SHROPSHIRE OFFICE MARKET REVIEW 2004

2004 has been a year of uncertainty in the national property market, with interest rates finally rising from their historically low levels.  Despite this uncertainty, however, the take up of office space in Shropshire has continued at a steady pace.

Pooks Commercial Property Consultants have been responsible for the marketing and disposal of a large proportion of the office space which has been taken up in Shrewsbury and surrounding areas during 2004.  It has been particularly noticeable that the market continues to be driven by the expansion and relocation of Shropshire-based companies, usually from period town centre offices to modern new-build offices on edge-of-town business parks.  The major office deal in Shrewsbury in 2004 illustrates this trend.

Whittingham Riddell relocated from offices in three large Shrewsbury town houses to a 1200 sq m (13,000 sq ft) purpose built modern office on a high profile site at Shrewsbury Business Park.  This move not only provided the company with a more efficient working environment, and space to grow, but also facilitated the installation of totally up to date computer systems and equipment to enable the company to improve the service it provides.  As with the majority of such buildings, WR’s old offices were sold for conversion back to residential use.

Other Shrewsbury businesses making the same move in 2004 were building surveyors Silk Rowson Plant, who moved from first floor offices in the town centre to a new building at Longbow Professional Centre, at Battlefield Enterprise Park in Shrewsbury.  Pooks dealt with the sale on behalf of Morris Property, and still have two offices remaining in the development. (pictured above) PCB Solicitors (formerly Patience Clarke and Burrowes) also moved, from town centre period buildings to the Cypress Centre at Shrewsbury Business Park.  The Cypress Centre extends to 520 sq m (5,600 sq ft) and forms part of Juniper Court, Cobra Developments’ scheme of new offices at Shrewsbury Business Park.  Another office deal at Juniper Court in 2004 was the letting of the Spruce Building to Image Integrators, originally a Telford-based company.  Pooks negotiated a new 10 year lease of the property.  The asking rent was £60,000 per annum.

It is notable that this trend is not really a feature of Shropshire towns other than Shrewsbury, as edge of town office parks do not yet exist to a significant degree in Oswestry, Market Drayton, Whitchurch, Bridgnorth or Ludlow, while Telford town centre is focused on retail provision, rather than offices.  One exception, however, is at Whitchurch, where Pooks are marketing Marlowe Court at Whitchurch Business Park, another development by Cobra.  This provides seven small business units, both workshops and offices, which are available to buy or to lease.  It is hoped that these will cater for a latent demand for quality modern business space in an area which has been undersupplied with such space.  Cobra is also planning a similar scheme for the Long Lane Industrial Estate at Craven Arms

While many larger companies have been moving out of Shrewsbury town centre, smaller town centre offices have been letting well during 2004 to small and start-up businesses.  Clients of Pooks carried out a refurbishment of a period building at Swan Hill Court, (pictured above) to provide high quality small office suites.  A particular feature of this refurbishment was that it provided parking, unusual in the town centre, and also enabled occupiers to cater for disabled visitors by providing a meeting room and a disabled toilet at ground floor level.  The offices let well to four separate tenants, including two healthcare companies, demonstrating that there is a demand for high quality town centre offices which comply with all relevant legislation and offer on site parking.  Such refurbishments and developments are, however, often made more complex by restrictive planning decisions.

Any reports about the Shrewsbury town centre office market would not be complete without mentioning the relocation of Shrewsbury & Atcham Borough Council, which was previously accommodated in three period buildings in different locations around the town.  SABC took occupation in March of The Guildhall at Frankwell, which was built by Frank Galliers Limited.  Pooks have been retained by SABC to let off surplus offices within the building and have  space of about 185 sq m (2000 sq ft) remaining  at an asking rent of £25,000 per annum. (pictured above)  The new flood defences at Frankwell were tested in the Autumn of 2004 and withstood the flood water well, so the site of The Guildhall appears to be a success.  The general improvement to the environment of Frankwell, and the additional number of workers in the area, should assist in generally improving the area over the medium to long term.

A significant change in the market which Pooks have noticed during 2004 is that there appears to be a shift away from demand being almost exclusively for freehold property, with more companies being willing to consider leasing for the first time in some years.  Rising interest rates are the key driver of this trend, as the cost differential between leasing and buying has been reduced due to falling rents and rising costs of finance.  However, many companies also prefer to use their capital in their business rather than to lock it up in the 25% equity usually required by commercial mortgage lenders.  One of Pooks’ lettings, of Clayton House at Oxon Business Park, to Creative Digital Printing, illustrated this.  Creative Digital were expanding, and needed to invest a significant amount of capital in the latest digital printing technology.  Therefore we agreed a new 10 year lease, with an option to purchase the building at a fixed price within the first two years, which will enable the company to spread expenditure over a number of years, if required.

There will be a good supply of space coming on stream soon at Shrewsbury Business Park in 2005 with two distinctive schemes to commence construction.  The Creative Quarter will offer striking buildings of 500-800 sq m each, (pictured above) while the Professional Quarter will provide more traditionally styled buildings in a courtyard setting, aimed at professional firms.

For further information contact Georgia Butler at Pooks
01743 276633 or geb@pooks.co.uk