Introduction
4.1 Prior to analysing the study area’s property market by the individual components of sites, industrial and offices – commentary is provided about the study area as a whole. This comprises a review of the supply of premises along with information on general national property and business trends. It is important to understand the supply and demand for property, as this is the key driver affecting the market for employment land.
Property Supply
4.2 A schedule of the vacant floorspace being marketed in the study area (as at March 2013) has been compiled mainly from physical survey, a trawl of commercial property agents’ websites and consultations with agents. The marketed space is therefore taken to be a reasonably close approximation to that which is vacant – although there may be occupiers waiting for interest in their property before moving, and empty units not actually being marketed. The schedules for industrial (including warehouses and workshops) and offices have been included in Appendix 2.
4.3 In addition to the premises discussed below, it should be noted that another 305 sqm of office and industrial floorspace will shortly be made available at the former Ashwell Prison site, near Oakham (Oakham Enterprise Park). Some workshop and business units are already being marketed at Ashwell and these are included in Oakham’s supply of vacant office and industrial premises.
Industrial
4.4 Table 17 shows that there is 5,800 sqm of marketed industrial floorspace, made up of 14 properties, in Rutland. Almost two thirds of the available properties are in Oakham (which has 60 percent of the available floorspace). There are also two industrial units available in Uppingham and two at Woolfox Depot, off the A1. There is only one unit on the market in one of the rural parts of the County (at Glaston). There is no availability in Ketton or Essendine.
Table 17 – Amount of Marketed Industrial Property
Area Size Band, sqm Total
0- 100 101- 200 201- 500 501- 1,000 1001- 2,000 2,001- 5,000 5,001+ Oakham Floorspace, sqm 110 402 853 903 1,208 - - 3,476 Number of Properties 2 3 2 1 1 - - 9 Uppingham Floorspace, sqm - - 356 890 - - - 1,246 Number of Properties - - 1 1 - - - 2 Woolfox Floorspace, sqm - - 275 731 - - - 1,006 Number of Properties - - 1 1 - - - 2 Elsewhere in Rutland Floorspace, sqm 72 - - - 72 Number of Properties 1 - - - 1 Total Floorspace, sqm 182 402 1,484 2524 1,208 - - 5,800 Number of Properties 3 3 4 3 1 - - 14 Source: BE Group 2013
4.5 Small (0-200 sqm) workshops and larger units (greater than 1,001 sqm in size) are only readily available in Oakham. Apart from one small unit in Glaston, other schemes only offer mid-sized properties of 201-1,000 sqm. Overall, the greatest availability is in the 201-500 sqm category.
4.6 Table 18 shows that the majority of marketed industrial space in Rutland is of moderate quality. The quality appraisal comes from an external inspection only and considers building condition, style, specification, servicing areas, eaves height and rental level. Good quality premises are available in Oakham (Station Court), Woolfox Depot and Glaston. There is only one budget option, in Oakham.
4.7 The majority of premises (79 percent) are available leasehold (Table 19). There are industrial units for sale in Hilldown and Station Road, Uppingham, while a large (1,208 sqm) industrial unit is also for sale at Pillings Road Industrial Estate, Oakham.
Table 18 – Quality of Marketed Industrial Property
Area
Quality
Good Moderate Budget
Oakham 1 7 1 Uppingham - 2 - Woolfox 2 - - Elsewhere in Rutland 1 - - Total 4 9 1 Source: BE Group 2013
Table 19 – Tenure of Marketed Industrial Property
Area
Tenure
Leasehold Freehold Either
Oakham 8 1 - Uppingham - 2 - Woolfox 2 - - Elsewhere in Rutland 1 - - Total 11 3 - Source: BE Group 2013 Offices
4.8 Table 20 shows that there are 3,261 sqm of marketed offices (29 premises) in Rutland. 69 percent of the premises are of 100 sqm or less, 41 percent are of 50 sqm or less. There is only one property larger than 500 sqm – 743 sqm of vacant floorspace at Agriculture House (the NFU building), Ayston Road, Uppingham.
4.9 Perhaps surprisingly Uppingham, rather than Oakham, has the greatest supply with 64 percent of the available floorspace and 55 percent of the available units. This is accounted for by the extensive availability at Uppingham Gate (1,179 sqm in six suites), with another 743 sqm being marketed at neighbouring Agriculture House. Nine small (50 sqm or less) office suites are also available in Uppingham Town Centre.
4.10 In Oakham, there are ten available suites in, and around, the Town Centre. Another 25 sqm office suite is being marketed at Ashwell. Rural options are limited to one unit at Glaston Hall, Glaston and one at Manor Farm Barns, Seaton. Other rural schemes, including The Rural Business Community at Seaton, are largely fully let.
Table 20 – Amount of Marketed Office Property Area Size Band, sqm Total 0-50 51- 100 101- 200 201- 500 501- 1000 1001- 2000 2001+ Oakham Floorspace, sqm 108 461 - 467 - - - 1,036 Number of Properties 3 6 - 2 - - - 11 Uppingham Floorspace, sqm 180 - 229 950 743 - - 2,102 Number of Properties 9 - 2 4 1 - - 16 Elsewhere in Rutland Floorspace, sqm - 123 - - - 123 Number of Properties - 2 - - - 2 Total Floorspace, sqm 288 584 229 1,417 743 - - 3,261 Number of Properties 12 8 2 6 1 - - 29 Source: BE Group 2013
4.11 Most of the available office space is of moderate quality (62 percent – see Table 21). However, there are also 11 good quality units in Uppingham, including suites at Uppingham Gate and a multi-let office building in the town centre (7 North Street East). There are no budget options available.
Table 21 – Quality of Marketed Office Property
Area Quality
Good/New Moderate Budget
Oakham - 11 -
Uppingham 11 5 -
Elsewhere in Rutland - 2 -
Total 11 18 -
Source: BE Group 2013
4.12 Most (79 percent) of the available properties are to let (see Table 22). However, suites at Uppingham Gate are available for sale or to let.
Table 22 – Tenure of Marketed Industrial Property
Area
Tenure
Leasehold Freehold Either
Oakham 11 - -
Uppingham 10 - 6
Elsewhere in Rutland 2 - -
Total 23 - 6
Source: BE Group 2013
Valuation Office Data
Industrial
4.13 According to the latest Valuation Office (VO) statistics (2008) there are 268 industrial hereditaments in the County, totalling 247,000 sqm. Out of all this space there are 14 marketed premises totalling 5,800 sqm (see Table 17 above). This suggests an overall ‘occupancy rate’ for Rutland of 97.7 percent by floorspace. By premises numbers, the ‘occupancy rate’ is 94.8 percent.
Offices
4.14 There are 180 office hereditaments in the County, totalling 24,000 sqm. Out of all this space there are 29 marketed premises totalling 3,261 sqm (see Table 20 above). This suggests an overall ‘occupancy rate’ for the study area of 86.4 percent by floorspace. By premises numbers the overall ‘occupancy rate’ is 83.9 percent.
Modern Occupier Needs
4.15 In this sub-section the report outlines what modern businesses are looking for in terms of their property, as well as those developers providing space for them. These are general comments and apply across the UK, as well as in the study area.
4.16 There are two key property sub-markets to consider in understanding the demand for premises. The first is the demand from companies looking for sites for their own occupation; the second, which is necessarily derived from the first, comes from specialist property developers who will provide solutions for these companies.
4.17 Many end-user companies, especially small ones, looking for accommodation prefer occupying an existing building to either organising the construction of one for themselves or entering into a design and build agreement with a developer. This is
due to the management time involved; while it may also be difficult to rationalise and visualise such an important acquisition off-plan.
4.18 Having premises built for owner occupation requires a long lead-time to cover the planning, negotiation and construction time involved. Furthermore not every company wants a brand new building, partly because they are generally more expensive than second-hand ones.
4.19 However the recent combination of low interest rates and the depressed stock market has led to an unusually large number of companies looking to own their premises (although current market conditions have softened this due to the lack of available finance). One route to achieving this is by developing their own site, especially if they cannot find a suitable freehold property. Nationally most requests for such small sites to enable self-build are of less than 0.4 ha in size.
4.20 Although design and build options can be convenient, they are quite expensive because the controlling developer makes its profit not only on the land sale, but also on managing the building process. Consequently if the company is able, some prefer to buy land direct and organise building contractors themselves. This is especially the case with lower value added industries where high quality buildings are of secondary importance. However without strong planning control this scenario can lead to business areas of lower aesthetic value and layout.
4.21 Developers acquiring sites consider the nature of the market, as outlined above, as well as the potential for speculative development, i.e. riskier, supply-led, rather than demand-driven construction. They also prefer to acquire prominent, (easy to develop) greenfield sites close to arterial roads or motorways because irrespective of sustainable transport policies, private transport still predominates. They naturally want land that is attractive to end-users. Furthermore property development is intensely entrepreneurial and extremely price sensitive. So although land may be available on the open market, if it is at too high a price, then the developer will not acquire it.
Emerging Property Trends
Industrial
4.22 Occupiers are generally looking for smaller premises as average company size continues to decrease. In line with rising aspirations and a concentration on higher value added activities, companies are looking for higher quality accommodation. In rural areas company sizes are generally already small; and the desire for high quality is less of a priority due to affordability issues. Successful industrial businesses typically require dedicated, self-contained, secure yard areas, and for units over 2,000 sqm the trend seems to be at least one dock level loading bay and a 40 metre turning circle to allow heavy goods vehicles access into and out of the unit. Eaves heights are also continuing to rise from an average of six metres to more towards ten metres to allow storage racking and more efficient use of space. For B8 high bay warehousing eaves heights can now be 15 metres to accommodate automatic racking systems.
4.23 Large requirements, above 10,000 sqm, are comparatively rare, and where they do exist are generally for distribution warehousing. Most of these are contract-led with a flurry of activity as a number of specialist distribution companies look for units, before one of them secures the contract on offer. However these companies generally cannot wait for a bespoke warehouse to be built for them and so, due to the rarity of such large, available buildings their search areas are increasingly wide.
4.24 Freehold demand is relatively strong as a result of low interest rates, poor stock market pension performances and increased private sector interest in property investment. However the lack of available finance is constraining this sub-market currently. This previously resulted in an overheated investment market, rising values, lowering yields and led to property developers being more willing to offer speculative, freehold buildings. However, as a consequence of the recent prolonged recession speculative development has stopped dead across much of the country. It may resume once the effects of the recession recede, but in more rural areas speculative development will never be commonplace.
4.25 Outsourcing of many aspects of the production and distribution process has led to a declining need for traditional, large scale, all-encompassing manufacturing facilities. This is gradually being replaced by smaller, sub-assembly light manufacturing space.
Shorter leases (five years) and break clauses (three years) are now becoming much more common.
Offices
4.26 For offices the trend is for smaller suites as average business sizes fall. There are two strands to this. Micro-businesses (those with less than ten employees) want serviced offices or similar types of easy-in, easy-out schemes that lower their risk of exposure. Small businesses (with 10-49 employees) are looking for offices in the region of 150-300 sqm. Often they are satellite facilities for larger companies.
4.27 Improving technology means specifications are changing, for example wireless networks may soon make raised floors superfluous and make the conversion of Victorian and other similar buildings easier.
4.28 In line with rising aspirations and a concentration on higher value added activities, successful companies are looking for higher quality accommodation. For example air conditioning is becoming almost a standard requirement in new schemes, which pushes up rentals by £5-10/sqm on average. Furthermore some occupiers (looking for more than 200 sqm) increasingly want self-contained premises, i.e. their own front door, toilets, reception, utilities, etc. There is increasing demand for relatively short leases (one to three years), which helps account for the increasing popularity of serviced offices.
4.29 Prior to the credit crunch, freehold demand was strong as a result of low interest rates, poor stock market pension performances and increased private sector interest in property investment. However, as with the industrial market, the recession and lack of available finance is constraining this sub-market and has largely eradicated speculative development, outside of major city centres.
4.30 Occupiers requiring higher skills, especially those linked to key growth sectors will be concerned about access to an appropriate pool of skilled labour, which will drive demand towards city centres, research facilities and higher education institutes.
4.31 Property will need to be increasingly flexible to accommodate research-based manufacturing space as more complex processes develop, but still within an office
4.32 Clustering around like-minded companies will also drive demand to key business park locations, with good availability of ‘white collar’, knowledge-based, skilled staff. Other businesses will require central urban locations such as the professions and creative industries, where face-to-face contact is important or where public transport is important to attract staff.
Summary
4.33 The amount of marketed industrial floorspace is almost double that for offices. It is concentrated in Oakham. There is only unit above 1,000 sqm, while small (0-200 sqm) workshops are only readily available in Oakham. Supply is very limited in Uppingham and there is no available space in Ketton, Essendine or in most other rural settlements. Good quality units are only found at Woolfox Depot, along with single properties in Oakham and Glaston. There is little freehold availability.
4.34 The County’s office supply is mostly small (0-100 sqm). Almost all the available suites are in Uppingham or Oakham, including a reasonable supply in the town centres of both towns. Very little is on the market in rural parts of the County. Most space is of moderate quality, although there are good quality units in Uppingham. These include six suites at Uppingham Gate, which are also the only properties available freehold.
4.35 Measured against the total office and industrial floorspace of the County, occupancy rates in Rutland are high. This is particularly the case for industrial floorspace, which is 97.7 percent occupied by floorspace and 94.8 percent occupied by premises numbers. Office occupancy rates are lower (86.4 percent by floorspace, 83.9 percent by premises numbers) but still show that the majority of offices in the County are in use.
4.36 Modern businesses and developers want easily developable, accessible and usually prominent sites for their premises. A healthy property market should provide a mix of options including speculative developments; design and build schemes, and freehold plots for owner occupiers to self-build. However, property development is entrepreneurial and not all companies that are looking for space can realistically be satisfied all the time. The property market, by nature, is inherently imperfect. Companies will, however, generally seek to move from existing property to provide themselves with better, more efficient, cost effective accommodation of an approximate size.
4.37 Modern trends are expected to lead to a greater number of businesses that are smaller in size, which are more dynamic and technology driven and which will come and go more fluidly.