The Coventry Success Story Continues

2004 has seen significant activity in both the office and industrial/warehouse sectors of the property market in Coventry, both in terms of deals and new developments reports Rupert Gillitt, Director of D&P Holt Limited. Whilst with the national economy having experienced a rise in interest rates and oil prices in the last 12 months with the outlook pointing to the possibility of a period of more muted growth, the signs for Coventry in 2005 continue to look extremely positive.

At ProLogis Park, both the speculative 310,000 sq ft warehouse buildings constructed by ProLogis Developments Limited have been let to Tesco and Co-op at rentals close to the quoting terms of £5.50 sq ft on a 15 year lease. Other deals have included the design & build facility for Domestic & General which totals some 56,500 sq ft and was sold on a freehold basis at circa £65.00 sq ft, and ProLogis Developments Limited intend to start work in early spring next year to construct a speculative industrial/warehouse facility of 204,000 sq ft.

Eden Park Developments will be commencing their new Colonnade Point scheme, situated on the former Plot E of ProLogis Park which will provide a range of quality industrial/warehouse units in sizes from approximately 7,500 sq ft up to 23,500 sq ft with rents from £5.75 sq ft and freehold prices from £67.50 sq ft.

Midlands based Oakham Developments and Abacus Developments recently obtained planning consent for the development of 2.3 acres at ProLogis Park for the development of 52,000 sq ft of offices to be called Oak Court. This is a joint venture between Abacus Developments, the development arm of the Sir Robert McAlpine Group, and Oakham Developments. Oak Court will be developed in two phases, the first will be a speculative development of seven courtyard buildings totalling 22,000 sq ft, which will begin in the New Year and the first units are expected to be completed in August 2005 and will be available either on a freehold or leasehold basis in sizes from 1,800 sq ft up to 30,000 sq ft on a design & build option.

North Coventry has experienced extensive regeneration and redevelopment projects during 2004 including the Chase Point Scheme on the A444, just south of Junction 3 of the M6 where Chase Midlands are now close to completing their speculative scheme of two units of approximately 38,000 sq ft and 80,000 sq ft which are available to let with guide rents from £5.75 sq ft.

Works on the Jaguar Arena are now well advanced and will be open in less than a year, and covers 72.5 acres to include a 6000 sq m exhibition and events hall capable of holding 8,000 people for concerts and a 1,000 seater banqueting suite. The Jaguar Arena development will also create a 32,000 seater stadium that will be the new home for Coventry City Football Club in time for the start of the 2005/06 season. More than 2,000 car parking spaces will form part of the development together with a business centre, overnight accommodation and a range of community facilities and office space. Next to the Jaguar Arena site, the new Tesco Hypermarket has recently opened which has created a significant number of new jobs, and is reported to be currently the largest Tesco supermarket in the UK.

There are also a number of significant existing buildings in North Coventry that are currently available to help satisfy demand and these include Exhall Point on Bayton Road Industrial Estate which is owned by Loades Estates where industrial/storage space is available on a leasehold basis in units from 18,000 sq ft up to 150,000 sq ft on what is an excellent secure site in a prime location close to the M6 and available on flexible lease terms depending on the amount of space taken.

It is a sign of the popularity of Coventry, combined with current industrial/warehouse demand that further speculative development is coming forward in other parts of the City including the proposed Shepherd Developments 130,000 sq ft scheme at Cyan Park on the former Barras Heath Wholesale Market fronting Phoenix Way. Potentially, a number of industrial/warehouse units ranging in sizes from 6,500 sq ft up to 50,000 sq ft will be constructed with completion in the summer of 2005 and will be available to purchase at prices from £67.50 sq ft and at rents from £5.75 sq ft. Astral Developments completed their speculative industrial/warehouse building of 30,000 sq ft at Westpoint on Coventry Business Park and also the former Whitefurze facility on Padstow Road situated on Torrington Avenue totalling some 50,000 sq ft of quality warehouse space is also available.

Rupert Gillitt adds “Coventry is experiencing levels of development activity never seen before. Indeed, the Chief City Planning Officer estimates there is over £4 billion of development either planned or currently under construction which has extended across the whole property spectrum.

Whilst many areas in the Midlands have experienced a general downturn in demand for offices, Coventry has seen some notable B1 office developments. TUI, the major travel company including Thompson Fly (now operating from Coventry Airport), Lunn Poly and Britannia acquired one of the former Powergen buildings at Westwood Business Park and developed new state of the art offices on an adjoining site which they acquired from the City of Coventry and propose further developments. Stoford, the developers of the 51,500 sq ft TUI building have recently completed a new 30,000 sq ft headquarters building for the Camping & Caravanning on the site opposite, whose former premises on Westwood Business Park (two buildings of 7,500 sq ft and 3,500 sq ft) have recently been let.

Another significant office deal in Coventry has been the disposal of Dalphimetal Limited’s former offices totalling approximately 17,500 sq ft on Foleshill Enterprise Park. These were acquired by Lear who moved from Middlemarch, and Dalphimetal subsequently relocated to Coventry Innovation Village on Phase I of the scheme developed by Real Land, and development of Phase II will be taking place shortly. On the University of Warwick Science Park, Riley Court the latest and largest speculative development undertaken by the Science Park to date has proved to be extremely successful with approximately 50% of the 30,000 sq ft of office/R&D space having been let in various suite sizes ranging from 2,000 sq ft at rents from £17.00 sq ft. The Business Homes Midlands scheme at Villiers Court, Meriden Business Park, Meriden has also seen success with Phase I of the scheme having recently been completed. Unit 1 totalling some 4,000 sq ft has recently been sold and deals are close to being concluded on the three remaining units, and therefore work is hoped to commence shortly on Phase II, where a further 15,000 sq ft will be available to purchase or to let in a range of unit sizes.

Coventry Rugby Club has now moved to their new home at the Butts Park Arena, where planning consent has been granted for 90,000 sq ft of commercial space and some 180 residential units. Considerable interest has been generated from both retail and leisure operators interested in participating in this high profile scheme.

Other schemes cementing the existing investment in the City as well as to satisfy ongoing demand and supporting the confidence of various developers, include the following:

Belgrade Plaza

A new £100 million scheme by developers Oakmoor Deeley to regenerate and redevelop approximately 3.5 acres of the City Centre between the Belgrade Theatre and the Ring Road to provide two hotels, residential apartments, restaurants, bars, a casino and retail units.

Park Court

Paragon Park

Planning on Paragon Park is expected early in 2005 which will see one of the largest mixed use regeneration schemes in the City, extending across a site area of approximately 50 acres.

Property values across all sectors have remained firm in 2004, with the greatest increases being seen in well let investments where yields have fallen to historically low levels. The demand for commercial investments continue to show strong demand with caution now being shown by many private investors in the buy to let residential market. There has been steady demand for small freehold industrial and office premises from both the investors and owner occupiers wishing to invest sums from their SIPPS.

The UK economy overall is still relatively strong and secure after some ten years of growth – inflation remains low, employment is still at an all time high and the unemployment rate is reported to be at the lowest in the EU. However, it is predicted that the UK economy will be growing more slowly over the next couple of years, and with a number of interest rate rises during 2004 perceived to be having the effect of “cooling” the residential property market. When considering the overall economy of Coventry, one can conclude that even though expectations have been high, these have been achieved, which has been borne out by the extent and number of the regeneration and redevelopment projects that have recently been carried out are currently being undertaken or are in the pipeline. Overall, the outlook for Coventry is for “The Renaissance to Continue Apace”.

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