MARKETING REPORT ON GRANGE ROAD BUSINESS PARK CHRISTCHURCH BH23 4JE PREPARED BY:- BILL PARKER BSC (HONS) MRICS 8 MAY 2015
CONTENTS PAGE NO 1. Client Brief 3 2. Goadsby 3 3. Site Location 3 4. Description 3 5. Accommodation 4 6. Condition 4 7. On Site Services 4 8. Comments 4 9. The Market 5 10. Potential Freehold Sale 5 11. Marketing 7 12. Fees 7 2
1. CLIENT BRIEF We have been asked to provide our advice in respect of disposal of surplus accommodation on Grange Road Business Park, with a view to potentially acting jointly with Vail Williams on the disposal. 2. GOADSBY Goadsby is a multi-disciplined firm of Chartered Surveyors and Estate Agents with 25 residential and 4 commercial offices situated throughout the central south coast. With four commercial offices based in Bournemouth, Southampton, Dorchester and Winchester, we have a wide geographical spread and offer the unique in respect of having both commercial and residential sector disciplines. The residential and commercial sides of the business work very closely, particularly in mixed use developments and last year the company had a turnover of circa 12m and are currently ranked in the top 30 national agencies. We have been ranked the 'Number One Commercial Agency' in Bournemouth for some years by the Estates Gazette, calculated by the number of deals and pride ourselves that many of our staff have been with the company for a long time and have vast experience in their specialist sectors. The Office Agency Team is headed up by Bill Parker who has worked in the area since 1989 and concentrated in this sector. Within this time period he has dealt with the majority of office buildings and many of the office occupiers in the area. He has strong market knowledge and track record in the sector. Assisting with this instruction will be Bryony Solan, Simon Woodruff and John Ryall. John is a dedicated administrator for our Commercial database. 3. SITE LOCATION The site is located on the east side of Christchurch, just off the A337 Highcliffe Road. Christchurch is approximately 6 miles east of Bournemouth and 26 miles south west of Southampton. The site is on the fringe of the commercial area where it starts to run into residential and indeed new residential development is taking place in Grange Road. The majority of commercial accommodation is located along Somerford Road, mainly industrial. Christchurch town centre is approximately 3 miles to the west. 4. DESCRIPTION The site is occupied by a range of buildings comprising both offices and R&D/storage. The building fronting Grange Road was sold to Spectrum Housing Group some while ago and they have their own self-contained site. We have been asked to consider the letting/sale of Block C (Signal House), which is located within the secure site. There is a security point on Grange Road which is manned and controls access to the site buildings and parking. 3
Parking is available adjacent to the building with overflow parking also available in Grange Road. Signal House comprises a two storey office building constructed in 2002, arranged in an 'L' shaped format. The main core is at the elbow of the building with two access points. Access to the first floor is either by lift or staircase and w.c. facilities are located on each floor. The accommodation is predominantly open plan, although there is some lightweight partitioning providing separate offices and meeting rooms. The specification includes air-conditioning, suspended ceilings and recessed lighting. We understand that parking is available at 1:250 sq ft. 5. ACCOMMODATION Wing Sq Ft Sq M Ground Floor West Wing 6,206 577 Ground Floor North Wing 7,774 722 Sub-total 13,980 1,299 First Floor West Wing 6,500 604 First Floor North Wing 7,619 708 Sub-total 14,119 1,312 Reception Area 606 56 Total 28,705 2,667 6. CONDITION 7. LEASE The building has not been refurbished, but we have assumed that the structure is in good order and no imminent repairs are required. We have also assumed that the air-conditioning is in full working order and has at least a 10 year lifespan. We understand that the lease length is flexible and it is anticipated that the tenant will take on an effective full repairing liability by way of a service charge. 8. ON SITE SERVICES You have advised that in addition to the security on site, there would be an opportunity to buy into the canteen facilities to offer a discount to their staff. 9. COMMENTS i) Condition We would recommend that a budget is set aside for some refurbishment works to the building and that these are carried out to assist in the marketing campaign. 4
We appreciate this has to be a balance between likely receipts and costs, however it is important that the space is presented in its best possible light. Within the reception area we would recommend providing some casual seating, coffee table and some plants to give it a more welcoming feel. We would also recommend that one of the Ground Floor wings is recarpeted. ii) Service Charge You indicated that the Estate Service Charge was 8 psf and there would be an additional service charge in respect of the building itself. The majority of service charge figures for office buildings in the area range between 4.50 psf and 5.50 psf with manned receptions. In this particular instance we do not have a manned reception, but we do have a manned gatehouse. Our view is that you will have to provide a fixed service charge which would rise in line with the Retail Price Index, this should be set at 5.00 psf in year 1. iii) iv) Parking The marketing brochure needs to set out the parking available for each wing and in total, based on 1:250 per sq ft. Building Name Emphasis in the brochure is on Building C, whereas we feel the emphasis should be on the building name, Signal House, which is less institutional. v) Energy Performance Certificate- The Rating E is quite low and consideration should be given to how this can be improved. Changing the lighting may have a significant effect. vi) Brochure A revised brochure, concentrating on Signal House would be better from a marketing viewpoint. 10. THE MARKET The conurbation comprises Poole, Bournemouth and Christchurch. The most accessible of these towns is Bournemouth with dial-carriageway access to the A31. The majority of office buildings are located in Bournemouth or just to the east on Castle Lane. There are a number of 1970's office buildings located in Poole when grants were available to locate in Dorset and the County boundaries were different. However, the centre of choice is Bournemouth. It is able to draw employment from both Poole and Christchurch as well as areas to the north including Ferndown, Ringwood and Wimborne. Companies that are based in Bournemouth, rarely look to move to either Poole or Christchurch because it will have an impact on staff who would be forced to travel further to work. 5
The office market has been difficult over the past seven years, but is just starting to show signs of improvement. Rents bottomed out at around 10 psf in the town centre and now, for refurbished space, this has risen to 13.50 psf and we have recently agreed a letting on 5,000 sq ft at 15 psf. Stock levels have reduced since 2013 with the introduction of Permitted Development Rights and there are no new offices under construction. As demand for office space gradually improves, tenants will find it difficult to locate suitable buildings which means that they will be forced to look further afield. It is for this reason that we feel that Signal House does have a reasonable change of letting in the near future. There is however a significant difference in rents between Bournemouth and Christchurch and whilst we note that a figure of 12 psf is being quoted, we would not recommend quoting more than 10 psf at the present time. The likelihood of letting the building as a whole is slim, it is more likely that we will be letting the space in floors. Depending on how long it takes to let the building there is no reason why the initial rent cannot be increased on new lettings. Whilst there is a fairly significant amount of space available, we would suggest that you make the rent competitive and a reason for occupiers to consider Christchurch as well as Bournemouth. The building reminds us very much of one of 20,000 sq ft which we reported on for Siemens in Poole. Of similar vintage, the client was prepared to refurbish the space and offer good parking on site, yet we were only going to be quoting 9.00 psf. This was a similar scenario with a secure site but, in the end, the client decided to reoccupy the space. In terms of lease lengths, at the present time three to five years is the norm. Ideally we would look to try and negotiate a ten year lease with a five year rent review, but the tenant will normally require a break in their favour at the fifth year in all likelihood. Fixing the service charge is in our view critical to securing the letting of this space. 11. POTENTIAL FREEHOLD SALE You asked that we also consider a potential sale of the freehold interest. You have indicated that it may be possible to provide a self-contained building and parking with its own access from the east of the site. It would certainly assist in widening the market but we would be reliant on finding an owner occupier to purchase as an investor is likely to discount the price heavily to reflect refurbishment and letting void. Our view is that if you were to sell the building and parking at a rate of 1:250 sq ft to an owner occupier, we would be looking to achieve somewhere between 80-100 psf. 6
12. MARKETING We have the most efficient ways of marketing to be as follows:- i) Mailing the brochure to our extensive database of occupiers and applicants in the area. We run a software system called Caldes which is a database of all our properties, applicants and companies totalling approximately 16,000 businesses. Our administration assistant sends these out electronically. ii) iii) iv) Our own website the property would be advertised on our own website. In order to download details, an applicant has to provide their name and email address. We then review businesses that have downloaded the details and follow them up within two days to see whether they wish to take their interest any further. Portals we use both RightMove and Zoopla for marketing, both of which generate reasonable enquiry levels. For client paid advertising, we also occasionally use the EG Property Link. Advertising We have not found advertising to be a particularly effective method of marketing, although it can be useful in an initial launch. Having said this, we are always keen to promote our schemes through Press Releases and we are very successful in getting these in the local publications. 13. FEES v) As mentioned, we would suggest some minor alterations to the brochure and website. The downloads on the latter are certainly very useful from an occupier perspective. Albeit that, for some reason, the space plans seem to take quite a long time to download. We understand that if you decide to progress discussions you would be looking to appoint us to act on a joint agency basis with Vail Williams. We currently act with them on other properties and have an excellent working relationship. Our suggestion would be that we act on a joint agency deal of 15% plus VAT of the first year's rent or average rent to the first review, ignoring incentives and to be split equally between us. I have attached a copy of our standard Term, Conditions & Definitions which confirms this fee structure. We look forward to hearing from you in due course and are obliged to point out that the figures contained in this report do not constitute a valuation and are for marketing advice purposes only. 7