Fort Halstead : Employment Land Summary. A Report by Regeneris Consulting

Transcription

1 Fort Halstead : Employment Land Summary A Report by Regeneris Consulting

2 Armstrong (Kent) LLP Fort Halstead : Employment Land Summary February 2014 Regeneris Consulting Ltd 70 Cowcross Street London EC1M 6EJ

3 Fort Halstead : Employment Land Summary Contents 1. Introduction & Key Points 1 2. Summary of 2012 Report 3 3. Locate in Kent Peer Review 7 4. More Recent Council Evidence 8 5. The Current Proposal and Jobs Yield 10 Appendix A : Locate in Kent Peer Review Report 12

4 Fort Halstead : Employment Land Summary 1. Introduction & Key Points 1.1 A comprehensive report was prepared by Regeneris Consulting in August 2012 which tested the feasibility of all potential employment uses at the Fort Halstead site. The report was called Fort Halstead : Towards a Development Framework (Employment Opportunities) and is an examination document. The August 2012 report was used, in part, to shape the employment aspects contained in the Fort Halstead masterplan. 1.2 This current report has been prepared for the purposes of the Examination of the Sevenoaks Allocations and Development Management document. It provides: A short summary of the original 2012 Regeneris report A summary of the views of Locate in Kent. Locate in Kent have undertaken a peer review of the 2012 report, with their full assessment attached at Appendix A. A summary of the recent evidence that the Council has produced in relation to employment land matters this is in the form of (i) a URS Business Demand Survey, (ii) two further releases of the Sevenoaks Annual Monitoring Report and (iii) Knight Frank assessment of the CBRE Fort Halstead viability analysis The current best estimate of the likely employment yield from the Fort Halstead site once redeveloped. Key Points 1.3 A comprehensive evidence base report was prepared by Regeneris Consulting in It advocated that circa 17 Ha of land at Fort Halstead be reserved for employment use, inclusive of the historic Fort structures (2.7ha). This thinking is reflected in the current scheme masterplan. 1.4 The scheme masterplan is consistent with all the available Council evidence on employment land needs in Sevenoaks, including the Council s 2007 and 2011 Employment Land Reviews. There is nothing in the Council s evidence base, or our own research, to suggest that the level of employment allocation at Fort Halstead should be higher than that proposed in the masterplan. If anything the evidence base points to a lower requirement. 1.5 Since the 2012 report was produced the following pieces of evidence have been released: Locate in Kent s Peer Review (2012). They concur with the Regeneris analysis and concluded that the B1 employment proposals for the site, plus associated employment uses, are reasonable. URS Business Survey (2013). This research confirms that the Sevenoaks business base is comprised of largely small firms and that only 7% of those businesses wanting new accommodation would consider a move to Fort Halstead. The two most recent AMR s (2012 and 2013). These confirm the continued very low take up of B1 employment accommodation in Sevenoaks. Page 1

5 Fort Halstead : Employment Land Summary Knight Frank s review of the scheme viability assessment (2013). This research shows that the predicted levels of B1a and B1c need at Fort Halstead are appropriate. 1.6 All the evidence released since 2012 confirms the continued appropriateness of Fort Halstead masterplan to respond to long term employment land needs in Sevenoaks. 1.7 The indicative Fort Halstead employment proposals will yield in the region of 1,600 jobs, or 1,400 when expressed on a Full Time Equivalent (FTE) basis. This figure is greater than the number of jobs currently provided on site, with the precise number of jobs post redevelopment being dependent on the final proposals and specific mix of B1a and B1c uses. 1.8 The new employment activities at Fort Halstead are likely to deliver greater local economic benefit than the current configuration with much more local travel to work patterns and corporate spending than that associated with DSTL. The employment capacity of the site is therefore retained. 1.9 Approximately 1,200 jobs (75% of the forecast total) are on the proposed 4.0 hectare B1 park, encompassing space for office and high value research and engineering firms. The scale of the proposed B1 park represents a large scale land allocation in the context of the Sevenoaks B1 market: It could house approximately 150 businesses based on the average company size in Sevenoaks. It could alone accommodate all the B1 need identified in the Council s 2007 ELR for the next 18 years. One site providing 18 years of objectively assessed future need constitutes a very significant allocation. The allocation is even more significant given that the 2007 ELR was prepared in a buoyant market period and the replacement 2011 ELR predicts much lower levels of B1 need. It could, as a single site, accommodate 12 years of the annual gross B1 market growth witnessed across the whole of Sevenoaks over the last 5 years. Much of this B1 demand is proven to be for town centre sites so Fort Halstead would actually accommodate many more years of demand based on the recent trajectory Some space on the Fort Halstead B1 park will be available for almost immediate occupation via the refurbishment of a small number of existing buildings, notably A01 and A03, that are capable of providing a good quality office product. The majority of space will however be new build. Page 2

6 Fort Halstead : Employment Land Summary 2. Summary of 2012 Report 2.1 For those wishing to cross reference to the original 2012 Regeneris report, the content in this summary section is taken largely from Sections 7 and 8 of that document. Sevenoaks Economy 2.2 The economic base of Sevenoaks has grown only gradually over the last decade. Between 1999 and 2010 employment increased by around just 70 jobs per annum and demonstrates a lower growth rate than seen in the region. Jobs growth was witnessed in a variety of sectors; between 1999 and 2008 the sectors which grew most substantially were public administration (+1,800), construction (+1,000) and retail (+700). Between 2008 and 2010 the sectors which grew the most were employment agency activities (+2,800) and cleaning and landscaping services to buildings (+900). 2.3 Currently, many of the 49,300 jobs currently housed within Sevenoaks are those which would be expected to accompany a resident population of some 114,000, with significant volumes of employment in the retail and public and personal services sectors. 2.4 The data suggests Sevenoaks also has one of the highest concentrations of knowledge economy jobs in Kent with around 7,500 jobs in A large share of these (1,300 or 17%) are in scientific research and development posts, the majority at Fort Halstead. There are also notable concentrations of employment in head office and management consultancy activities (800), legal and accounting services (700), architectural and engineering activities (700), activities auxiliary to financial services and insurance activities (600) and computer programming and related activities (500). 2.5 Apart from employment at Fort Halstead, knowledge economy employment tends to be focused in very small organisations. In 2008 around 40% of knowledge economy jobs were in businesses of 1 to 10 employees. There were only around 20 knowledge economy businesses with 50 employees and over in the district. Much of the knowledge economy appears to be located in Sevenoaks for either historical reasons or lifestyle decisions on the part of owners/managers. 2.6 Sevenoaks is a relatively open economic area, with the district experiencing high levels of both daily out and in-commuting, with a net balance of out-commuters of some 9,000 workers. Daily out commuting is influenced by the proximity of Sevenoaks to central London and a globally significant array of employers and occupations. Levels of economic inactivity/unemployment have remained relatively low and there has been no pressing need for more rapid employment growth in recent years. Employment Land Need 2.7 Various documents have been produced by Sevenoaks DC to inform their employment land policies. These include the 2007 Employment Land Review which identified employment land requirements for the period to 2026, plus a 2011 update using more recent forecasting data. The focus of this evidence is the conventional employment land markets of B1 office, B2 industrial and B8 warehousing accommodation, which taken together typically account for Page 3

7 Fort Halstead : Employment Land Summary about 45% of employment in a local area. 2.8 Generally the employment land evidence does not show a need for substantial additional employment land provision in Sevenoaks, with the evidence reinforcing the headline economic data outlined above. In summary, the position is as follows: B1 office/b1b & B1c markets. The evidence points to a very localised market, with limited historic take-up and strong competition from some established B1 locations in the wider M25 South market area for footloose investment. B1 take-up in the M25 South market has reduced in the last five years, as has out-of-town business park demand throughout the UK (where the average vacancy rate is now at a 16 year high). In B1b/c markets, take-up has reduced in the c75 UK science and technology parks and large HQ/R&D campuses have been rationalised. Historically science and technology park build out rates have not been particularly rapid, even in a period of relatively buoyant national economic performance and the availability of public funding (on which many have been reliant). In 2007, the Council s ELR suggested around 4.2 hectares of B1 space would be required between 2006 and 2026, falling to a maximum of 0.8 hectares in the 2011 ELR update. In either scenario it was envisaged demand could be met through small scale infill development. We understand there is also an amount of currently vacant office stock which can help meet any identified demand. B2 industrial. Sevenoaks accommodates a largely local market. The overall picture in Sevenoaks, and the majority of adjoining locations, is of declining demand. The Council s latest ELR evidence states an overall reduction in demand of 4.5 hectares in the period to A decline in demand was also evident in the earlier 2007 ELR. B8 warehousing. The Council s 2011 ELR evidence forecasts positive demand for new B8 accommodation. The mid-point estimate is for an additional 5.2 hectares to Whilst the projection technique is unconventional, it is arguably a better reflection of need than the 2007 ELR which forecast declining demand. The ELR suggests that this need is unlikely to be met through intensification of existing sites and that some modest new employment land provision may be required. 2.9 On the basis of the above, it is only in respect of the B8 warehousing market that Sevenoaks needs to identify a modest amount of additional employment land. The small net need for B1 accommodation will be met through smaller scale infill developments and the B2 market is forecast to be in gradual decline. It is not considered that Fort Halstead is an appropriate location to meet this B8 need. Highways/HGV access would be sub-optimal in the eyes of many B8 occupiers and the site does not lend itself to the creation of the larger scale B8 units which occupiers increasingly demand (both in terms of creating suitably large development plots and height requirements). Wider sub-regional need would migrate to more established B8 locations, particularly around Dartford. Dartford is regarded as a national occupier location, with demand also migrating further into Kent along the M2 and M20 as well as M20 towards Ashford The 2012 Regeneris report also reviewed the market for employment land requirements which may emerge from the other sectors which comprise the remaining 55% of a typical local economy. In summary, the position is as follows: Page 4

8 Fort Halstead : Employment Land Summary High street retail and other retail markets. The Council s evidence base suggests the need for some additional provision in Sevenoaks Town Centre (1,700sqm convenience and 2,300sqm comparison) to 2026 and some demand for additional convenience floorspace in Swanley to New out of town provision is neither needed nor envisaged in policy terms. Hotel, leisure and tourism. This is a broad category of employment uses. The evidence suggests there is a need, and an opportunity, for new hotel provision in Sevenoaks. This need is particularly prevalent in relation to higher quality and boutique hotels, but is also evident in other market segments. Public sector. The evidence points to expanding demand for care services for the elderly, alongside considerable growth in technology assisted home living. Several new extra care schemes have been permitted/constructed locally in recent years. In the hospital sector it is clear that investment will be orientated to developing existing facilities, with no need for new provision. Most of the identified need within Council documents for enhanced education and health provision will be met in existing facilities and/or existing settlements. Whilst there will be some increasing demand for new FE/HE provision (and associated accommodation) in the sub-region the prospects of securing investment of this nature for Sevenoaks are slim. Proposed Employment Uses 2.11 As a result of the assessment process, four main opportunities were identified in the 2012 report in respect of employment provision at Fort Halstead: Opportunity 1 : QinetiQ Retention 2.12 Provision of a circa 8 hectare plot to house an existing QinetiQ building (X48) and a new 3,300sqm office block. This will safeguard circa 200 high quality jobs at the Fort Halstead site. It was noted that QinetiQ have no interest in becoming the sole long term occupier of Fort Halstead and retention of QinetiQ would require other neighbours to help create a new sense of place and to provide natural surveillance. Opportunity 2 : B1 Office/Workspace 2.13 It was concluded that a circa 3.2 hectare site be made available for good quality B1a,b & c accommodation. This would yield in the region of 16,000sqm of offices, serviced officers and workshops. Opportunity 3 : Quality Hotel Provision 2.14 There is a need for new hotel provision in Sevenoaks and Fort Halstead could be a suitable site. Given the characteristics of the site, the primary opportunity relates to provision of a higher quality or boutique hotel with adjoining spa and leisure facilities, although there is evidence of need within other hotel segments as well. CBRE s hotel specialists confirm there would potentially be market interest in opportunities of this nature, although any operator demand is likely to be dependent on provision of the appropriate up-front infrastructure and creation of what they would perceive as an attractive wider setting. Provision of a high quality hotel of circa 100 bedrooms is likely to require a circa 3 hectare plot depending on the nature Page 5

9 Fort Halstead : Employment Land Summary of any formal/informal open space which would accompany it. Opportunity 4 : Cultural Interpretation 2.15 The favourable policy support for new smaller scale tourism initiatives and perceived potential for interpretation of Fort Halstead s historic role and assets could provide an opportunity for the site. A facility might make use of (the few) historic buildings on site and involve access to the historic Fort area. A new cultural tourism facility of this nature is likely to require circa 2 hectares (inclusive of the historic Fort area). Such use of the site would not be viable in isolation and would need to be delivered alongside a wider redevelopment of Fort Halstead In addition to the above, if a new residential community were to be delivered at Fort Halstead then there would be a need for some ancillary local retail and related provision. This would require around a further 1-2 hectares of land. At the time of writing the most likely form of any new ancillary provision at Fort Halstead could be in relation to small scale retail, crèche and small scale day care provision, although this will require further testing once the parameters of any new residential community become clear The above uses total approximately hectares. Page 6

10 Fort Halstead : Employment Land Summary 3. Locate in Kent Peer Review 3.1 Locate in Kent were asked to review the August 2012 Regeneris report. The scope of the peer review exercise was primarily to gain the views of Locate in Kent on the scale of the B1 market that should be provided for by Fort Halstead. 3.2 The views expressed in the August 2012 Regeneris report were supported by the findings of the peer review exercise. The peer review report stated: Locate in Kent concurs with the general conclusions about the future use of the site, reached by Regeneris in their report (p18) We feel that the allocation of up to 3.2ha for offices to accommodate B1a and B1c development is reasonable 1. (p18) It is quite possible that there would be demand for serviced offices at this site. (p18) Any new offices should be as flexible as possible in terms of the floorplate. (p19) We concur with Regeneris that large scale industrial use is not suitable for this site. However we do feel that small scale B2 light industrial use could have a role at the site. 3.3 The Peer Review report is included in full at Appendix A. 1 This has now been increased to 4.0 hectares (see final section of this report). Page 7

11 Fort Halstead : Employment Land Summary 4. More Recent Council Evidence 4.1 There has been no update to the employment forecasting work that was undertaken by Sevenoaks Council in 2007 and The most recent Council Employment Land Reviews remain those prepared in 2007 and Three further pieces of relevant information have been released since August These are summarised below and confirm the continued appropriateness of the conclusions reached in URS Report : Sevenoaks Business Demand Survey October This report was prepared in late 2013 and involved a survey of 275 local businesses. 4.4 The report recognised that Sevenoaks... has a higher than average level of employment in small firms. The report found that approximately 42% of respondents occupied premises that are smaller than 1,000sqft (p11). 4.5 Some 25% of survey respondents were planning to move or may move some or all of their operations in the next five years (p26). This equates to 70 firms in total. 4.6 Over half who were considering a move stated they would be looking for site and premises in Sevenoaks town centre. Only 7% stated that they would want premises close to the M25 at Fort Halstead. This category was one of a number of pre-coded options that respondents were asked to choose. 4.7 The survey was intended, in part, to replicate data that was gathered by URS in The evidence shows that broadly the same volume of businesses were considering a move in 2013 (26%) as 2005 (21%). It is therefore logical to assume that the take trends evidenced in the Council s Annual Monitoring Reports (see below) will continue at broadly the same rate in the future. Sevenoaks DC AMR data 4.8 Data from CBRE Commercial Agents suggests that total B1 transactions totalled 28,000 sqm between 2000 and 2011 equivalent to around 2,500 sqm per annum. The vast majority of this activity was comprised of transactions of 1,000 sqm or below. No individual year had transactions more than 4,500 sqm. A large part of the activity in the B1 is accounted for by churn whereby occupiers are vacating existing stock and moving to alternative existing accommodation that better fits their needs. Their vacated stock is then filled by others. 4.9 These trends are evidenced in the Council s Annual Monitoring Reports 2 which shows that over the last five AMRs (2009 to 2013) there was a: Net growth of only 1,176 sqm B1(a) office space an average growth of 240sqm per annum. 2 Sevenoaks DC. Annual Monitoring Reports for 2009, 2010, 2011 and Page 8

12 Fort Halstead : Employment Land Summary Net reduction of 3,276 sqm of B1(b)(c) space an average reduction of 1,800 sqm per annum The data shows very little net growth in the B1 market in the last four years. When losses of employment land are excluded the gross take up of employment space still remains very modest at an average of 1,000 sqm of gross B1a take up per annum in the last 4 years and an average of 500 sqm of B1bc. In gross terms the combined B1a,b and c markets grew by an average of 1,500 sqm per annum across the whole of Sevenoaks district in recent years. This suggests a relatively modest market for B class accommodation The most recent AMRs (2012 and 2013) also provide data on the scale of mixed-b type employment space that has been delivered indicated that there was a net growth of 3,490 sqm of mixed use areas that have been brought forward, and which would also contain an element of B1 accommodation. The precise extent of B1 on these mixed use areas is not known. The 2013 AMR stated that there was a net loss of 355 sqm mixed-b class accommodation. Knight Frank Review of Viability Appraisal 4.12 Knight Frank have undertaken an independent review of the CBRE viability assessment for the proposed Fort Halstead scheme. This work was undertaken on behalf of Sevenoaks DC. Part of their review was to advise Sevenoaks DC on whether there was sufficient market demand for the proposed on-site uses Advise on market demand conditions was formulated on the basis of Knight Frank s professional judgement, as opposed to bespoke and detailed market research on the Sevenoaks market The Knight Frank conclusions were as follows: In total there was sufficient demand for between 200,000 and 250,000 sqft (net) of B1a, B1c and B2 floorspace at Fort Halstead This would be broadly split between B1a uses (100,000 to 150,000 sqft) and B1c/B2 (100,000sqft) The current masterplan envisages some 170,000 sqft (net) of B1a and B1c accommodation with further expansion land available for QinetiQ if they require it. The split is shown as 120,000 sqft B1a and 50,000 sqft B1c. No substantial B2 provision is envisaged because of the unique characteristics of the Fort Halstead site its likely inability to host large footprint industrial occupiers and the consequent HGV movements. In addition all the Council s evidence base material points to a declining B2 market locally The provision of 170,000 sqft (net) of B1a and B1c accommodation is therefore broadly in keeping with the market advice of Knight Frank. Page 9

13 Fort Halstead : Employment Land Summary 5. The Current Proposal and Jobs Yield 5.1 The current proposed employment mix is as follows: QinetiQ will require 8.7 hectares of land for future operational requirements. The 8.7 hectares will enable QinetiQ to retain a number of existing bespoke buildings and develop a new build block to meet their future operational requirements. A further 1.3 hectares of QinetiQ expansion land is also identified. 4.0 hectares of B1 development, which according to the current masterplan would include a mix of circa 18,000m 2 (Gross External Area) of offices, serviced offices and light industrial workshops. The masterplan has been developed with a relatively low density mix of employment uses to maintain and respond to the unique Fort Halstead setting, slightly more floorspace may be possible dependent on the final mix. Proposal for a quality new hotel/spa facility, which is now assumed to require a site of some 1.5 hectares. Proposal for a cultural/heritage facility to celebrate the history of Fort Halstead, which is assumed to require a site of some 2.7 hectares 3. Proposal for a new local centre to accompany a new residential community. This local centre, based on an assumed plot of circa 0.5 hectares, is likely to include ancillary retail, nursery/crèche facility and house the estate management office. 5.2 The total area dedicated to employment generating uses is therefore 18.7 hectares. Some of this site area comprises the historic fort facility and a new cultural/heritage facility. If this is netted off then the figure for employment uses reduces to nearer 16.0 hectares. Jobs Yield (created and safeguarded) 5.3 At the time of writing the August 2012 report on-site jobs at Fort Halstead equated to 1,200 actual jobs 4. This figure will be slightly less than 1,200 when converted to Full Time Equivalent employment, although we understand the majority of current on-site posts to be full time. We estimate the current on-site job yield converts to 1,100 FTE posts (this is based on circa 85% of current posts being full time). 5.4 The jobs yield for the proposed redevelopment scheme is as follows: Retention of QinetiQ will yield 250 actual jobs (assumed to be 230 FTEs). This assumes some growth on the existing headcount of 200, with space available for considerably more QinetiQ expansion should it be required. The B1 park is estimated to be able to yield just over 1,050 FTE jobs when fully developed and occupied. On the assumption that 25% of the jobs would be part time 3 Part of this 2.7 hectares is the historic fort structure, and falls out-with the estimated 40 hectares of previously developed land. 4 This figure has already started to reduce with early DSTL departures. Page 10

14 Fort Halstead : Employment Land Summary then the actual number of jobs (not FTEs) on the B1 park would approach 1,200 posts. An up-to 120 bed hotel with associated gym, spa, and restaurant facilities would yield 80 FTE jobs. Assuming 50% of hotel/leisure workers are part time, then the scale of actual jobs would equate to 105 jobs. The estimate is based on HCA Employment Density Guide which states 1 FTE employee per 1.25 bedrooms for quality hotels with facilities. The heritage/cultural facility is assumed to create 5 posts, or 4 on an FTE basis. The village centre is assumed to create approximately 45 actual jobs based on the likely mix of uses. This will equate to 35 on an FTE basis. 5.5 Adding together the proposed B1 park with the other elements of the proposed Fort Halstead redevelopment generates a potential employment yield of 1,600 posts 5 (or 1,400 FTEs). This would serve as a more than adequate replacement for the existing 1,200 on site posts. 5.6 The derivation of the B1 park jobs is provided in Table 5.1 below. A standard set of assumptions has been applied to the floorspace figures to estimate an employment yield. Table 5.1 : Employment Yield on B1 Park GEA (Sqm) GEA to NIA reduction (%) NIA (Sqm) Jobs Density (Sqm per FTE worker) FTE Jobs B1c total 4,872 8% 4, B1a total 13,070 15% 11, Total 17,942 15,591 1,066 Source : Regeneris Consulting calculations using HCA Employment Density guidance. Floorspace estimates provided by JTP. Based on a 4 hectare land allocation 5 This is based on 1,200 B1 Park posts, plus 250 QinetiQ posts hotel posts + 45 village centre posts. Page 11

15 Fort Halstead : Employment Land Summary Appendix A : Locate in Kent Peer Review Report Page 12

16 Locate in Kent Peer review of the Regeneris report - Fort Halstead: Towards a development framework (employment opportunities).

17 Peer review of the Regeneris report - Fort Halstead: Towards a development framework (employment opportunities). Contents 1. The task... 1 Locate in Kent credentials... 1 Layout of report Part 1:... 3 Detailed comments and updates on data and information in Regeneris report Part Property demand and supply data (Locate in Kent data)... 5 Sevenoaks Office Property Supply and Demand... 7 West Kent Office Supply and Demand... 9 Kent & Medway Office Supply and Demand Sevenoaks Industrial Property Supply and Demand West Kent Industrial Supply and Demand Kent & Medway Industrial Supply and Demand Valuation Office Agency data Office heridataments(number of units), floor space and rateable value Industrial heriditaments(number of units), floorspace and rateable value Part 3: Conclusions General Offices (B1 a and B1c use classes) Industrial uses Tourism use Hotel Other uses Appendix 1: Innovation Centre occupancy and rents-confidential INFORMATION i

18 Appendix 2: Kent Hereditaments, Ratable Values and Floorspace Office Office Hereditaments for Kent (number) Office Rateable Value for Kent ( million) Office Floorspace for Kent (thousand m 2 ) Industrial Industrial Hereditaments for Kent (number) Industrial Rateable Value for Kent ( million) Industrial Floorspace for Kent (thousand m 2 ) Tables Table 1: Sevenoaks Office Property Supply... 7 Table 2: Sevenoaks Office Property Demand... 8 Table 3: West Kent Office Property Supply... 9 Table 4: West Kent Office Property Demand... 9 Table 5: Kent & Medway Office Property Supply Table 6: Kent & Medway Office Property Demand Table 7: Sevenoaks Industrial Property Supply Table 8: Sevenoaks Industrial Property Demand Table 9: West Kent Industrial Property Supply Table 10: West Kent Industrial Property Demand Table 11: Kent & Medway Industrial Property Supply Table 12: Kent & Medway Industrial Property Demand ii

19 1. The task 1.1 Locate in Kent have been asked by PPS on behalf of RREEF to peer review the Regeneris report-fort Halstead: Towards a development framework (employment opportunities). The request was that the peer focus primarily on the report's conclusions in relation to the B1 market. Regeneris advise that there is no realistic prospect of the Fort Halstead site being developed as a major new B1 location in the next 15 years or so (for either B1(a) office or B1 (b,c) R&D, technology and light industrial uses), both because of the future nature and scale of likely demand and also the presence of more attractive supply elsewhere in the M25 South market/elsewhere in Kent. They do however suggest that a proportion of the site, circa 2 hectares, (this was later updated to a possible 3.2ha) should be reserved for smaller scale B1 provision - see Para 7.25 of the report. This smaller scale provision would be designed flexibly to try and capture demand from a wide range of sectors, and would probably include some serviced office provision. The scope of the peer review exercise is to establish Locate in Kent's view on the above conclusions. In particular we are keen to elicit your team's opinion on the quantum of land that should be earmarked for B1 provision in our emerging masterplan. Regeneris Consulting state that the Fort Halstead site is unsuitable for either the B2 industrial or B8 distribution markets. This view is partly shaped by likely market demand issues, but more fundamentally by the unique physical and environmental characteristics of Fort Halstead and the unsuitability of the site for these larger scale uses. These views resonate very strongly with all the opinions we are picking up in consultation. As such we don't think the scope of your review should focus on the market for B2/B8 accommodation. The Regeneris report also identifies potential for a number of non- B class employment uses (such as a new quality hotel). It would be useful to obtain confirmation, or otherwise, on the realism of these opportunities as part of the peer review exercise Locate in Kent credentials 1.2 Locate in Kent is Kent and Medway s investment promotion agency. A private company set up in 1997, it has assisted 750 companies to relocate to, start up in or expand in Kent since 1997, creating or saving 50,000 jobs. It also has an aftercare role with existing Kent companies. It has been involved in economic development and investment promotion in the county for more than 25 years. It has a good understanding, therefore, of the county s offer to investors and occupiers, in competition with other areas. 1

20 1.3 The company also runs the Kent Developers Group which consists of 19 developers and 8 associates who are also involved in development and construction, and therefore has a good understanding of what development is planned and viable in Kent. 1.4 The company also maintains a large commercial property database which enables us to see exactly what commercial property is available in Kentproperty supply, which property is more or less popular, and trends over time. Searches performed on that database and knowledge and data gleaned from our ever changing pipeline of clients searching for commercial property, give us a good understanding of property demand. Locate in Kent s credentials for this task can therefore be summarised as: Extensive knowledge and experience of the Kent commercial development world Access to unique data on property supply and demand Wide understanding and experience of what commercial property is being sought by indigenous and in-coming companies, Layout of report 1.5 This report consists of three main sections: Part 1 - A detailed review of data and information presented by Regeneris, in the light of Locate in Kent s knowledge Part 2 - Presentation of Locate in Kent sourced data regarding property supply and demand, both from the company s own data and VOA data. Part 3 - Our conclusions from the above, forming our main response to the task outlined above. 2

21 2. Part 1: Detailed comments and updates on data and information in Regeneris report Para 2.4 and indirect and indirect jobs created from the 210 Fort Halstead staff that live in the district is similar to the Locate in Kent multiplier established over many years of research into Kent companies. However, this multiplier (0.32) is generally applied to all staff working at a site because the indirect jobs created via suppliers are independent of where staff live. Nonetheless, with most suppliers probably not being local, that may counterbalance this calculation. Para 4.6, Fig 4-1 and Fig 4.2-this would appear to confuse town centre and non town centre office stock. For example there is virtually no office stock in West Malling village centre for example, certainly not twice as much as Sevenoaks, neither can this be figures for Tonbridge and Malling district, since these are much higher. On the other hand, Dartford figures are presumably for the town centre. Paras Most Kent serviced office providers are located in whole buildings e.g. Innovation Centre Medway, The Nucleus at Dartford, Kent Innovation Centre, Canterbury, Regus Kings Hill etc. By excluding the more supported environments (such as the first three listed above) from consideration of serviced offices, and from serviced office figures, when such centres are prevalent in Kent, this type of office use is potentially excluded from full consideration. Further information about these centres is provided in the conclusions and at Appendix 1 Para Mention should be made here of Bromley, the nearest office location with proposals for a large amount of new office floor space Para involvement of the RDAs in science parks in the South East is not common and there has been no public investment in the two Kent parks, Kent Science Park (KSP) and Discovery Park. Para At KSP new investments have reduced but the employee levels have remained roughly the same as existing companies expand, and several investment schemes have been underway for existing tenants. Occupancy is just under 80% Para Discovery Park is now owned by Discovery Park Limited, now has approx. 1,000 scientists and others working there, 650 plus from Pfizer, the others primarily from 3 other sizeable life science companies and a number of small life sciences start-ups. 3

22 Expansion East Kent 0% loans are also available to companies locating there. Genzyme Diagnostics are now Sekisui Diagnostics. At Kent Science Park a certain amount of expansion is possible within the existing site but further expansion is dependent on a new motorway junction. Para Figures re industrial take up are not correct, least of all because in 2010 Ideal waste paper took 6,768 sq m of space at The teardrop Centre in Swanley, and this is just one development assisted by Locate in Kent. Para At present (June 2012) there is approx. 22,000 sq m industrial/warehousing space in 41 properties available, average size 537 sq m, i.e. there is more space available than this report suggests. However there is now only 561 sq m at Vestry compared with 2,000 sq m quoted, showing that there is a demand for such space. Para West Kent College has now merged with South Kent College to create K College on a new campus in Tonbridge. 4

23 3. Part Property demand and supply data (Locate in Kent data) Supply 3.1 Locate in Kent s property supply statistics are derived from Locate in Kent s Property Database which is populated with properties from key Kent estate agents and continually updated. 3.2 In June 2012 there were (approximately) 853 office properties and 791 industrial properties logged onto the database. An analysis is made each month of the number of properties available in each of Kent s 12 districts and in Medway in 13 size ranges (square feet). An average property size is calculated for each district in each month. The office property supply statistics for Sevenoaks, West Kent (Sevenoaks, Tonbridge & Malling and Tunbridge Wells Districts) for June 2011 and June 2012 are shown in Tables 1, 3 and While the Locate in Kent property database does not contain all Kent properties, it does nevertheless provide a large sample (approximately 90%) of Kent property supply which allows comparisons between districts and areas and analyses of trends to be made. Monthly analyses of property supply have been made for the past 8 years. Demand 3.4 Locate in Kent s Property Demand statistics are derived from Locate in Kent s project pipeline, which in June 2012 consisted of 309 projects. The majority of Locate in Kent s active projects have a property requirement in Kent and hence these statistics provide a sample of property demand in Kent which though by no means comprehensive, is indicative of comparative demand over time and between areas. 3.5 The term active project refers to all investment projects currently active on Locate in Kent s client database which Kent still has a chance to secure. These projects may have been active for more than a year. Locate in Kent s analysis at any point during the year uses the active project base as a snapshot view of the inward investment market in Kent & Medway. 3.6 It should be noted that an apparent match between property demand and supply does not indicate that all demand can be met. Firstly, although Locate in Kent property supply figures are reasonably comprehensive, Locate in Kent only deals with a proportion of companies looking for space, so demand figures are not comprehensive. In addition there are mis-matches on size of property required as well as precise location, 5

24 tenure and quality. The Locate in Kent property database shows that many properties have been on the market for many years and therefore presumably are not meeting demand. Consequently a much bigger supply is needed than the apparent demand, and experience shows that there are many occasions when demand cannot be met in Kent, let alone an individual District. 3.7 The office property demand statistics for Sevenoaks, West Kent (Sevenoaks, Tonbridge & Malling and Tunbridge Wells Districts) for June 2011 and June 2012 are shown in Tables 2, 4 and 6. Note: Locate in Kent property figures are quoted as square feet as used by UK property professionals, whereas Regeneris figures are in square metres. 1 sqm = sq ft 6

25 Sevenoaks Office Property Supply and Demand 3.8 Sevenoaks property supply between June 2011 and June 2012 showed small variation, with an overall increase of 9% from 77 to 84 properties (Table 1). The average size increased (almost doubled) as a result of two larger properties (40,000 to 50,000 sq ft size range Westerham House 49,433 sq ft and 160 London Road 44,670 sq ft) coming onto the market. 3.9 Sevenoaks office property demand between June 2011 and June 2012 showed a nominal decline from 29 to 27 properties (Table 2). The average size increased by 25% as a result of the reduction in demand for smaller sized properties The supply and demand figures show an apparent mismatch, with approximately three times as many properties available than demanded. However, as noted above, Locate in Kent s active projects are not the only companies looking for property in Kent and so one must assume that demand is greater than suggested by these demand figures. Table 1: Sevenoaks Office Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average size 1,375 2,657 7

26 Table 2: Sevenoaks Office Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average size 3,645 4,563 8

27 West Kent Office Supply and Demand 3.11 Whereas Sevenoaks property supply increased over the 12 month period, West Kent property supply between June 2011 and June 2012 showed a 17.3% decline (Table 3). Since the decline was largely in smaller sized properties. The average size increased by 18.2% West Kent office property demand between June 2011 and June 2012 showed a decline from 52 to 42 properties (Table 4). The average size increased by 4% as a result of the reduction in smaller sized properties. As noted for Sevenoaks, the demand figures are less than supply, but Locate in Kent s demand figures do not represent total demand in Kent. Table 3: West Kent Office Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average size 2,357 2,785 Table 4: West Kent Office Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100,

28 Total Average size 3,694 3,849 10

29 Kent & Medway Office Supply and Demand 3.13 Kent and Medway office supply showed a decline of 7.2% over the year (Table 5). This was largely in smaller sized properties, and in combination with the addition of some larger properties (White Cliffs Business Park and Discovery Park in Dover), this created a dramatic increase of 130.5% in the average property size. However the presence of a large amount of space some 50 plus miles away from Fort Halstead is unlikely to have much impact on the site unless it was to be set up as a science park in direct competition Kent & Medway office property demand between June 2011 and June 2012 showed a slight decline from 126 to 115 properties (Table 6). The average size almost doubled because of the addition of one large property demand (DTZ, minimum demand 290,628 sq ft). Table 5: Kent & Medway Office Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average size 2,792 6,436 Table 6: Kent & Medway Office Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80,

30 80,001-90, , , >100, Total Average 2,909 5,765 12

31 Sevenoaks Industrial Property Supply and Demand 3.15 Sevenoaks industrial property supply between June 2011 and June 2012 showed an increase of 24% from 33 to 41 properties (Table 7). The average size (4,756 sq ft) increased only marginally (6%) Sevenoaks industrial property demand between June 2011 and June 2012 showed a 38% decline from 47 to 29 properties (Table 8). The average size (17,646 sq ft) remained virtually the same, increasing by 2%. Table 7: Sevenoaks Industrial Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 4,480 4,756 Table 8: Sevenoaks Industrial Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 17,302 17,646 13

32 West Kent Industrial Supply and Demand 3.17 West Kent industrial property supply between June 2011 and June 2012 showed a marginal increase (2%) (Table 9). Average size (7,642 sq ft) increased by 5% West Kent industrial property demand between June 2011 and June 2012 showed a decline from 58 to 45 properties (22.4%) (Table 10). The average size (15,941 sq ft) decreased by 6%. Table 9: West Kent Industrial Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 7,270 7,642 Table 10: West Kent Industrial Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 16,943 15,914 14

33 Kent & Medway Industrial Supply and Demand 3.19 Kent and Medway showed a decline of 4.6% over the year in the numbers of industrial properties available, from 829 to 791 (Table 11). There was no consistent pattern in the variation of size of properties, but the addition of some larger properties (White Cliffs Business Park and Discovery Park in Dover), created an increase of 46.4% in the average property size (to 11,151 sq ft) Kent & Medway industrial property demand between June 2011 and June 2012 showed a slight decline (11.4%) from 114 to 101 properties (Table 12). The average size (25,343 sq ft) increased by 38.5% because of the addition of an unnamed UKTI Indian company. Table 11: Kent & Medway Industrial Property Supply ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 7,618 11,151 15

34 Table 12: Kent & Medway Industrial Property Demand ft 2 June 2011 June , ,001-5, ,001-10, ,001-20, ,001-30, ,001-40, ,001-50, ,001-60, ,001-70, ,001-80, ,001-90, , , >100, Total Average 18,303 25,343 16

35 3.2 Valuation Office Agency data 3.21 This data- full title Business Floorspace (Experimental Statistics) was made available by the Valuation Office Agency on 17 May 2012 and relates to figures for 31 March each year. Though undergoing evaluation, the data does none-the- less broadly accord with the data presented by Regeneris (other than in a few instances outlined in Part 1), and therefore provides useful confirmation. Office hereditaments(number of units), floor space and rateable value (see Appendix 1) 3.22 These figures show that in respect of offices, Sevenoaks is reasonably average in Kent terms for the growth in hereditaments (number of units), and office floor space between 2000 and Dartford and Tonbridge and Malling show a much higher growth (a doubling in the case of Dartford) of the number of units, and a 75% increase in floor space in Dartford compared with a 34% increase in Kent. In terms of total rateable value increase, Sevenoaks has seen an 82% increase since 2000 compared with a 64% increase in Kent overall and at the other extreme a tripling in Dartford. As floor space in Sevenoaks has only increased 22% over this period, it indicates a good increase in rateable values for each property, which is not the case in most Kent districts. Industrial hereditaments(number of units), floorspace and rateable value (see Appendix 2) 3.23 Sevenoaks shows a slightly above average increase (14%) in industrial units since 2000, and an increase in total rateable value that is slightly below the Kent average. Industrial floor space reduced by 5% in Sevenoaks, it also reduced by a similar or larger amount in Dartford and Maidstone. 17

36 4. Part 3: Conclusions 4.1 Locate in Kent concurs with the general conclusions about the future use of the site, reached by Regeneris in their report. However, we would make these more detailed comments in relation to the points we were specifically asked to address: 4.1 General 4.2 Every site is unique, but Fort Halstead is particularly so in terms of the potential employment use of the site, not only because of its previous uses but because of its position right on the edge of Kent and adjacent to two London Boroughs with their main employment locations: Croydon, Bromley and Orpington. This makes it even harder to use available employment and property data to predict what demand might be for employment uses of different types. In addition of course, the recession makes it even harder to judge what may be possible over the medium term. This means that opinions formed from experience are probably at least as important and valuable as those based on a review of the data. The Regeneris report and the Locate in Kent review hopefully together form a balanced view of what may be achievable at the site. 4.2 Offices (B1 a and B1c use classes) 4.3 We feel that the allocation of up to 3.2ha for offices to accommodate up to 12,275 sq m of B1a and B1c development, besides the potential land allocated for QinetiQ, is reasonable. We would however make the following more detailed points: The delivery of employment uses at this site will almost definitely depend on at least part of the property being provided speculatively. We do not think the chances of attracting a pre-let, especially in the early stages, are high. It is quite possible that there would be demand for serviced offices at this site. There are a number of reasons to think this-there is little provision in the vicinity, the Sevenoaks area and the rural areas to the south of Croydon and Bromley Boroughs is likely to have a number of entrepreneurs/small businesses, the owners of which previously worked in London and whose response to the recession is to set up on their own. In fact business start-up figures for Sevenoaks from the Office of National Statistics show this to be the case. Once these businesses grow out of their home base they require attractive serviced offices. The Serviced Office Group recently took space at 160 (the BT building) in Sevenoaks 18

37 to provide serviced offices-their research presumably showed that their was demand for this. Time will tell what take-up proves to be The confidential table at Appendix 3 shows that Innovation Centre style accommodation which has been developed from one end of the county to the other has almost universally been successful in attracting good occupancy and good rents, even during the recession. In some cases, businesses locating there have been starting up, but some are also downsizing. The nearest centre to Sevenoaks is at Dartford which has good occupancy rates despite the high rents. This type of accommodation should be seriously considered for this site. It may be that this could be provided, at least initially in some existing buildings on the site which could be refurbished, similar to the Capital Enterprises refurbishment of the officers quarters at Kings Hill which now provide extensive serviced office facilities totalling about 55,000 sq ft, at Churchill Square. This is in addition to the Regus facility also at Kings Hill. Innovation Centre Medway has also had success (including commercial success) in providing hotdesking facilities which are actually more lucrative than small offices. Any new offices should be as flexible as possible in terms of the floorplate. Again, Kings Hill proves that the more recently built flexi units have been easier to let and re-let than the more traditional HQ style properties which are hard to successfully sub divide. 4.3 Industrial uses 4.4 We concur with Regeneris that large scale industrial use is not suitable for this site. However we do feel that small scale B2 light industrial use could have a role at the site. There are several examples of small developments of this type that have been successfully built and let in Kent during the recession. These include the 60,000 sq ft Foundry Business Park at Faversham ( the 60,000 sq ft Deal Business Park, ( and the innovative 85 unit The Base development in Dartford by Basepoint ( ) which is similar to an innovation centre for light industrial uses and is experiencing good occupancy levels. We feel that this site could be particularly attractive for light industrial because of the dearth of such facilities in the area and the successful letting of most of the remaining space at Vestry Business Park. 4.4 Tourism use 4.5 We are not experts in tourism, but feel the suggestion to provide a tourism attraction related to the past use of the site, to be reasonable 19

38 4.5 Hotel 4.6 Again, we are not experts in this field, but the Future hotel development opportunities report undertaken by Hotel Solutions in 2007 indicates a possible requirement for up to 91 new bedrooms of 3 to 4 star nature and 224 of budget hotel nature in Sevenoaks District up to 2026, using a medium growth scenario. We do not have any information or knowledge that would suggest any disagreement with this but again, because of the nature and location of the site, it is difficult to say how attractive the site might be, and the catchment area of any such development. The combination of uses on the site would be crucial here, and the success of any hotel at this site would be clearly dependent on marketing since the site does not have passer- by visibility. It is fair to say though that there is little provision locally, especially up into the south part of the London Boroughs of Bromley and Croydon, including Biggin Hill airport. It is possible to imagine a small/medium sized quality hotel being successful at this site alongside any tourist attraction developed and bearing in mind the (albeit only minor) hospitality needs of the businesses on the site. 4.7 The Fort Halstead site is being marketed on the hotel sites part of the Locate in Kent website, and further information can be found here. c 4.6 Other uses 4.8 Any other uses such as small scale retail will need to be provided for (or at least promised in the longer term) commensurate with other uses on the site, or the site will not be attractive to potential users. 20

39 Appendix 1: Innovation Centre occupancy and rents-confidential INFORMATION Innovation Centre Innovation Centre Medway Occupancy Rent 92% Average floor rate of per sq.ft exclusive of small power and business rates. Nucleus, Dartford 70% 45 psf furnished (less under Launchpad) Kent Innovation Centre, Broadstairs Over 90% sq m a month/ per sq m per annum Margate Media Centre 65% sq m a month/ per sq m per annum Kent Science Park 79% sq ft all inc except business rates Canterbury Innovation Centre Near 100% - 21

40 Appendix 2: Kent Hereditaments, Ratable Values and Floorspace Office Office Hereditaments for Kent (number) Area Kent 6,130 6,180 6,260 6,330 6,470 6,430 6,620 6,900 7,220 7,510 7,640 7,990 8,270 Ashford Dartford Maidstone ,020 1,040 1,100 Sevenoaks Tonbridge and Malling Tunbridge Wells Source: Valuation Office Agency, 2012 Office Rateable Value for Kent ( million) Area Kent Ashford Dartford Maidstone Sevenoaks Tonbridge and Malling Tunbridge Wells Source: Valuation Office Agency,

41 Office Floorspace for Kent (thousand m 2 ) Area Kent 1,34 1,35 1,37 1,39 1,41 1,35 1,37 1,38 1,41 1,45 1,46 1,47 1, Ashford Dartford Maidstone Sevenoaks Tonbridge and Malling Tunbridge Wells Source: Valuation Office Agency,

42 Industrial Industrial Hereditaments for Kent (number) Area Kent 10, , , , , , , , , , , , ,28 0 Ashford 1,100 1,100 1,120 1,120 1,130 1,120 1,150 1,180 1,180 1,210 1,220 1,240 1,250 Dartford Maidstone 1,220 1,210 1,200 1,200 1,210 1,160 1,150 1,150 1,130 1,140 1,150 1,150 1,170 Sevenoaks ,000 1,020 1,010 1,030 1,040 1,040 Tonbridge and Malling Tunbridge Wells Source: Valuation Office Agency, 2012 Industrial Rateable Value for Kent ( million) Area Kent Ashford Dartford Maidstone Sevenoaks Tonbridge and Malling Tunbridge Wells Source: Valuation Office Agency,

43 Industrial Floorspace for Kent (thousand m 2 ) Area Kent 6,510 6,704 6,756 6,777 6,738 6,665 6,689 6,731 6,686 6,669 6,567 6,603 6,659 Ashford Dartford Maidstone Sevenoaks Tonbridge and 918 1,050 1,080 1,106 1,101 1,048 1,075 1,019 1,013 1,028 1, ,038 Malling Tunbridge Wells Source: Valuation Office Agency,

44 Fort Halstead : Employment Land Summary Regeneris Consulting Ltd Manchester Office 4 th Floor Faulkner House Faulkner Street, Manchester M1 4DY Tel: [email protected] London Office 70 Cowcross Street London, EC1M 6EJ Tel: [email protected] Page 13