Our commercial property sector is a central cohesive source of support and stability, key in building a stronger more lucrative Cardiff.
There are some extremely positive developments taking place in Cardiff’s property sector. With investors looking for opportunities outside of an overheating London marketplace, Cardiff is very much on their radar. And the capital is well placed to secure new inward investment, particularly back office financial and professional services functions from London and the south east.
The Welsh Government has established an enterprise zone aimed at the sector with a package of support measures, including reduced business rates, in the centre of the capital.
With a healthy increase in grade A office letting activity, alongside a swathe of new office stock, either coming out of the ground or in the pipeline, the city is emerging with confidence from one of the most protracted downturns experienced by the UK’s property sector.
BBC Cymru has drawn up a shortlist of locations for a new 150,000 sq ft headquarters in the capital. This could see it moving to Cardiff Bay or a city centre location. And in another sign of the strength of the creative industries sector in the capital, ITV Cymru Wales is also moving to a new headquarters at 3 Assembly Square at the heart of Aviva’s Cardiff Waterside scheme in Cardiff Bay.
However, in a much more ambitious commercial scheme Cardiff Council has entered into a memorandum of understanding with local development company Rightacres Property, which will transform the area around Cardiff Central Station – a key gateway by rail into the capital.
With acquisition of a number properties and land around the capital’s train and adjacent bus station, Rightacres will kick start the project with a 140,000 sq ft grade A office which is scheduled for completion by late 2015.
Longer term the Capital Square scheme could see 800,000 sq ft of new office, leisure and residential space– on a scale similar to the retail transformation of the city driven by Land Securities and Capital Shopping Centres with their £650m St David’s Shopping Centre which opened in 2009 with John Lewis as its anchor tenant.
Chief executive of Rightacres Paul McCarthy said that the precise make-up of the project would be driven by market forces, but will predominantly be office-led. However, with the scheme’s location at a key gateway into Wales it could be popular with residential investors Paul added: “This is a very exciting phase in the story of Cardiff, representing the next major piece of the jigsaw in the development of the city centre.”
Ben Bolton a director with chartered surveyors Cooke & Arkwright said: “With an overheating London market investors are clamouring over each other to snap up investment opportunities in the regions, including Cardiff.
“There are now exciting developments being brought forward by both Cardiff Council and the Welsh Government in the city. There are not many parts of the UK, outside of London, with speculative office schemes close to or coming out the ground. In 2015 there will be a tremendous amount of developments completed in Cardiff, which is extremely positive and will put the city in a strong position to attract new inward investment as well as serving the indigenous firms requiring new grade A space to accommodate expansion plans.”
Other local developers also remain very active. JR Smart has had the confidence to build speculatively at its Capital Quarter scheme in the city centre. An 80,000 sq ft office scheme at Capital Quarter has just been completed. JR Smart will shortly start construction on another 80,000 sq ft speculative office scheme.
International property fund manager Cordea Savills recently acquired the freehold interest in Helmont House – an office and hotel development from Rightacres. The deal, for £23.1m, reflected an initial yield of 8%. And last year the under construction 240,000 sq ft new headquarters for motor insurance group Admiral was sold by Stoford in a £58.7m deal to German-owned Union Investment Real Estate.
Managing partner of the Cardiff office of international chartered surveyors Knight Frank, Matthew Phillips said that Cardiff’s commercial market already has a string of active large investors such as Aviva, Prudential, Legal and General, Schroders and Aberdeen.
Matthew said: “Twenty years ago bigger funds and institutional investors considered Cardiff quite tertiary and there was a feeling it was a little insular.
“That has now completely disappeared and they now see Cardiff in the same way as they would Manchester or Bristol when looking at property investment opportunities outside of London.
Matthew Phillips at Knight Frank said: “If you look at an investor like Aviva they have investments all over the world, but Cardiff is a very important location for them. Over the last decade they have successfully developed nearly 500,000 sq ft of prime office space at its Cardiff Waterside estate in Cardiff Bay. They have taken the decision that Cardiff Waterside, where it has consent for a further 500,000 sq ft of development, is very much an important long-term hold. That is a great vote of confidence in the capital.”
Investment partner at Knight Frank, Rob Jones said: “Cardiff has had a great 18 months in terms of high profile investment deals. The funds in London have money to spend and Cardiff is a very credible location. The capital has promoted itself well. It is a similar size to a Sheffield and Hull, but Cardiff is a much more attractive proposition. Investors can see that and they like the fact that Cardiff as a capital city is not going to go off pitch in terms of its geography.”