Lead for the Midlands autumn office review

Market Overview News

For the first time in three decades the three principal East Midlands Cities of Nottingham, Derby and Leicester are witnessing strong demand for new City Centre sites for large scale speculative development from developers says Michael Donaghy of Fisher Hargreaves Proctor.

In Nottingham occupier demand has been strong for Grade A City Centre space only 11,000ft² remains in Royal London’s 50,000ft² Chapel Quarter Scheme on Maid Marian Way current occupiers being Reuters and Trent FM.  Coming very soon is the Axis, a Henry Boot development with over 40,000ft² of offices within a truly mixed use scheme also incorporating retail, leisure and residential.  November will see the completion of McAleer and Rushe’s Waterfront House delivering approximately 74,000ft² of Grade A space again within a mixed use scheme.  Both developments have been received well with serious discussions over large portions ongoing.  Whilst the Peoples College site on Maid Marian Way and the East Side scheme are both coming forward there is still real demand for other opportunities.

In Derby, Cedar House Investments, Ivy Grove and Prime Holdings are on the last phase of development of Pride Park and the adjacent Wyvern Park, both of which continue to be a success story principally due to their proximity to the City Centre and their ability to absorb that demand.  PDF have recently acquired 12,000ft² and Omya approximately 10,000ft² on the Wyvern.  Rental levels are hitting £14.50 per ft².  The near completion of this scheme has led the likes of Wilson Bowden to actively search for City Centre sites, albeit to implement future City developments these rental levels will most likely have to increase.

In Leicester Akeler Developments are constructing a 50,000ft² of City Centre offices within Phase 1 of Colton Square which will be reading in May 2007.  Initial interest has been good with quoting rentals believed to be £16.50 per ft².

The out of town business parks have faired comparatively less favourably with Miller Birches NG2 in Nottingham and Pride Park in Derby the exception to this rule principally due to their fringe of City status and comparatively higher parking levels when compared with City Centre stock.  NG2 has achieved over £17.50 per ft² for large floor plates within the Arc and the 30,000ft² HBOS deal and over £20 per ft² for small to medium sized self-contained entities within its Triangle Scheme.

Due to the continued high levels of demand from the owner occupier sector and the obvious time lag taken by developers to meet with this demand 2006 can be viewed as the year of the small freehold.  Small courtyard schemes very often offering between 1,500ft² – 3,000ft² of self-contained offices are either on the market or soon to come to the market in Nottingham at the Triangle on NG2, Ash Tree Court on Nottingham Business Park, in Derby on Brunel Business Park and Pride Point, Pride Park and Leicester on Forest Park to mention only a few.

With the three core Cities having somewhat limited or none at all in the case of Derby Grade A City Centre office space, demand is indeed strong from developers to bring appropriate City Centre sites forward.