Out in front: Omega is on the way, but MEPC believes that Birchwood Park can become Warrington’s alpha dog
Conversation in Warrington has been dominated by progress – or the lack of it – at Omega, the £1bn office and industrial scheme on the former Burtonwood air base at junction 8 of the M62 (see panel, p105).
However, three junctions east along the M62, at its 10-year-old Birchwood Park scheme, developer MEPC is planning to accelerate rather than capitulate in the face of the competition.
The developer is planning to increase Birchwood Park’s size from 1.1m to 1.8m sq ft over the next five years. Unlike the Miller Developments-led joint venture behind Omega, MEPC feels confident enough to develop speculatively, and has lodged plans for a 65,000 sq ft office building, known as 109 Dalton Avenue, an image of which is published here for the first time.
Jonathan Walsh, managing director of the 123-acre development, says that it is time Birchwood Park cashed in some of the 1m sq ft of outline planning consents that MEPC already has in place. And, perhaps sensing the contrasting lack of progress at Omega, he has decided that it is time to shout about it.
“With the amenities, the land available for development, the long-term investment from MEPC and the product we are planning to bring forward, we are more dominant than we have been in the past,” he says.
MEPC, Walsh adds, will pursue a “twin-track approach” to development at Birchwood Park. As well as the large-scale 109 Dalton Avenue, there are proposals for a mix of smaller office units targeted at occupiers in the sub-12,000 sq ft range.
Mix of buildings
Providing a mix of building sizes at various price points is a strategy that has served Birchwood Park well in the decade since MEPC acquired it from the Atomic Energy Authority for £25m. According to the latest Warrington Annual Property Review, the park secured almost 115,000 sq ft of office lettings last year, representing more than half of Warrington’s annual take-up.
“Birchwood is a business community,” says Walsh. “We take a long-term view. We focus on planting acorns. We have around 120 suites of less than 1,000 sq ft, but we know that one of those companies will take 30,000 sq ft in 10 years’ time.”
It is no exaggeration to say that the mix of buildings at Birchwood creates an offer that is unique in the North West. The 195,000 sq ft 1960s Chadwick House, for example, is multilet to tenants including Sony Ericsson, Atkins and Nuvia, paying rents in the region of £12.50 per sq ft.
Another refurbished office building, the 95,000 sq ft Thomson House, provides a similar offer, while a mix of older office buildings and industrial units are also retained. Some other inherited buildings, which Walsh describes as “real howlers”, have been demolished.
However, MEPC has deliberately focused on higher spending occupiers at the southern end of the park. The 160,000 sq ft Bridgewater Place, a development of four grade A office buildings, has been let to tenants including the Department of Work & Pensions and GB Oils, which are paying up to £17.50 per sq ft. Some 75,000 sq ft of deals have been concluded at Bridgewater Place since January 2007.
Nonetheless, despite the undoubted success that Birchwood has experienced during its 10-year lifespan, there must be questions over how such a development fits in with the growing fondness among occupiers for – and the bias of the planning system towards – city centre locations.
Pointing at a wall-mounted map illustrating the places that can be reached within a 45-minute drive of Birchwood, Walsh says that such concerns are nullified by Warrington’s position at the heart of the North West’s motorway network, which benefits staff recruitment among occupiers.
“Many businesses may prefer to be in city centres, and that will never change,” he says. “But for others, it just won’t work. It doesn’t matter about planning guidance. The market will determine where occupiers will be.”
He dismisses the idea that Liverpool could become a rival to Birchwood because of its emerging grade A city centre space in the £20 per sq ft bracket.
“Liverpool, if you look at it, has half a catchment area because it’s on the coast,” he says. “I like Liverpool – the development going on there will improve it – but it doesn’t have the raw materials in terms of location.”
Aside from location, another key element of Birchwood’s offer is its focus on amenities, such as a nursery, gym, conference centre, restaurant, coffee bar, dry cleaner and newsagent.
Walsh says that Birchwood has focused on this kind of offer for its “customers” from day one, and aims to boost it with the provision of a 100-bed Ramada hotel, under construction opposite Bridgewater Place.
Walsh also has a brave approach to management. He wears a name badge, he says, as a “philosophical position” to show tenants that he is available, rather than “hiding behind managing agents”.
Few in the local property industry have a bad word to say about Birchwood, which is held up as a beacon of success when compared with stagnant rents and slow take-up in the south Manchester market.
Chris Cheap, director at GVA Grimley in Manchester, who recently acquired the DWP space at Bridgewater Place, says: “The DWP could see straight away where their staff would go for lunch. The park has a life about it, even at weekends, and it’s evolved quite organically and quite cleverly.”
GVA Grimley is joint letting agent for Omega with Jones Lang LaSalle, and Cheap says that the Birchwood model is something Omega could seek to replicate.
“We’re looking closely at what to do with Omega,” he says. “We know there needs to be a mixture of uses, and there is a need for a business community, rather than a series of two-storey, pavilion-style office blocks.”
Will Lewis of WHR, which is joint agent for Birchwood Park with King Sturge and BE Group, adds: “Many schemes have attempted to copy the formula of Birchwood Park. The variety of amenities has continually been improved by a proactive on-site management team, and the park is now a destination in its own right.”
Richard Wharton, senior associate at King Sturge, adds: “The park is also popular with contract-led enquiries seeking flexible terms to match the terms of the contract.”
Subject to planning, work on Building 109 could begin at the end of the year. As the biggest speculative office building Warrington has seen for some time, it will provide the sternest possible test of Walsh’s bullishness about Birchwood Park’s long-term prospects.
The competition
Omega
The forthcoming £1bn Omega scheme on the former Burtonwood air base has been in the pipeline since 1999, and has had to navigate a series of long-winded planning hurdles.
Miller Developments’ and Royal Bank of Scotland’s 558-acre scheme is considered a strategic regional priority by both landowner English Partnerships and the Northwest Regional Development Agency.
A first phase of 1.8m sq ft of industrial space and 1.3m sq ft of offices gained permission in 2006, but Miller/RBS are waiting for prelets before starting work. The cost of a dual carriageway to open up the first phase is believed to total more than £10m.
Despite the imminent launch of a full-scale marketing drive, the jv says that work will not begin on the road until a prelet has been signed.
Lingley Mere
Muse Developments’ and United Utilities’ 380,000 sq ft scheme hit the headlines in April when it was announced that United Utilities had signed for a 46,000 sq ft shared service centre at the site, near junction 8 of the M62.
Wates Construction has also recently signed for a 6,900 sq ft office unit at a rent of £17.35 per sq ft.
Some 40 acres are available for development, and a second phase of offices, totalling 50,000 sq ft in three buildings, is being drawn up.
Daresbury Park
The 94-acre scheme at junction 11 of the M56 was acquired by West Yorkshire-based Commercial Development Projects, part of the Marshall construction group, from Maple Grove and DeVere Hotels last year.
Nuclear fuel company BNFL is a major occupier, while healthcare group Assura recently bought a 54,000 sq ft building at the site and will occupy 18,000 sq ft.
DeVere is selling 25,000 sq ft of vacant former offices at the site for £5m. Around 1.3m sq ft of outline office planning consents are in place.
Market at a glance
Prime office rents are £17.50 per sq ft, achieved at Bridgewater Place, Birchwood Park
Office take-up in 2007 was 218,330 sq ft – the lowest annual total in the past decade
The largest deal last year was Muse Developments’ 27,400 sq ft letting to United Utilities at Lingley Mere
In the investment market, £75m of stock was traded, with an average lot value of £7.5m
The prime office yield last year was 5.8%
Source: Warrington Annual Property Review/BE Group
