Tunnel vision

The Channel Tunnel is Kent’s strongest selling point. But continental companies are proving shy in stepping onto English soil. By Lucy Allen Despite being only 20 miles from the French coastline, Kent still struggles to attract inward investment from the Continent. In 2001, only four European companies chose to locate their industrial premises in the county. In 1997, it was seven. A short trip to Kent is enough to prove the availability of land. At the 145-acre (58.7ha) EuroKent business park near Ramsgate, a site is being prepared for a 50,000 sq ft (4,650m2) call centre for Saga Group. The site’s only other occupier is Grupo Antolin Irausa, a Spanish automotive company with a 75,000 sq ft (6,950m2) facility. This leaves 127 acres available for office, distribution or production occupiers. Inward-investment company Locate in Kent reports that the highest number of investors in the industrial sector in Kent are from the UK, with 69 projects. This is followed by the US, which accounts for 21 schemes in the Kent market between 1997 and 2001. Although Germany provides the main source of European inward investment in the UK as a whole, with 8% of projects and 7% of jobs created, the strongest European investor in Kent is France with 15 projects. Germany is responsible for 6 schemes in Kent between 1997 and 2001. French companies are particularly attracted to Ashford, with the convenience it offers for Eurostar connections. Locate in Kent’s Clare Barnfather lists mobile phone repair company SBE Electronics, IT company Synaptique Europe and telecoms equipment company Leacom as examples of French companies which have industrial premises there. Yet despite this cluster of companies, agent John Wilkins of Cluttons in Maidstone has had dealings with only one European industrial company, System Airs, whose parent is LHG Kanalflakt AB of Sweden. “I can’t think of any other European companies which have acquired manufacturing property in Kent,” he says. Barnfather, however, is optimistic. “For the French, the Channel Tunnel is an umbilical cord back to Paris,” she says. Agents in the region agree that the Channel Tunnel is Kent’s strongest selling point, especially regarding the industrial market, although some are worried that it could feed the London market instead. “Closeness to Europe is very important for Kent,” says Robert Williams, site director at Sittingbourne Research Centre. “But the worst thing for the county would be that European business passes through on its way into London and farther afield. “People need to come to Kent specifically, rather than it being a bridge to other areas of the UK. We need to be smarter, quicker and more accurate in our approach to targeting specific companies,” admits Barnfather. Supply by size band Space between 40,001 and 50,000 sq ft is scarce Source: Locate in Kent Demand by size band Demand is highest for space up to 5,000 sq ft Source: Locate in Kent Project activity by country US companies are the biggest overseas investors Source: Locate in Kent Successes by world region The growth of European operations is still slow Source: Locate in Kent Jobs created by world region European firms will only create 4% of jobs in 2002 Source: Locate in Kent Market action Rents driven by logistics Dartford is achieving the highest rents in Kent’s industrial sector, with levels approaching the £7.50 per sq ft mark. Thanet is the most under-achieving region of the county, with rents still hovering around £4.40 per sq ft. Agent Cluttons reports that demand is outstripping supply in some locations, with sites in north-west Kent close to the M25 showing the highest activity. Mat McGrail of FPDSavills says: “There are two markets in Kent: the M25 and the M20/m2. There is a steady trickle of supply around the M25, which keeps supply levels tight and should push rents up. But towards the north of Kent, around the M20/m2 where traditionally there is little spec build, I can’t see things moving that much.” John Wilkins of Cluttons in Maidstone says: “In recent years we have seen industrial spec build in Dartford, Sevenoaks, Maidstone, Tunbridge Wells and Rochester. Demand has come mainly from warehouse and distribution operators. Rents have crept up a fraction over the past few years, but I think there will be a period of fairly stable rents over the next 12 months. “Demand isn’t quite so strong as it was 12 months ago,” he adds. “On the supply side, there is very little being built, and so I expect the supply and demand equation will find an equilibrium in 2001/2002.” The logistics sector rather than the industrial sector as a whole has driven forward rental increases. A large percentage of demand is retail related, either from suppliers, retailers or distribution contractors. Demand is highest for industrial space of up to 5,000 sq ft, with 26.7%, or 125 companies, requiring that size of space. Demand is small for 20,001-30,000 sq ft industrial spaces, with only 3.8%, or 18 companies, requiring it. Inward-investment company Locate in Kent reports that this is a result of the trend towards smaller, knowledge-based companies with high growth potential but small initial requirements. The company reports a large amount of small industrial space on the market, with 300 properties of up to 5,000 sq ft available. Space of over 100,000 sq ft and that between 40,001 sq ft and 50,000 sq ft is in short supply, with only 1.2%, or six properties, falling within these size ranges. Out of 962 properties held on Locate in Kent’s database, 58% are industrial. Industrial rental growth in the county fell back in 2001 from 4.4% to 1.7%, which is slightly lower than both the UK’s overall 1.9% and that for the South East, at 2%. Industrial yield figures are not yet available for 2001, but in 2000 they fell back slightly from 9% in Kent to 8.5%, in line with the South East and the UK as a whole, both of which fell back during the year to 8.2% and 8.5% from 8%, 6% and 8.7% respectively. The IPD reports that demand for top-quality space remains strong, but is being hampered by the limited product available. However, land deals which have taken place could reflect the optimism of investors following confirmation that phase two of the Channel Tunnel Rail Link will go ahead. Locate in Kent predicts that only 4% of jobs created in Kent in 2001/2002 will be from European companies. It is expecting 3% of jobs created to be US based, with the remaining 93% coming from UK companies. The inward-investment company predicts that 19 European companies will locate in Kent during 2001/2002, with 24% from the US and the remaining 57% from UK-based companies. Strategic developments* Several major industrial schemes are in the pipeline offering facilities which planners hope will keep firms in the area rather than using it as a bridge to the rest of the UK Scheme Landowner/developer/agent Gross area (acres) Planning situation Ashford International (South Kimberley Works and Newtown Works) Ashford council/Railtrack/John Laing Property 161 Various outline consents for leisure, industrial and residential uses Orbital Park, Ashford Eurotunnel Developments/Salmon Harvester Development/Colliers CRE/King Sturge 99 Outline consent for 990,300 sq ft B1, B2 & B8 uses Waterbrook Park, Ashford Eurotunnel Developments/Colliers CRE 116 Application for outline consent for 1.14m sq ft B2 and B8 use and an inter-modal depot Thanet Reach Business Park, Broadstairs Terrace Hill Group/Thanet district council 37 Outline consent for A2, B1, B2 & B8 uses Eddington Lane,Canterbury Allied London Properties 35 Outline planning permission B1 & B8 Crossways,Dartford Whitecliff Properties 314 Outline consent B1, B2, B8 for around 3m sq ft Questor, Dartford Investment Group/Clerical Medical/ GVA Grimley/Glenny 37 Consent for 115,000 sq ft refurbished B1, B2 and B8, 50 000 sq ft new B1 B2 & B8 Betteshanger Coalfield site, Dover South East England Development Agency 314 Outline consent for B1, B2, B8 White Cliffs Business Park, Port Zone, Dover Dover Harbour Board 210 Outline consent for 86 acres B1 & B8. Site under development White Cliffs Business Park, Industrial Zone, Dover Dover Harbour Board/Fairclough Projects/ Dover council/Tersons/Cluttons 86(phase two) Outline consent for B1, B2 and B8. Around 25 acres serviced land available phase one Abbey Park, Faversham Abbey Park Holdings/ Harrisons Chartered Surveyors 235 Outline consent for 62 acres for B1, B2 & B8 use; 32 acres C3 Shearway Business Park (formerly Biggins Wood), Folkestone South East England Development Agency/ GVA Grimley/Smith Woolley & Perry 25 Permitted uses B1, B2 and B8 Hawkinge West Business Park, Folkestone Truck Inns/Smith Woolley & Perry 30 Permitted uses B1 and B8 Mountfield Road Industrial Est, Folkestone SEEDA/Colliers Ritblat/Caxtons 10 Allocated for B1, B2 & B8 uses Northfleet Riverside, Gravesend National Power/GVA Grimley 37 Outline consent for port-related and distribution development Link Park, Hythe Stannifer/ Oliver Liggins 119 Phase one outline consent for 35 acres B1& B8 uses. B2 users considered via detailed application Springfield, Maidstone Cuckfield Group/Persimmon/Cluttons/GVA Grimley 10 Masterplan completed Priory Park, Quarry Wood, Maidstone Atlantic Fund Management/Palace Estates/ Sibley Pares/Knight Frank 37 Consent for 372,000 sq ft B1, B2 & B8 uses QED, New Hythe Business Park, Aylesford, Maidstone Summit Property Development/Fuller Peiser/ Edwin Hill 30 Planning consent for B1, B2 & B8 uses London Manston Airport, Ramsgate Wiggins Group/MEPC 741 Allocated for expansion of airport-related activity EuroKent Business Park, Ramsgate Rosefarm Estates/Thanet district council 143 Outline consent for A2, B1, B2 & B8 Manston Park Business Park, Ramsgate MEPC/Wiggins Group/Edwin Hill 170 Planning consent for A2,B1, B2 and B8 Isle of Grain, nr Rochester Lattice Property Holdings/Medway council/Michael Parkes 951 Allocated for B1, B2 & B8 and port-related uses Kingsnorth, Rochester MED Management/Zimmer Holdings/Medway council 153 Allocated for B1, B2 & B8 and special uses Medway Valley Park, Rochester Whitecliff Properties/Harrisons chartered surveyors 43 Allocation for a mix of A1, B1, B2 & B8 uses Sandwich Corridor Scheme, Sandwich Private landowners for Richborough sites and Sandwich Industrial Estate/Dover council/Thanet district council Around 74 Outline planning consent for B1, B2 & B8 uses Eurolink Business Park (phase three), Sittingbourne Blue Circle Developments/Harrisons Chartered Surveyors/Whitecliff Properties 40 Outline planning consent for B1, B2 & B8 uses Kemsley Fields Business Park, Sittingbourne Fletcher Challenge/Rexam Developments/ Harrisons Chartered Surveyors/GVA Grimley 210 Outline consent for B1c, B2 & B8 uses. Limited A1, A2 and A3 uses Ridham Dock, Sittingbourne Ridham Sea Terminals/Cluttons/Strutt & Parker 89 Outline consent for B1, B2 & B8 *Strategic developments are defined as being at least 25 acres with planning permission for commercial development.These are listed in alphabetical order by nearest town Source: Locate in Kent/Cluttons