The recent upturn in activity in the Nottingham office market is prompting the city’s first speculative office refurbishments in five years, says Innes England's Craig Straw.
Innes England was recently instructed to market newly refurbished grade A office space in Riverside Park in Nottingham.
It’s a 5,812 sq ft ground floor space at Loxley House in Tottle Road – owned by Threadneedle Investments, the leading international active asset manager with a strong track record of outperforming the market.
Pre-recession, this sort of speculative refurb was commonplace, but then as the number of potential occupiers dried up over the downturn, so did the upgrading of office space to attract a wider market with landlords preferring instead to await the identification of a new tenant before carrying out any works.
The return of speculative refurbs such as Loxley House is another important indicator of improving confidence in the market as owners and developers invest in their properties. Refurbishment offers a quick and cost-effective way of maximising the value of a property and with the right treatment, delivers the type of commercial space that the market requires.
With the lack of grade A office space in the city, then property owners are increasingly creating opportunities by refurbishing their better quality stock.
Threadneedle’s investment in this refurbishment in advance of a letting demonstrates market sentiment is improving. It shows a real confidence in the market that such a big institution like Threadneedle is investing in Nottingham.
The first six months of 2014 recorded a 110% increase in office take up compared to the same period last year signalling that the city is back on track with a big rise in the number of deals involving small to medium sized firms and bigger deals making a comeback.
The refurb at Loxley House was a strategic move by Threadneedle who said that Nottingham was a city bouncing back from the credit crunch and had displayed strong signs of recovery. In terms of investment, Threadneedle could see the possibilities and were increasingly confident about growth prospects in Nottingham and cities just like it.
Threadneedle is not alone with the trend continuing elsewhere in the city. intu Properties has refurbished Albion House in Canal Street.
A four-storey building with a number of tenants including Learndirect and law firm Hawley & Rodgers, it’s a prominent building with a rolling programme of refurbishment which included improving the communal reception area as well as substantially increasing the car parking capacity. The landlord’s commitment has been rewarded attracting new occupiers into the building alongside existing tenants who have also taken the opportunity to expand. Now only one suite remains available
Elsewhere in the city, the former Baker Tilly offices at the Poynt in Parliament Street were launched to the market earlier this week following speculative refurbishment by developer Henry Boot. Meanwhile F&C REIT has a rolling programme of refurbishment for its Nottingham assets. Park View House, for example, is now almost fully let and the company is turning its attention to 37 Park Row, following its vacation by Nottingham Trent University. It’s important to note that there is also some evidence of rental inflation returning to the market for these assets – with as much as £16.50 per sq ft having been achieved recently.
Overall, there is a constant demand for good quality modern office space in the city and it’s critical to Nottingham’s economy and growth that we have the space to enable occupiers to expand their businesses – and, crucially, their workforce in order to meet their strategy for expansion. It’s good to see that developers and property owners are responding – creating the space we need in the city, and boosting confidence throughout the wider business sector.