwind of ideas and thoughts, underpinned by passion, and driven by a mind seemingly too busy to rest. No wonder that as she talks, Lou has just returned from the drive-by McDonald’s near her Edgbaston office, with burgers, shakes and more to refuel her hungry colleagues. There’s certainly much to debate. Last year she led an MBO of the CSJ Brooke Smith consultancy. In January, the venture rebranded as Brooke-Smith Planning, and July saw her elected a global vice-president of RICS, alongside two of her peers based in Germany and Singapore. If Lou decides to stand for the senior VP’s position next summer, she could become the organisation’s global president in 2014 - although she does have a three-year window in which to decide her next step. At the same time, she has to juggle the demands of heading a practice whose clients include British Waterways, Coca-Cola, Crossrail, Her Majesty’s Court Service, and the Co-operative Society, alongside retailers, residents’ groups and local authorities - and two teenagers. “The RICS role had been at the back of my mind for a long time, but it was only after I bought the company back that I decided this was the right time,” says Lou. “I’d been on the LOUISE BROOKE-SMITH, GLOBAL VICE-PRESIDENT OF RICS
governing council for quite a while, and I wanted to step up. “Often, the presidency of an organisation is seen as something of a swan-song, and the individuals often seem rather remote, and distant from their members. “The RICS is different though; all the top people are in their 40s, it has a strong officer team, and the top job is not as onerous as it was, it’s more of an ambassadorial role. “Myself, Chris (Fossick) in Singapore, and Martin (Bruhl) in Germany also have similar backgrounds, and have reached a similar level in our organisations. The international structure we have now also means that the global president isn’t expected to do everything.” Lou’s decision to seek nomination from the governing council followed a spell of soul-searching about the likely challenges. “I thought about if I could handle the position, if I’d enjoy it, if the professional circumstances were right, if it would fit from a business point of view, and if I could do a good job for the RICS. Once I’d decided all the answers were ’yes’, it was time to go forward,” she recalls. However, the subsequent journey to becoming a global VP was certainly not about ticking a few boxes, and having a cosy chat or two. “It was a pretty gruelling professional experience,” admits Lou. “You have to be nominated by your peers, some of whom have to already be sitting on the governing council, then you go forward to the leadership
committee for endorsement and to make sure you fit all the right criteria, and that group is independently adjudicated. “Then you make your case before the 60-plus members of the governing council who vote you in or out. It’s a very lengthy and comprehensive sifting process, and you don’t go forward unless you’re willing to be shot at - but in the end it’s worth it.” The RICS doesn’t require its three global VPs to create their own agenda, but Lou says she’d like to make equality a theme of her role. “I wasn’t standing as a woman, but equality aspects are very important, not just in terms of the male-female membership, but about the recruitment of people from ethnic communities, and in the widest sense, about how individuals can access the profession,” she says. The organisation’s imbalance between male and female numbers has been a long-standing issue, and although there has been progress, Lou readily accepts that more does need to achieved. “When I started, females were only about 2% of the membership, and now the figure is pushing 20%, but we haven’t moved as fast as other professions, and the number of ethnic members remains very low,” she admits. “I really don’t know why so few ethnic applicants come forward, as globally, we have more overseas people qualifying as surveyors than we do in Britain. “We are strong in China, for example, and just opened an office
in Brazil, so there is worldwide acceptance and endorsement of our brand. The 2011 president is from Malaysia, and the number of RICSaccredited degree courses launched in Asia shows we are seen as a quality marque.” Lou is very much the public face of her practice, but as she chats away amiably, it has to be asked if she considered a new and generic brand, after the MBO. “We took lots of advice about a different name, but it didn’t matter who we asked, the response was the same, to leave it alone, so BrookeSmith Planning it was,” she says. “We are a close team, and work very much on a collective basis, which is a major reason why I’m confident that everything will continue as normal, even when my RICS workload increases. “We’re advising on a major retail scheme, we’ve got a waste transfer station project in Wigan, some other large regeneration projects, we’ve just done a residents’ mooring scheme on the Thames for British Waterways, and are looking at another in Leeds. “We also have a lot of work advising different communities and councils, especially with regard to the potential impact of localism, but the team is very capable of handling everything I ask of them. “The RICS workload will be the equivalent of one day a week, and I’m paring down my peripheral interests and activities, so everything should fit nicely into place.”
Personal touch brings Indigo to the Cube as Bloc looks for its next location
The debate about Birmingham’s ‘need’ for a five-star hotel is long over, but the sector is certainly buoyant, and at both ends of the market.
Nick Taplin, SANGUINE MD
Sanguine Hospitality is having a serious impact on the city’s leisure sector just by itself; with a £10 million-plus Indigo hotel and spa opening at the Cube in December, and a Marco Pierre White steakhouse on the 25th floor. The venture, which will occupy the two floors below the roof-top terrace and bar, has targeted a fourstar rating. The operator is also underway with a £30m project to create Europe’s largest Hampton by Hilton on Broad Street, where the redundant Cumberland House will be transformed into a 285-bedroom hotel. Sanguine will complete its hattrick of Birmingham schemes by putting a 224-bedroom Holiday Inn Express into another one-time office block, the 19-storey Kennedy Tower, now rebranded as Snow Hill Plaza. Meanwhile, having launched its first Bloc Hotel in the Jewellery Quarter earlier this year, the organisation behind the pod-style design is looking for new sites, and could even acquire existing businesses. Operations and marketing director Olivier Delaunoy and his fellow board members are convinced their business model - off-site modular construction techniques to create hi-tech rooms, but without bar or restaurant - is perfectly suited to these value-conscious times. Sanguine is covering all its bases, with just over 500 rooms at the budget end of the market, and 52 rooms in its niche boutique offering at the Cube. The group has an eclectic portfolio; from full-service
hotels, health clubs and spas, down to partnerships with the big budget brands, but even though managing director Nick Taplin is from the Midlands, the decision to take space inside the Broad Street landmark through happenstance. “Our first acquisition was in April 2003, a hotel south of Bristol, then we bought a property in Chester as a big banqueting venue, and then built a hotel and health club in Bristol, but as the market began to overheat, it became difficult to identify value,” he recalls. “We probably used the downturn to our advantage, because we had funds available, and began looking at a number of locations, largely depending on which operators were already there. “To be honest, we were just about to buy a site in Cardiff, when our agent (Richard Dickson) came on, saying he’d been told about a fantastic opportunity in Birmingham, so we came up to see what he’d found.” A chance meeting at a business event in the West Midlands had seen Dickson meet Neil Edginton, as always a passionate ambassador for the landmark building he helped create, and take to completion. Nick admits he made the journey to Birmingham with expectation, but not huge amounts of hope, about the potential location. “Richard was really enthusiastic, but I was born in Rugby, Birmingham had been my old stomping ground, and I remembered what the city centre, and particularly Broad Street, had been like,” he says.
“I walked out of the station though, saw the Bullring and the new Selfridges, then walked down to where we could see this huge new building. I started looking at it, and thought ’Wow’. ”It was great to see how much Birmingham had changed, and to meet so many people so enthusiastic about the place. When we began talking to advisers and possible investors about the Cube though, they had the same initial reaction as myself, so we just had to convince them.” Sanguine’s other city schemes involve redundant office buildings, and Nick pays tribute to the success of the government’s Business Premises Renovation Allowance programme, in allowing those projects to proceed. “It’s been a great scheme for us. A building has to be empty for at least a year, before it meets the requirements, but the tax breaks available really do help convince people that they should invest in the UK, so well done to whoever came up with the idea,” he says. “Three schemes in one location is enough for us now, but we’re always looking for new places. We’ve just completed two projects in Liverpool, so Glasgow, London, Manchester and Cardiff are on our short-list. By the end of 2012, we’ll have 2,500 rooms built, or under construction, which we reckon is pretty good considering the state of the economy and the property market.” The Bloc team’s ambitions are for the moment, less grand, but then their first hotel only opened its
(automatic) doors in Spring. “We decided to trial the product in Birmingham, because we thought the demand was there, and it was an ideal location,” says Olivier. “My involvement came about because I’d previously advised NiteNite on their pod hotel. I don’t know what went wrong there, but maybe the balance between loan finance and revenue was not perfect “When I met the directors though, they had a clear idea of how to build the Bloc, and the hotel core took just eight days. One director is a designer by trade, so he wanted a high-quality finish, and I’d worked with Laura Starkie for many years in different roles, so knew she’d be perfect for operations manager. “We’ve been very careful to monitor our reviews on TripAdvisor, and the feedback from customers has been extremely useful. Now we are looking for new locations. We almost had a site in London, but couldn’t get planning permission, so we’re looking at Edinburgh and Manchester. “We’ve also developed different models, so we have the original new-build approach, but also one which would work for a refit of an existing building, and one which combines both. “We won’t rush into anything, because we are perfectionists, and always looking to improve, so the next Bloc may - for example - have a lobby which looks very different. “If anyone has ideas about possible sites or knows of buildings with potential, then we are always very happy to hear from them.”
New hope for IPL site
One of Birmingham’s biggest regeneration sites will come to market in the New Year, after spending three years in the doldrums. Icknield Port Loop covers 65 sprawling acres of brownfield land, between the WolverhamptonBirmingham canal and Edgbaston Reservoir. It was regarded as one of the country’s best urban development opportunities, until recession forced Isis to put its scheme on hold in the autumn of 2008. The developer - the regeneration arm of British Waterways - had intended to bring forward around 2,500 homes, and some 60,000 sq metres of offices and commercial space on the site. Now though, the landowners essentially the Homes & Communities Agency (HCA), the city council and British Waterways - have decided on a revised scheme, reflecting the present market conditions. Plans are likely to be submitted
before the end of the year, and a development partner will be sought during 2012. The new proposals would see a much reduced amount of housing; some at around 40 per hectare, others at around 70 ph., and apartments at around 120 ph, totalling some 1,000 units. There would also be roughly 10,500 sq metres of retail, leisure and commercial space, including a waterside pub, and work-space units, plus a large central park and two smaller ones. Most of the homes would be two or three-storey, but on Icknield Port Road and alongside the main Wolverhampton canal, the skyline would rise to five storeys, and possibly to eight storeys in two areas. Public consultation began on October 1st, and thoughts on the proposals are being invited via the web site - http://icknieldportloop. wordpress.com. A sizeable chunk of the Icknield
site was transferred to the HCA, after the government’s decision to abolish the RDA network, including Advantage West Midlands, which had a £300 million portfolio of schemes and property assets. The HCA’s regional executive director, Paul Spooner, said: “Our job can be described as a stewardship approach, in which we deliver what Local Enterprise Partnerships (LEPs) and local authorities want. It is certainly not about land-banking. “We have already had discussions with local authorities and LEPs in all of the areas where assets have been transferred. “We are starting to see interest in these sites from investors and, for example, at Icknield Port Loop, we have had positive response from house-builders and businesses. “With the city council and British Waterways we will bring the site to market in the New Year, which will generate a significant number of new homes and commercial space in
the long-term.” Ten former AWM staff, including its head of asset management Steve Holland, joined the HCA during September, to help the agency decide how to obtain best value for taxpayers, from the portfolio. Jaguar’s recent decision, to site its new £355m engine plant at the i54 business park, on the northern outskirts of Wolverhampton, confirmed AWM’s logic in identifying the brownfield location as a strategic inward investment destination. “We have a long-term commitment for the former RDA assets to contribute to local economic growth and the Jaguar Land Rover deal is a key achievement,” said Paul. “We are working very closely with local partners to ensure the continued disposal of the sites and the expertise and experience of our new colleagues will ensure that we continue the good work already put in place.“
Staying Cool ups the heat but SACO has ace in its pack As the 20th century slid slowly from view, the regional market for serviced accommodation barely existed, but itâ€™s now one of the rare property sectors to enjoy buoyant demand and decent margins. By Ian Halstead
TRACEY STEPHENSON, STAYING COOL MD
CLARE ACE, HEAD OF ACCOUNT MANAGEMENT
A veteran of the region’s development scene, Coventry’s Peter Deeley, identified the potential demand from corporate travellers in the late 90s, when his vehicle - The Serviced Apartment Company (SACO) - was well ahead of its time. “When we started, the idea of providing serviced accommodation outside London was brand new,” recalled the company’s head of account management, Clare Ace. “It wasn’t that the market was evolving, there wasn’t really a market.” SACO launched, on New Year’s Day 1997, with a block of 21 apartments in the heart of Bristol, where its head office has remained.
“We knew there was interest from local corporates, the economy was expanding, and the city also has a great sense of history, so it seemed the ideal place to be,” said Clare. “Initially, we expected to be letting apartments on long-term leases, perhaps six months or more, to people who were away from their homes for significant periods. “We then started looking at other cities, where our target industry sectors - construction, IT, manufacturing and financial services - were active, and were expanding, so we acquired apartments in Nottingham, Reading, Cardiff, Glasgow, Birmingham and Jersey. ”It was a challenge to raise awareness of this new market segment, but we gradually built up a regular client base. Then we had the idea of linking up with other providers, under the SACO brand, to centralise the bookings, the marketing and the administration.” SACO now operates just shy of 550 apartments, across 28 locations in fourteen cities and remains both one of the regional market leaders, and a powerful presence in the Association of Serviced Apartment Providers (ASAP). The leisure side of its network evolved almost accidentally, as people who had used apartments on corporate lets decided to use them for holidays, but has since grown steadily. “In general, the length of stays has shortened, but it’s very locationspecific. Bookings in Bath, as you would expect, are dominated by leisure, whereas in Birmingham, probably 75% of lets still come from corporates,” said Clare. “We work hard to ensure that we have a very flexible product, which works for both short and long-term lets, so we have studios, and apartments with one and two bedrooms. “Business bookings vary greatly now, for example. We get steady custom from the sporting and entertainment sectors, we do extremely well when there are trade exhibitions at the NEC, and we also get customers who are appearing in shows, at events, and even in Christmas pantomimes.” Inevitably, recession impacted on the sector, but in a very positive way, as cost-conscious corporates decided that many employees no longer needed to stay in luxury hotels. “We put two bathrooms into all our two-bedroom apartments, so people could share, and it’s going very well,“ said Clare. “In London and Birmingham, for example, we’re getting quite a lot of graduates sharing, who have joined the professional services sector, but can’t yet afford to buy their own place.”
Intriguingly, Clare says that SACO and other operators still work closely together, to ensure that ever-more corporates and leisure customers are aware of the sector. “It’s like the hotel industry 30 years ago, when there were lots of independents and small chains, rather than the major brands. The market is very fragmented,” she said. “SACO’s strategy is to strengthen our position in existing locations, and to identify new ones, but as a founder member of ASAP, we know we all have to keep raising the sector’s profile. “People are used to hiring apartments overseas, but still don’t always think of that option when they’re holidaying in this country.” Just as SACO was a pioneer of serviced apartments, Birminghambased ‘Staying Cool’ was established to offer something new no the sector; between the big hotel brands and expensive boutique offerings. It’s six years since business partners Tracey Stephenson and Paul Taylor conceived their venture, and their success is evident; given that their apartments in Urban Splash’s Rotunda sit proudly atop TripAdvisor’s table of Birmingham’s 137 places to stay. Their spaces are branded as serviced apartments, but the presence of AppleMacs, organic nosh, Gaggia coffee-makers and other upmarket elements suggests they are rather posh ones. Tracey - now the MD deliberately avoids the word ‘luxury‘, but Staying Cool’s largest lets at the Rotunda are Birmingham’s only apartments to have earned an official five-star rating Peter Deeley entered the sector as a long-time developer, but the Staying Cool duo started out as members of Manchester’s professional services sector, who weren’t happy with the hotels they used as their careers took them elsewhere. “We thought we saw a gap in the market, and the Deansgate corridor looked a good place to start, and we ended up owning 14 properties in eight schemes, in four different areas. We had a mix of corporate lets during the week, and leisure at the weekend,” recalled Tracey. Managing apartments so far apart proved a challenge though, and Staying Cool’s strategy changed after a meeting with Tom Bloxham, some three years back. He had space at several Urban Splash schemes in Manchester, and in the Rotunda, which had just been given a makeover by Birmingham’s best-known architect, Glenn Howells. The locations, the scope to create stylish apartments, and the
US brand were the ideal match for Staying Cool, and the resulting partnership has worked so well that the two business partners relocated their venture to Birmingham. Now, with the brand established, and repeat bookings from both business and leisure customers at a consistently healthy level, the challenge is to raise sufficient external finance for expansion. “We’re looking to replicate the Rotunda approach, where we have multiple apartments in a single building, elsewhere and we’d like the next properties to be in London. It does seem an obvious place to go, but the occupancy rates are so much higher,” said Tracey. “In Birmingham, we keep on beating our previous record, and the third quarter of 2011 was ahead of our forecasts, but in 2010, although our letting figure was 74% - against the local average of 64% - in London, the figures are close to 100%. “We’d like to take several floors in a large building, and are just waiting for the right opportunity. We’d consider other cities, such as Glasgow, Newcastle, Manchester and Brighton, but there, we’d want to be right in the centre. In London, it’s more about the building than the location. ”We have a very small property portfolio, and we’re talking to potential trade investors and property investors, because we believe that the serviced apartment sector has huge scope for growth.” Tracey is convinced that the Staying Cool business model - central locations, upmarket apartments, and high service levels - will work elsewhere, and the first expansion will be with Urban Splash, adding seven more apartments to the 20 they already own in the Rotunda. However, she admits that the banks are proving typically cautious, about funding further steady growth. “They aren’t quite sure how to define us. We don’t offer the kind of serviced accommodation they are used to, but we aren’t a hotel, so at the moment, it’s proving difficult to persuade them to lend,” said Tracey. “However, we have set up an advisory board of non-executives, to offer advice and help us expand. The co-founder of Mr & Mrs Smith, James Lohan, has joined because he’s one of our biggest fans, the chairman of Bespoke Hotels, Robin Sheppard, is on, and we’ve just invited Glenn Howells to join as well. “I’m sure the banks will soon realise just what we do, and then we can start looking for new locations, always mindful that we certainly don’t want to go too quickly,or too soon.”
Barberry’s Bishop Gate gets council’s blessing
HENRY BELLFIELD, BARBERRY DEVELOPMENT’S DIRECTOR
Some may carp at delays in the planning system, but Barberry Developments demonstrated just how efficient the process can be, with its new £50 million project in the heart of Coventry. Its Bishop Gate proposals are for a retail-led mixed-use scheme, anchored by a 130,000 sq ft superstore, with a swish 20,000 sq ft gym and fitness club, and three levels of car parking, offering some 580 spaces. The location - as its name implies - is at the northern side of the centre, close to the former city walls, and one of medieval Coventry’s gated entrances. Yet, although site assembly was only completed at the turn of the year, and the outline application submitted in March, the scheme had
won outline consent by the first days of June. Director Henry Bellfield says the efficiency and flexibility of the council’s regeneration team, the support of Coventry-based AJA Architects, and the backing of the Co-op Bank all helped smooth progress. “Some people just pay lipservice to the merits of partnership working, but Barberry has always believed in it. We’ve worked with the Co-op for more than 15 years, and AJA have always done a great job for us,” he says. “We spent a lot of time sitting down with the council officers, the councillors and the urban designers, understanding what they hoped to see on the site, and fine-tuning the proposals before they went in. “There’s no point coming up with
plans in isolation, because then the first time the councillors really see what is proposed is at the planning committee meeting, and some aspects may well come as a surprise to them. “It was in all our interests to hold detailed discussions to explain our vision and make sure consensus was reached. Martin Yardley (director of city services and development) was very helpful. He was clear, decisive and open throughout the process, which is what all developers want.” Around half the 3.37-acre site was previously occupied by a redundant Royal Mail sorting office, which was marketed by Jones Lang LaSalle. “Coventry had been very much on our radar, although we didn’t know about this particular site until it became available,” says
Henry. “The council had very clear aspirations for the redevelopment of the location, and saw a retail-led scheme as ideal. “I think there was a shortlist of at least six potential purchasers, and there was a delay because Royal Mail wasn’t 100% sure what it wanted to do; sell the site, have a JV with a developer, or develop it themselves. “Eventually, they decided to sell it outright. Our offer was accepted, and we exchanged contracts within ten days from that point.“ Henry says talks with several major supermarket operators are advanced, and he hopes agreement will be reached by the end of 2011. “We’ll then work up a detailed application, and aim to submit that during Q1 of 2012, and hopefully start site work by next summer.”
Urban Splash tweaks its model for the new times
Tom Bloxham was the poster-bloke for urban regeneration when recession hit, and although many rival ventures have disappeared, his Urban Splash vehicle remains the sector’s brightest star. Inevitably though, there have been changes along the way, as he explained to Ian Halstead, over a coffee at his company’s Manchester redoubt. “The biggest difference is not lack of opportunity, but lack of finance, no matter what your track record, and however solid your asset base might be,” said Tom. “The model - which served us so well before the downturn - was to use bank debt to build schemes on a speculative basis, then to pre-sell apartments, and for the banks to make mortgages freely available. “Now of course, all those elements are gone, and the people doing the valuations are so concerned about getting something wrong, that it doesn’t seem to matter if our units are bigger, better and brighter than other products on the market. ”We’re still just as keen to take on the more challenging projects though - such as the Park Hill project in Sheffield - because we have always seen ourselves as problem-solvers. “The strategy had to be tweaked to reflect the new conditions, of course. We still have £20 million of assets, and are now more focused on our investments, and on residential units, so at the start of the summer, we had a real sales push. “We held on to a lot of the commercial space we brought forward, but sold more of the resi. We kept on doing new schemes though, right through the recession, which many people didn’t. The only real difference is that we are now looking at housing, rather than flats. ”The character of Urban Splash, the kind of company we are, hasn’t
changed, we’re just working in slightly different directions.” One of the organisation’s rising stars is the former Emily Jones - now Mrs Handslip - once a surveyor with DTZ in Birmingham, who crossed the M6 to take charge of lettings at Fort Dunlop, and is now responsible for all Urban Splash’s commercial space deals across the country. “Emily’s a bright young woman, she’s done very well for us over the last four or five years, and I’m sure she will continue to do,” said Tom. However, he doesn’t believe that the present trading climate means Urban Splash now needs to recruit a different type of person. “I’ve always believed, whether you are recruiting for an internal position, or looking to appoint an architect to one of your schemes, that you should short-list all the people who are capable, and then take on the person you get on best with,” said Tom. It’s an intriguing philosophy, which has clearly served Urban Splash well, but the inevitable downside is that if trading dips to the point where job cuts are unaoivdable, that their leaving is like saying goodbye to friends, not just colleagues. “Yes. It was an awful feeling in the depth of the recession, when the business just had too many staff, and we had to make people redundant. I started the business to create jobs, and to build the business up, not to ask people to leave,” said Tom. “However, as conditions have improved, we have been able to take some back on, and the vast majority who did leave were able to walk straight into jobs elsewhere, because Urban Splash is good to have on your CV. Hopefully, it‘s not something we ever have to go through again.”
TOM BLOXHAM, URBAN SPLASH
Sense of history is catalyst for BHB’s success
BHB Architects are dedicated to saving old buildings for posterity, but also committed to using their architectural skills to ensure that new ones will stand the test of time. The Practice is multi-award winning and based in Lichfield, and they have demonstrated consistently that the use of intelligent and sensitive design ensures that some of the nation’s most treasured buildings will be enjoyed for generations to come. History plays a vital role in this practice. As specialists in the repair, alteration and extension of historic buildings – particularly churches – it has rapidly gained a reputation for its conservation work which now accounts for over half of its projects. These also include educational facilities and commercial projects, particularly those for challenging, multi-use sites.
The practice acts as church architects to over 300 churches throughout the region advising on restoration, repairs, reordering and new build schemes. BHB have completed work with grant-finding bodies such as English Heritage, the Heritage Lottery Fund and the Architectural Heritage Fund and is on the Royal Institute of British Architects’ (RIBA) Architects Accredited in Building Conservation register. Director with the practice Andrew Hayward commented “Our practice has a great reputation for good design and working with historic buildings but we also win awards for our new build designs. We have recently been instructed on a new build visitors centre for one of the larger National Trust properties, for example to demonstrate our all round abilities”.
There is a RIBA honour for its work at The Crown Inn, Playhatch, Henley on Thames; a Local Building Authority Built In Quality Award for its design of the Asda superstore in St. Matthew’s Quarter, Walsall; and a Southern Staffordshire Design Award for its conversion of the 12th century St. Thomas’s Priory in Baswich, North Staffordshire; The Practice believes firmly that you cannot design something that will fit into more than one place. They believe that every time you add or alter an historic building, it has to remain a good neighbour’. But even historic buildings can be brought into the 21st century. They also are proactive in their desire to embrace and promote environmentally aware design to their clients. Andrew went onto comment...” Green issues are having an enormous impact in the way that
Architects work. Sustainability is key to any project... However some green technologies are still in their inception and are expensive to implement, so there has to be a commercial reality to all of this: it has to be deliverable and possible to do within the budget.” The 35 strong practice has been established in a variety of guises for over 65 years, but for the vast majority of this time, has occupied the same converted Georgian Town House offices. The building, which sits impressively within the historic street scene, has been subject to many alterations and extensions over these years to house the diverse activities going on within, it is however difficult at first glance to see any trace of these changes... surely a visible testament that BHB Architects practice what they preach.
Focus and foresight key to BB’s new strategy
MAREK DOBROWOLSKI, MB’S INVESTMENT MANAGER
It can often seem that the only global real estate event of merit is MIPIM, which lures thousands of delegates and exhibitors to the South of France each spring. However, Business Birmingham’s new inward investment strategy means it is now targeting other property shows, and its investment manager Marek Dobrowolski was packing his bags for CoreNet 2011 in Paris, when PropertyAdvantage caught up with him. “MIPIM is certainly very useful, but it is rather a catch-all for the property industry. CoreNet is much more tightly focused, and attracts relocation specialists, investors and corporate occupiers, which resonates with us as a city, and Business Birmingham (BB) as a brand,” he explained. “We see it as a chance to educate property professionals about Birmingham, about what the city has to offer, and about how we are looking to work in smart and intelligent ways, in smart and intelligent buildings. “We commissioned independent research to identify the sectors
offering the most potential for attracting inward investment, and now we have tailored our international events programme to target those sectors, and to raise the city’s profile in the commercial property sector. ”Obviously, there’ll be a strong presence at CoreNet from Western Europe, but there will also be a significant number from Asia, and I‘m sure Eastern Europe will also be represented.” The sectors noted for BB by the long-established Plant Location International arm of IBM Global Business Services - are shared services, business process outsourcing, public sector functions, digital media, low carbon and transport technologies, financial services, and clinical trials. “It’s the first time we’ve been to CoreNet, but I’m expecting well over 300 people to be there, so we’ve arranged meetings with property people, developers, professional services advisers and relocation specialists, because my remit includes business centres and
shared services,” said Marek. “I’m sure there’ll be some interesting workshops, and there’s always the chance of a random meeting, but it’s important to be very well organised to get the maximum benefit. It’s going to be a very intense two days, because I have a very full agenda. “I’ll also be representing Birmingham in a wider context, talking about the benefits of the Greater Birmingham area, and of the West Midlands conurbation. One of the key elements of the visit is to be far more proactive about inward investment than we were in the past. “We produce more language graduates than any other city, for example, and more languages are spoken here than in any other UK city, so we are in a prime position to offer companies a real solution to their language needs, but people do need to be made more aware of what we have. “However, we are making progress. I recently had a conversation with a company based in India, and they are asking if we can service their clients in South-
East Asia - from Birmingham. “It might be another year, or 18 months, before we conclude those discussions, but that is the nature of inward investment. You need to be at events such as CoreNet to get a sense of what organisations are looking for, so you can tailor your response, but it is still a long-term process.” The next stage of the new strategy is to promote Birmingham as a place to do business, by highlighting examples of national and international businesses which have made their corporate home in the city. “Raising our profile is more than just attending events, it’s about changing perceptions. Thought leadership is one element, as is letting people know about case studies of successful relocations, so they start to get a sense of what is happening here. ”It’s never just about buildings and property though, it’s always about people too. The theme of CoreNet this year is ’social dynamics’, so a central part of our message is about skills, talent and the critical importance of work-life balance.”
HMRC deadline moves ever closer
The last three years have seen significant changes to the complex system of property capital allowances, so the time seems right to ask an expert to analyse what’s been happening. Dan Hartland, a property specialist and tax partner with Grant Thornton’s Birmingham team, sifts the good from the bad. “The biggest good news is that since April 2008 it’s been possible to claim a writing-down allowance of 10% a year, with regard to ‘integral features‘ in buildings. “Assets such as general lighting, general power and cold water installations, which may not previously have qualified for allowances now do, although at a lower rate. “Such allowances are also available to the buyer of a secondhand property, and can be valued on a ‘just and reasonable‘ apportionment of the sale price. “Based on a typical example of a commercial building sold for £10 million, a 2% apportionment, made on a conservative basis, would lead to additional allowances of £200,000. “It’s also good news that ‘green capital allowances’ are increasing, with additional categories of energy efficient assets being added. “However, on the negative side, the capital allowances regime is - in general terms - becoming less generous, with the abolition of industrial and agricultural buildings allowances, and a reduction in the rates of writing-down allowances. “The last budget also announced further reductions, with effect from April 2012, when writing-down allowances will be trimmed to
18% a year, and the total annual investment allowance - for which 100% relief is given - will be slashed from £100,000 to just £25,000. “Even worse, having clarified and improved the position with regard to the specific fixtures in a building which constitute ‘integral features‘, HMRC has now turned its attention to all fixtures, as they perceive that allowances are being duplicated, when properties change hands during their lifetime. “We see this as contrary to the basic premise that the total allowances claimed, should never exceed the original cost of the fixtures. “Meanwhile, HMRC’s consultations about proposed major changes in capital allowances claims for plant and machinery fixtures closed at the end of August, and the outcome is keenly awaited. “For commercial property holders, the key issue is to realise that it isn’t unusual in acquiring commercial property to undervalue the ‘just and reasonable‘ apportionment to fixtures, or even to make no claim for such allowances. “However, although historically there has been no cap in the time limit to revisit such claims, it is proposed that from April 2012, allowances must be claimed within either one or two years after expenditure “For all historic acquisitions, where capital allowances on fixtures may have been underclaimed, property owners have only until 1 April 2012 to ‘bank’ these allowances, or risk losing them forever. We strongly recommend seeking professional advice, which would normally involve a formal capital allowance review.”
DAN HARTLAND, PROPERTY SPECIALIST & TAX PARTNER AT GRANT THORNTON
A PERSONAL VIEW
JASON JACKSON, HEAD OF SHOOSMITHS’ BIRMINGHAM OFFICE
It’s been five months since real estate partner Jason Jackson slid into the hot seat, as Shoosmiths’ head of office in Birmingham, so PropertyAdvantage sought his thoughts. “It’s eight years since we came to the city, and I suspect that many people don’t realise we now employ more than 160 staff here, which makes us the biggest commercial office in our group. “A significant number of our senior people have joined from other firms, after we identified what our profession calls ‘rainmakers’, whom we needed to strengthen our presence, and raise our profile. “I look after our construction and real estate teams, and we really do have a lot of experience in those sectors, which I think is reflected in the quality of our clients. “I’ve advised Stoford for 15 years and we also act for MCD and
Nurton Developments, plus several London-based developers, including Highcross. We also have a sizeable number of investor clients, and are on the legal panel for Birmingham City Council. “I’m often asked how urban regeneration can happen, in the current volatile economic climate. It‘s obvious that nothing can happen unless funds are available, but for me, activity is increasingly driven by occupiers. “I think it’s good for Birmingham that Snowhill Two is now being built, because although speculative office development is gone, we do need to see new space coming forward, especially at such a landmark location. “In terms of public sector involvement in regeneration, local authorities could certainly be more flexible in how they put land into a
deal. Birmingham and Sandwell are both major landowners, and they can play a critical role in making projects progress. “Regarding Enterprise Zones, for example, councils could perhaps put their land in for nothing, or price it for less than the perceived market value, to give development a muchneeded stimulus. “We’re doing a deal at the moment with a local authority, for 200,000 sq ft of space, and they are willing to be extremely innovative, which is great. “There’s another scheme, in Sandwell, for 80,000 sq ft - which has been around for some time, and was one of AWM’s projects - and here the developer and the bank are all pulling in the same direction, to make things happen. “In the city centre, we’ve been instructed on several recent lettings,
so activity is definitely picking up, but market conditions do remain fragile. “Our retail team is doing well, and we’re seeing a lot of activity among budget brands. We act for Poundland, and One Stop Stores (a convenience store chain owned by Tesco). In the hotel sector, Travelodge are very busy, and we’ve acted for several developers doing deals with them. “Another busy area is the distressed sites. The banks still have an awful lot of property assets on their hands, but we are seeing developers come in, offer to finish off the scheme, and take a management fee, in partnership with the banks and the receivers. “We’ve been doing a lot of those deals, and I expect them to increase as banks increasingly realise that it makes more sense to try to get a return from these sites, rather than just hold on to the assets.”
Hereford’s hopes are high after impressive EZ win
RAY STONE, CHAIR OF THE EZ BOARD
There was much wailing and no little gnashing after the government selected its Enterprise Zones this summer, as Local Enterprise Partnerships across the UK saw their expensively-assembled bids snubbed. Coventry & Warwickshire, Stoke-on-Trent, Staffordshire and Worcestershire lost out, and it didn’t ease their pain when Hereford - more usually associated with cider apples and cute half-timbered buildings succeeded in attracting one of the business-friendly locations. The Marches LEP backed the idea of basing its zone around the existing 40-acre Rotherwas Business Park, seeing it as ideal for business clusters based on the defence and security sectors, and the Department of Communities & Local Government clearly agreed. Ray Stone, who will chair the EZ board, is in bullish mood when asked to outline the bid, and the attractions he believes will bring business to the area. “I think a strong element of our case was that we have an existing business location, although the whole zone stretches to about 160 acres of essentially brownfield land, which was a site for producing munitions during the two world wars,” he says. “Rotherwas was developed by Advantage West Midlands and the town council, and they put £21 million of infrastructure in place, so the link road, the spine roads, the electricity and the water are already here, and we are ‘shovel-ready‘. “Having the benefits of the zone - lighter planning controls, super-
fast broadband and lower business rates - is great, but these proposals would stand up commercially and strategically by themselves. “When the EZ business case was evolving, we noticed that a number of security and defence companies had been established here, almost all by people who left the SAS, and we identified a 20-acre area for those clusters to continue to develop, the Rotherwas Defence Zone. “To the north, we are looking for hi-tech and high-value businesses, which will attract graduates and talented young people. Hereford has an hour-glass demographic shape - because young people leave and don’t come back until they are ready to retire - and we must change that. “Business parks in this area are already bursting at the seams, and we think companies will want to relocate to our EZ to expand. By 2015, we believe we’ll have between 1,500 and 2,000 people working here, and by 2025, we expect between 4,500 and 5,000. “Hereford is a great place to live, the schools are excellent, and having worked in England, Scotland and Germany, I can honestly say that local workforces are the best I have ever found.” Ray’s background is in manufacturing, having retired in January following a series of highlevel managerial positions for British and US-owned corporations, and his experience and contacts are already bearing fruit for the fledgling zone. “It may surprise people, but 20% of employment here is still manufacturing, but the locals don’t
shout about it, they just get on with it. “However, the area’s current hotel offer is poor, so I’d like to see a 3+ star hotel on the site, with a conference and exhibition centre, and we’re already talking to a couple of chains.” Ray is confident that the zone will have an international dimension, and the site has already been visited by the government’s overseas trade body, UKTI. “We have been inundated by inquiries, some of them a little leftfield, but we will be very selective. We’re already talking to people in New York, Washington and Seattle, and to make access for visitors as easy as possible, we’ll be putting up a heli-pad at the far end of the site. “One of our board members is in inward investment, and he‘s having discussions with a US-based company which is looking for a European base.” Around 80% of the zone is owned by the town council, which would like to lease plots, probably on a 25-year basis. However, Ray says 36 acres are owned by a trust controlled by a local farming family, who has a member on the EZ board, and are willing to consider land sales. “We are also setting up an executive team to actively market the site, and from April 2012, we’ll be appointing property agents, probably one national and one local,” he says. “We’re also talking to banks, law firms, estate agents and others, so we can produce a web site and a brochure, to promote the site, so we can spread the message that we really are ready for business.”
Whether you are in the private or public sector, an occupier or a property professional ‘Property Advantage’ is an essential read. We focu...
Published on Nov 26, 2011
Whether you are in the private or public sector, an occupier or a property professional ‘Property Advantage’ is an essential read. We focu...