The Midlands Engine Office Market Report 2017 says the town has only 5% of grade A office supply at the moment. More than half of current available stock is poor quality grade C space that requires extensive refurbishment to make it fit for purpose for potential occupiers, or could be viewed as obsolete and converted for other uses.
Ian Leather, director at LSH Northampton, said: “There is pent-up demand from good quality tenants that is going unmet as a result of the constraints on supply. With limited options for potential occupiers, there is an opportunity for landlords to consider refurbishment of sub-standard buildings. Notably, for the first year in a decade, no grade A space was let during 2016.”
Northampton has shown its mettle for ambition, with larger-scale policies and plans for town centre regeneration, which include the dedicated enterprise zone across 120 hecatres and new-build office development. These will boost fortunes and attract occupiers and investors to Northampton, according to the report.
The plans include FOUR Waterside, a proposed development within the Waterside Enterprise Zone that is backed by Northampton Borough Council in partnership with Kier Property. When delivered, phase I will provide 60,000 sq ft of prime office space and the first new office development in central Northampton for many years.
Phase III at Waterside Way, The Lakes, is the prime out of town office location, only five minutes drive from Northampton town centre with the next phase of office development being planned and triggered by forward commitment by companies who are struggling to identify the right quality options from the existing supply. This could be the release valve for many tenants who are restricted from a lack of choice.
The new University of Northampton Waterside Campus, which is due for completion in September 2019 has brought significant investment in infrastructure, including a new bridge over the River Nene and will energise the town centre with an influx of up to 12,000 students.
The report also highlights the £53m Project Angel building in the town centre, which has now completed and enabled the consolidation of 2,000 staff into high quality, modern accommodation. As a result, the formerly occupied Century House and Riverside House are about to undergo significant refurbishment and are already attracting attention from prospective tenants.
At the moment, the only grade A stock available comprises the recently completed University branded Innovation Centre by the rail station, while out of town options are, limited to Britannia House, with 19,110 sq ft; Electus with 17,590 sq ft; and 12,275 sq ft at Quadra on Pavilion Drive.
Although take-up in 2016 was up 45% on 2015 to 182,000 sq ft, the figure was boosted by Opus Energy’s 90,000 sq ft acquisition of John Dryden House for its consolidation in Northampton.
“This was a major transaction, which was great news for Northampton with about 800 jobs being retained which a strong vindication of Northampton for occupiers is looking for access to key labour.” said Ian. “The remainder of occupier activity was made up of smaller transactions to a diverse range of occupiers.”
Ian said activity in the first quarter of 2017 reached a respectable 31,811 sq ft, an improvement on Q1 2016, which reached 25,440 sq ft, and Q1 2015 with 26,336 sq ft, but that was not enough to suggest 2017 as a whole will surpass the annual average.
“The opportunities for growth and return on investment are abundant in the Midlands Engine region, we just need to be strategic about how we approach them. With this in mind, a forensic understanding of the market remains critical,” added Ian.
LSH’s Midlands Engine report focuses on eight key regions in the Midlands Engine area: Birmingham city centre, Birmingham out of town, Coventry, Derby, Leicester, Nottingham, Milton Keynes and Northampton.