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Black Grace Cowley 51 Victoria Street, Douglas, Isle of Man, IM1 2LD Telephone: 01624 645550 Fax: 01624 645556 Email: [email protected] www.blackgracecowley.com www.facebook.com/blackgracecowley @immproperties
RECEIVED ON
DEPARTMENT OF INFRASTRUCTURE
Black Grace Cowley CHARTERED SURVEYORS FIXTURE AGENTS & VALUERS
3 July 2014
MG/mw/3-1
Mr Peter Caldwell Director Ostick & Williams Architects and Planners 14 Edgewater Road Belfast BT3 8JQ
Dear Mr Caldwell
Re: Proposed Office Development Scheme, 39 Finch Road, Douglas, Isle of Man
Thank you for providing the plans and specification for the new office scheme on Finch Road, which we understand you are about to submit to the local Planning authority.
We have been involved with this site for a number of years, having helped in originally assembling the site, and also coordinating the short term lets on the existing property.
As you are aware, the site previously had planning approval for an office scheme, however, when we took the scheme to market, it unfortunately coincided with a slow period in office lettings, and it proved extremely difficult to secure any pre-let agreements.
You have asked us to comment on the current market and the proposed marketing strategy should the current application be successful, and we have detailed our thoughts below.
As you are aware, the market in Douglas has been relatively slow for the last 5/6 years reflecting the general economic downturn following the financial crises of 2007/2008. There has therefore been very little speculative office development, although the two schemes that have been built over the last two years, St George’s Tower and Quay House have both been reasonably successful, with Quay House in particular now having 100% occupancy.
As there have been no major schemes (20,000 sq ft +) developed during this period, the availability of modern purpose built space has been reducing, and we have already expressed concerns to Government that without further new stock, we could easily be left in the difficult situation of being unable to accommodate large space requirements either from local companies expanding, or for new companies looking to relocate to the Island.
Rents on the Island have remained remarkably stable throughout the last five years and currently stand at between £21 and £22.50 for Grade A modern open-plan office space.
With the current relatively low levels of stock available to let on the market, we would expect rents to show increases over the next few years and potentially settle around £25-£26 per square foot.
Recent transactions in the market have shown a renewed optimism from companies with pre-letting of the new Canada Life headquarters at the Business Park, (16,500 sq ft); the purchase of the Ravensdale site on Circular Road by local E-gaming firm Microgaming where they intend to develop a 40,000 sq ft new office block for their own occupation; and lettings of individual floors in both St George’s Court on Hill Street and Standard Bank House on Circular Road.
The main difficulty with new developments are the short time frames that companies often work to in either relocating to the Island or in expanding their operations. Over the last 20 years there have probably been no more than three or four pre-let arrangements, and the majority of modern office buildings have been built on a speculative basis and let once construction has begun and the scheme is part developed.
We therefore see it as essential that a detailed planning approval is secured on this site to ensure there is every opportunity to either develop quickly once a tenant interest has been identified, or more likely so that speculative development can commence and the developer will take the risk that lettings will be secured during the construction period.
With no other speculative schemes due to start within the next six months, our advice to client has been to press on with the development at as early a date as possible, on receipt of detailed planning approval, and hopefully steal a march on any other developers currently considering new schemes.
The final comment I would make is that unlike many of the office buildings developed in Douglas over the last 20 years, the likelihood is that a building like this will be let on a floor by floor basis and not to a single tenant as had become the norm with the prior growth of the banking and insurance industries on the Island. The proposed marketing therefore will be concentrated on letting of individual floors to companies in the E-gaming, CSP, legal and accountancy industries where we see the majority of growth over the next 5 years.
We hope this short report is adequate for your current needs. If there is any further information that you require please do not hesitate to contact us.
Kind regards
Yours sincerely
M N Grace BSc MRICS BLACK GRACE COWLEY
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