Swindon is facing the future with bold statements and ambitious regeneration projects. David Thame reports.
To the frank astonishment of its rivals, a recent survey declared Swindon to be the UK city of the future.
With broadband internet access already high - broadband take-up, at 60 per cent, is the highest in the land - the local council launched a £37m plan to make Swindon England's first wireless' town, with all residents getting their own email address.
For such a consciously up-to-the-minute place the Swindon office market has a familiar, almost old fashioned, feel to it.
Swindon's thin town centre office market, and growing, but still wobbly, out-of- town office market, savour of the eighties rather than the noughties.
Yet with take-up growing - and rents growing too, albeit more cautiously - the town's office market is looking better today than it has done for several years. The financial services sector is largely responsible for a surge in take-up, which will see the annual total easily higher than 200,000 sq ft of office space.
Swindon-based Nationwide Building Society - a pioneer in online banking, and hence a very Swindon kind of business - decided to take 16,775 sq ft in the Pegasus building at St Martin's Developments' Windmill Hill. Nationwide is to open a new call centre and staff will be behind their desks by March 2008.
Then there's the ambitious regeneration project is to be found at The Exchange. Developed by Manchester-based Muse on a 17-acre site between the town and the railway station, the location could hardly be bettered. Yet at 1.7m sq ft - most of it devoted to shops and offices - it is unlikely to be without complications, especially in an increasingly iffy UK economic background. The £3300m, mixed-use project is being promoted by urban regeneration company New Swindon.
Windmill Hill didn't claim all the big deals - Dutch property giant HBG, developing at Lydiard Fields, attracted a major new corporate occupier to Swindon with the arrival of JP Morgan Chase Bank. JP Morgan has taken the 26,900 sq ft Canberra House building with staff moving in during the summer.
Last winter's deal between Nationwide and insurer Legal and General, in which Nationwide sold its life and trust management subsidiaries, also resulted in a useful deal, even if one which doesn't alter overall take-up figures: Legal & General took some 30,000 sq ft in Kingsbridge Point in the town centre direct from Nationwide.
Ben Cullen, national head of offices at Cushman & Wakefield and joint letting agent at Windmill Hill, says: "Its been a strong year for Swindon offices, much stronger than the recent past. We see more lettings activity at Windmill Hill, as did HBG at Lydiart Fields. Swindon has often looked like the poor relation to Bristol and Reading, but I think this year has shown that it can perform well although at a discount to the other two towns, which of course suits some occupiers."
Simon Kingsley, Partner in Alder King's Swindon office, agrees. He says: "We've been coming off a low base, with poor take up over the last two to three years and this year will look very good in comparison. We had already beaten the total take-up of 2006 by this autumn thanks to a lot of activity on well-specified out-of-town office space, something we haven't seen for a while with the consequence that some stock, which has been overhanging the market for sometime, has now gone. That's mostly due, I think, to demand from indigenous occupiers who are upgrading and relocating."
Yet Kingsley warns that rents have yet to show much sign of movement. "While markets have improved it hasn't yet meant significant rental growth. That, presumably, will be the next stage," he predicts.
Rents have indeed remained rather flat. Windmill Hill is setting the pace by quoting up to £319.50 a sq ft - a figure regarded by many observers as, at best, aspirational.
Says Kingsley: "On smaller suites with flexible leases, Windmill has been getting rents north of £318 a sq ft, but on the larger longer-term leases tenants are bound to be expecting incentives.
"But even if you make assumptions about incentives, Windmill would be scoring £317-18 a sq ft and if you look down the M4 corridor to Newbury or Bristol, both of which are above £320 a sq ft, the regional context means we feel like a good value location. There should be no need for developers to slash rents."
Alastair Andrews at Old Town-based Loveday and Loveday says it will be a year or more before real rental growth becomes apparent.
"The Swindon office market is still in the early stages of recovery, so we've seen very little evidence of rental growth so far. It will need 12 months or more of growth before they start to go up. For now I suspect that behind the scenes landlords are probably being forced to negotiate down to fill space that, in some cases, has been empty for several years," he explains.
Jeremy Sutton, partner at King Sturge, says that the recent surge in market activity is, at least in part, thanks to a more flexible approach to rents adopted by some developers.
"Tenants have secured some good deals because in some cases developers at places like Windmill Hill have adopted a more flexible strategy on stock that has been empty for some time. But the market is hardening simply because as supply dwindles so the landlords' position improves," he says.
Developers are showing signs of increased confidence in the Swindon market, even if the immediate effect of some developer's decisions will not be a surge in rentals. For instance, Leehampton Developments is busy trying to undercut Windmill Hill at Edison Park, quoting rents of £316.75 a sq ft. Meanwhile HBG are planning to start on another phase at Lydiart Fields with two speculative buildings of 35,000 sq ft and 27,000 sq ft.
Yet some schemes are still sticking, such as the Minton Group's Stonehill Green, which has attracted some impressive occupiers to the west of the town, but could do with some more.
Swindon's office market is back on track after an uncertain few years. Watching rents rise in response will occupy most landlords' - and tenants' - attentions in the next twelve months.
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