Behind the scenes Conceived in 2004, will Nottingham’s vast, £750m EastsideCity scheme finally be developed? Daniel Cunningham reports
According to Roxylight’s managing director, Nigel Brunskill, the mistake that the developer made when it set out to regenerate Nottingham’s Eastside in 2004was raising expectations too early.
Speaking to the press in depth on the project for the first time since the plans were announced, Brunskill tells EG that, while nothing has happened on the ground, an arduous land assembly and planning process has been going on behind the scenes and that Eastside will happen.
Nottingham’s property fraternitywants to know what is going on. The 34-acre development site lies derelict and overgrown, while regeneration has shifted to the city’s Southside.
“There has not been much talk in the marketplace about Eastside for some time,” saysJonathan Bishop, partner with local agency HEB, “but there is a shortage of quality stock in the city and the proposals are exciting, even if the economy is not on its side at the moment.”
Five years ago, Roxylight, Laing O’Rourke and Barclays unveiled EastsideCity asthe centrepiece of the council’s 140-acre Eastside regeneration. It comprised1.4m sq ft of offices, 170,000 sq ft of retail and leisure, and 1.3m sq ft of residential space, around awater feature.
“It’s vast,” says Brunskill,”one of the biggest urban regeneration sites in the country, and it has required the most complicated land assembly that I have ever been involved with.”
In 2005, the council resolved to grant outline consent, but did so onlyin 2008, by which time the recessionhad firmly taken hold.
The schemehas not been mothballed, says Brunskill, adding that land had to be painstakingly purchased from 15 parties, including a former Boots factory site, at a cost of “tens of millions” of pounds, before the council would grant consent.
Approval granted
InMay this year, the masterplan was approved and detailed consent was granted for thefirst plot, which includesa 111,000 sq ft office building.But, with little communication between the developer andthe local market in recent years, agents want to know who exactly is behind EastsideCity.
Roxylight has been involved since 2002, when it spied the opportunity and began to piece land together.In 2005, Roxylight co-founder Peter Farrar told EG that local developers “could not get their heads round the size of the thing” and that an overall vision was needed.
From 2004, the scheme was held by Eastside & City Developments – a consortium led by Roxylight, which included Laing O’Rourke and Barclays. Roxylight’s and Laing O’Rourke’s partnership was established to develop EastsideCity and the former Vauxhall car plant in Luton. From 2005 to 2008, Roxylight’s involvement was through its urban regeneration brand, URUK.
In 2008, Roxylight sold EastsideCityfor an undisclosed sum to a specially created investment vehicle,Guernsey-based Heathcote Holdings. Brunskill says: “A project of this size and geographical importance requires substantial equity investment, and the Guernsey structure has the ability to achieve this.”
He hints that foreign equity will be raised via Heathcote: “Overseas investors, family funds and sovereign wealth funds would expect and often demand ownership through a non-UK entity.”
Roxylight Project Services is now the project manager, and HSBC has been brought on board to provide finance for infrastructure and the first phase of the development.
Although this is not a development by a local property company, Brunskill argues strongly that the backers have a long-term commitment to the project, and has already sunk substantial funds into it. He insists that Heathcote will hold the freehold of the site in the longterm, and will not sell it off piecemeal, even if joint-venture partners are brought in for different phases.
But is EastsideCity deliverable?
The scheme’s end value of £900m has recently been revised to £750m, says Brunskill. To attain it, he says, they will aim for office rents of £20-£21 per sq ft. This will be a challenge, bearing in mind that Nottingham’s top office rents are £18-£19 per sq ft.German computer game designer Crytek recently took16,000 sq ft at Southreef Developments’ yet to be completed Southreef scheme for a reported £18.75 per sq ft.
But local property people say that the EastsideCity site remains a key development opportunity in a market lackinggrade A stock. Bishop points out that grade A availability is less than 100,000 sq ft, including the 60,000 sq ft remaining at Southreef,which is due to be completedthis year.
Clearly, a major prelet will be crucial. The council had been widely expected to relocate itsheadquartersto the site.However,in September it took 250,000 sq ft at Capital One’s Loxley House in the Southside regeneration area, for a bargain price of £22.5m, amid rumours of its frustration at EastsideCity’s progress.
Brunskill denies that the council was ever a certainty for the site and saysHeathcotewould not have been able to compete with the deal at Loxley House.
Energy firm E.onhas shortlisted four sites, including EastsideCity, for its 80,000-100,000 sq ft requirement. In addition, Brunskill says that talks for 150,000 sq ft of office prelets are underway, including 50,000 sq ft to BioCity,the university-owned bio-science campus that borders the site.
But some in the market suggest that a retail prelet could kickoff the first phase, with Sainsbury’s and Tesco both understood to be in talks with the development team to take a major foodstore at the site.
The long view
Brunskill is eager that observers do not judge the project’s chances by today’s market conditions.”We went for a 13-year consent because this is the type of scheme thatis likely to be developed across at least two market cycles,” he says.
The first sign of activity will come in the first quarter of 2010, when work begins on the infrastructure, including a relief road through the site. “No one will take this seriously until the infrastructure is in place,” says Brunskill.
Walking around the wider Eastside area with Louise Seymour, principal regeneration manager with development agency Nottingham Regeneration Ltd, she insists that progress is being made elsewhere on the 140-acre site. She points out that £15m of public money is being pumped into a revamp of the historic Sneinton Market area, including a new leisure centre and public square.
But talk inevitably drifts back to EastsideCity. Seymour says: “Securing reserve matters is a sign that the developer is doing something, but without any occupiers, actual development remains elusive.”
She also points out various buildings dotted around the regeneration zone that are in Heathcote’s and Roxylight’s control, including the Sneinton Market building itself, on which they hold the long leasehold.
Roxylight has the potential to make its mark in Nottingham. Now that the team has spoken out about the scheme, local property people are eager to see words backed up with development.
EastsideCity: a potted history
2002 Roxylight begins assembling land on former Boots factory site in Nottingham
July 2004 Eastside & City Developments, a consortium comprising Roxylight, Laing O’Rourke and Barclays, submits outline planning application for 34-acre scheme initially called The Island
January 2005 Council resolves to grant outline planning consent
2007 Laing O’Rourke sells stake
2008 Heathcote Holdings buys Eastside & City Developments. Roxylight Project Services becomes project manager
April 2008 Council grants outline planning consent
May 2009 Council approves master plan and grants detailed consent for first phase, which includes 110,000 sq ft of offices
EastsideCity at a glance
£750m project in Nottingham by Heathcote Holdings and Roxylight Project Services
Covers 34 acres of Nottingham’s 140-acre Eastside regeneration zone
3m sq ft of stock, including 1.4m sq ft of offices, 1.3m sq ft of residential, 127,000 sq ft of retail and 44,000 sq ft of leisure
