Place North West gathered a select panel of property folk for a roundtable discussion at South Preston Office Village all about the state of the city's commercial property market.
The Preston Market Matters roundtable was sponsored by Roundhouse Properties , developer of South Preston Office Vilage and now on site over the road at South Rings Office Village.
In attendance were:
- Harold Lefton, director, Roundhouse Properties
- Jody Lauder, surveyor, Edwin Thompson
- Ian Hassall, surveyor, Lancashire County Council
- Damian Walmsley, partner, Moore & Smalley
- Alban Cassidy, director, CA Planning
- Richard Laming, director, GVA
- Mike Fetherstone, partner, Napthens Solicitors
- Russell Adams, planning and development consultant, NJL Consulting
- Simon Joyce, branch manager, Handelsbanken
- Daniel Burn, senior associate, King Sturge
- Nick Kos, principal director, Bailey Deakin & Hamiltons
Below is a summary of the discussion on the day around particular topics
Out of town or city centre?
Participants agreed the out-of-town market in Preston is now the dominant market place for offices. Preston city centre lacks available, quality product, with little sign of a boost in supply on the horizon.
How the city centre reinvents itself no one seemed quite sure. Bigger businesses moved out many years ago to business parks such as Riversway in the late 1980s and early 1990s, followed by Lancashire County Council and government departments and others.
More recently there has been development in north Preston around Junction 31a of the M6 such as Fulwood Business Park and, to a lesser extent, in south Preston, where only the lack of available development land is stopping more space from being delivered.
The out-of-town market is well established and now occupiers are moving between different out-of-town locations to newer space or better access to motorway connections.
Traffic congestion on gateways in and out of the town is also putting off occupiers from basing themselves in the city centre, leading to this trend of people coming from Riversway to places like South Preston Office Village.
Accommodation in the city centre is out-dated and there are no major new developments taking place or have been planned.
Harold Lefton of Roundhouse said: "We're embarking on what is for us is a fairly substantial development over at South Rings which will be about 60,000 sq ft spread across 23 separate units."
There is now just one unit remaining to let at South Preston Office Village and Lefton hopes there will be cross-fertilisation as occupiers out-grow space there and relocate to South Rings.
In terms of turning around the fortunes of the city centre market, panellists said the public sector needs to kick-start the market by pre-letting new space. Budget cuts to the city council and other public sector organisations makes that increasingly unlikely.
Ian Hassall of Lancashire County Council commented: "The market needs to look at the broader public sector regional funding opportunities whether that is the Regional Growth Fund or new Evergreen fund. On behalf of Lancashire County Council, these are avenues we are beginning to explore and we are engaging with landowners and businesses. This is going to be a long term process to the restructure the market."
The consensus was that Preston's commercial property market is being constrained by transportation problems. Regional businesses with bases in Liverpool and Manchester that are seeking to expand into Preston are often struck by the lack of clear uncongested routes in and out of the city.
Jody Lauder is part of the Preston Trampower campaign proposing a new four-line network to connext key parts of the city with park-and-ride stations outside the city centre.
Lauder said: "We can't hold our hands up and say that the eastern corridor [first line planned] is going to be the answer but it will certainly provide alternative transport access for people to the retail park and open up a number of heavy engineering sites and light industrial sites inside the accommodation of Preston city which combined could bring forward mixed use schemes or wholesale residential development.
"The vision for Preston Trampower is essentially to put in four routes east, north, west and south and to be able to deliver that we need to be able to free up the red tape we have to go through."
The Preston Trampower model is for a mix of public and private funding from Department for Transport.
Lauder said applications to DfT have to be driven in partnership with local government but securing that support under the current authority committees is very difficult.
He added: "One of the current difficulties is that there is wholesale transition within local government structures and councils are up for re-election, so nobody wants to take a stance on Trampower because of the insecurity of what will happen after the elections."
The decision was taken by local politicians that Tithebarn was the number one objective over the last 10 years and, whether it happens or not, if it didn't happen through the biggest retail boom we've ever had is it going to happen now? The answer is no-one knows but it looks increasingly less likely.
Politically, that scheme has been seen as the big regenerator of the city centre, at the detriment of other developers. Nick Kos said: "I've had incidents where clients have wanted to do major developments on Church Street who were looking at taking out a lot of old stock and were basically told 'forget it, we want to see Tithebarn happen, we don't want to see anything that is going to compete with that'.
"Developers aren't interested in getting into all the policy and all the political argument; they will go somewhere else where they can make money."
Retailers are also holding back and will not extend or push the pedestrianised areas because they do not know how the market is going to shift if and when Tithebarn comes along.
Blackburn council is still challenging the Tithebarn decision anyway on procedural matters. Transport was the contentious point in the inspector's letter which recommended refusal on the basis of increased congestion.
The inspector's point of reason was 'it is a local matter and if you're prepared to put up with it then you suffer it'.
There is a sense in the property community in Preston that perhaps we've missed the boat and Tithebarn should have happened at a time when the market was at its peak.
Liverpool managed to get Liverpool One just under the line before the recession and you wonder, even if the High Court challenge is resolved shortly, what's the next step?
Participants agreed that Tithebarn is not fundable in its current state and would need "some rationalising and a reality check" to become of a realistic scale for today's market.
There was also a consensus that Preston local authority planners took too long to decide on Tithebarn and have discouraged development in the city centre that may clash with it.
In some cases, developers planning other schemes were even asked to submit Tithebarn Impact Assessment reports, assessing the likely impact of something that doesn't exist.
Simon Joyce, manager of the Preston branch of Handelsbanken, said: "We still very much have an appetite for investing in property. We have always struggled with the speculative end of things and I don't see that changing in truth.
"Unlike other banks we don't have any [negative] capital issues whatsoever so there is as much money as people require in relative terms but we do like things to be underpinned by revenues and established cash development.
Joyce continued: "If someone comes along with a great idea with planning backing and some central government support and there is still some gap funding from a banking point of view we would probably struggle with that. We are naturally conservative which is why our capital structures are so strong."
The roundtable panellists felt the London-based centralised credit departments of the banks failed to understand the local market and were missing the chance to back good local developers planning speculative schemes that would do well.
Dan Burn of King Sturge said there were strong occupier markets that could drive demand that the banks should be encouraging: nuclear, precision engineering, manufacturing, waste among them.
Preston suffers from not having a single organisation or person who is the main development driver. There are a number of organisations "all having a bit of a go" and the consequence is that people coming to town do not really know who the best person is to speak to.
Nick Kos, director of Bailey Deakin & Hamiltons, said: "Yes, I think it is a question of the fact that there are certain statutory responsibilities sitting in two camps, if you use Preston planning authority the county council is the higher authority. Developers are suffering without a clear port of call. They can't just have one proper conversation."
There is also Lancashire County Developments, the county council's economic development company, which is another organisation trying to take the mantle of being the main development conduit.
Ian Hassall of Lancashire County Council responded: "I think you're right Nick, there needs to be clarity and I've been at the county now for just a few weeks and the county are recognising the point you are raising. There is a much improved relationship with Preston City Council which needs to be improved."
Hassall continued: "The county has worked very closely with the districts despite the well-publicised trials and tribulations surrounding the local enterprise partnership [approved eventually in April] and have got the buy-in of most of the districts to the county being the appropriate entity for taking a strategic view of Lancashire with particular concentration of its efforts and its resources and its funding around Preston and that central Lancashire base. That is where there is the best opportunity for GVA growth and for jobs to be created over the next five to ten years."
The question was posed of whether there is a need to replace Preston Vision, the economic development company, with something else?
Panellists felt that there would not be a problem if Preston's planners were better and more welcoming of development.
"Preston City Council and public sector partners need to deliver what they say they're going to deliver and then the developers can do likewise."
On the positive front, it was stated that the city council has a relatively new chief executive [Lorraine Norris] who understands the importance of economic development for the city but actually understands some of the steps that needs to be taken and some of the decisions that need to be taken.
What is Preston known for outside the North West, other than Tithebarn, which has not happened?