P.662b Fitton Estates .com

SPECIALIST RESIDENTIAL AND COMMERCIAL PROPERTY CONSULTANTS

Hoghton Place Ftao: Richard Woodford 47 Hoghton Street HOW Planning LLP Southport 40 Peter Street PR9 0PG M2 5GP

11th February 2015 E-mail: [email protected] Dear Sirs,

Re: TRADING ESTATE, ROAD, SOUTHPORT, MERSEYSIDE, PR8 4PZ

1.0 Introduction

1.1 We have been asked to provide our opinion and commentary in relation to Birkdale Trading Estate, specifically in relation to the proposed redevelopment of the site for alternative use.

1.2 To briefly summarise the contextual framework, Birkdale Trading Estate is designated as a Primarily Industrial Area within the adopted Sefton Unitary Development Plan.

1.3 Under Chapter 5, Economic Development and Tourism, Industrial Development, Policy EDT5 (Primarily Industrial Areas) states that these areas will continue to be the preferred location for new business, industrial storage and distribution development (Class B1, B2 and B8 uses).

5.41 The designated Primarily Industrial Areas will continue to be the main focus for new business, light and general industry, both in the Strategic Employment Locations and elsewhere. Many of these areas need comprehensive redevelopment, with improvements to the appearance of buildings and the spaces between them.

1.4 Other uses will only be permitted where it can be demonstrated that the proposal meets all of the following criteria:

POLICY EDT5 PRIMARILY INDUSTRIAL AREAS

a) it would not prejudice the availability of an adequate supply of land for business and industrial development; b) it cannot be located on any other more appropriate site; c) it would maintain an overall balance of uses and employment opportunities appropriate to a Primarily Industrial Area; and d) it would assist urban regeneration

1.5 The Local Plan (approved by Council for publication 22nd January 2015) will set out how new development will be managed in the period from 2015 to 2030. The latest employment policy of the Local Plan (www.sefton.gov.uk/localplan) again references the notion of

Commercial Property Consultants - Estate Agents - Valuers - Business Transfer Specialists - Surveyors - Marketing Consultants

Partners: John Barnes FNAEA FICBA, Graham Bowling BSC (Hons) MRICS ‘Primarily Industrial Areas’ at Chapter 7 – Economic Development and Regeneration, para 7.2:

In addition to identifying new development sites, the Local Plan also seeks to ensure that the Borough’s main business parks and industrial estates are retained and improved to provide a continuing supply of employment sites. This is particularly important given that Sefton has the smallest amount of designated employment land of any Greater Merseyside authority, despite having the third largest population. Whilst many small and poor quality industrial sites have been, and will continue to be, redeveloped for housing, the key employment areas are identified as ‘Primarily Industrial Areas’ and reserved for employment generating uses.

1.6 We would furthermore draw attention to the National Planning Policy Framework, which at paragraph 22 states:

Planning policies should avoid the long term protection of sites allocated for employment use where there is no reasonable prospect of a site being used for that purpose. Land allocations should be regularly reviewed. Where there is no reasonable prospect of a site being used for the allocated employment use, applications for alternative uses of land or buildings should be treated on their merits having regard to market signals and the relative need for different land uses to support sustainable local communities.

1.7 Our subsequent commentary has regard to the above and endeavours to draw attention to the current state of the existing premises and occupiers, the local employment market and the viability and sustainability of the estate.

2.0 Existing Premises and Occupiers

2.1 The estate provides for a number of single storey units of relatively low specification, predominantly brick walls with concrete floors and a combination of roof coverings, including profile steel sheeting, corrugated asbestos and mineralised felt.

2.2 The premises appear to have been constructed circa 1970s and are situate in a predominantly residential location.

2.3 We have been provided with a copy of a report completed by DTZ on behalf of Lloyds Bank, dated February 2011, wherein the estate is described as a ‘’Relatively poor quality industrial estate(…) the majority of buildings are of a poor specification are in a relatively poor condition.’’ Furthermore that ‘’The property is approaching the end of its economic life.’’ In the 4 years that have passed since the date of this report we see little to suggest anything to the contrary, and can only assume therefore the property has deteriorated further as a result of the passage of time.

2.4 That the property is approaching the end of its economic life is reflected in the transient nature of occupiers found on site. We have been provided with the following tenancy schedule, which we understand to be correct at the date of this report.

Fitton Estates Telephone: 01704 500345 Hoghton Place Fax: 01704 544402 47 Hoghton Street E-mail: [email protected] Southport Merseyside, PR9 0PG Fig. 1

Unit no Tenant 1 Miss D Mills Electrician storage/office 2 Mr Dewsbury food storage/refrigeration 3 Sachsa Rawlinson craft shop/ studio 4 Mr K Pearson Flooring Shop/ showroom 5 Mr D Curcillo & Mr K Congoon Café/ food prep 6 Kirsty Johnson Pet grooming 7 D McLean DWM Joinery Storage 8a M & S Eyewear Eyewear shop 8b Mr I Berry (Pole Dancing) Exercise Trainer 9a Paula Askew Ante natal classes 9b Jo Rutherford Photography Shop/ studio 10 & 11 Mr M Farrell Garage / tyre bay 10a Mr Eccles Printers 12 Mr D Wright craft shop/ studio 13 Mr M Farrell Tyre bay 14 Mr Pierce t/a Weldon Metals Fabricators 15 Mr S Estehuizon Wheel refurbishment 16 Mr K Diamond storage 16a Mr T Murphy storage 16b Mr L Edwards storage 17 Mr G Johnson storage 18 TRS Heat Treatment Distribution storage 19 & 20 T Lornagan t/as TD Welding Fabricators 21 Mr C Bennis Trade supplier / storage 22 & 28 Hunt & Edwards Trade supplier / storage 23 Mr P Rimmer Workshop 23a Mrs Molly Marshall Storage 26 & 27 Mr C Lord t/as K C Workwear Uniform /Workwear shop 30 Mr Wolfenden t/as The Fair Trade Store Storage

31 Ken Marsh TV's Workshop 32 & 33 Mr C Hind vacant 34 & 35 Mr M E cigarette shop 39 Mr A Lythgoe t/as Tackle tarts Fishing shop 39B Mr & Mrs Hitchcock t/as Silver Moon Crystals Storage

24,25,29 Blue cube Offices

37,38 Tidy paws Pet grooming Container Container Container Container Container

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG 2.5 On comparison of the above schedule with that provided within the 2011 report it is noted that only 16 of the units (described on the above schedule) are in the same occupation, equivalent to approximately 35%. This perhaps best references the extremely high turnover of tenants the estate suffers from.

2.6 High tenancy turnover can naturally lead to lower tenancy profile. Indeed to evidence this we understand presently Units 10, 11, 22, 23 and 28 are all in significant rental arrears (over £1,000), Units 19 and 20 have been paying a concessionary 50% rental for the last 3 years and Unit 16b has had 4 months’ discretionary rent free in 2013 due to a work injury of the occupant. There have also been reports historically of anti social uses on site, such as thinly guised cannabis growers. We understand furthermore incentives are increasingly required to attract new tenants.

2.7 We are advised the security of business tenure provisions afforded by the 1954 Landlord and Tenant Act Part 2 are excluded from the tenancy agreements in situ on the estate and we enclose an example template as an Appendix to this report.

2.8 Having referenced the current tenancy schedule it is arguable that approximately half the existing occupiers could feasibly be considered outside of a B Class use, specifically:

Unit 3: Craft shop/studio Unit 4: Flooring shop/showroom Unit 5: Café/food preparation Unit 6: Pet grooming Unit 8a: Eyewear shop Unit 8b: Exercise trainer Unit 9a: Antenatal classes Unit 9b: Photography shop Unit 10a: Printers Unit 12: Craft Shop/studio Unit 21: Trade supplier Unit 22: Trade supplier Unit 28/35: Trade supplier Unit 26/27: Uniform/workwear Unit 34/35: E cigarette shop Unit 37/38: Pet grooming Unit 39: Fishing shop

2.9 Fundamentally, the dynamics of the estate are that is essentially an omnium gatherum of uses and fleeting occupiers. This has clear implications from a re-location perspective, as the number of ‘industrial’ or B Class uses is vastly reduced on account of the above. The majority would conceivably be able to relocate to secondary or tertiary retail type units in the location, of which there is adequate availability, at a similar price. This is explored further in the following section.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG 3.0 Employment Market

3.1 Pursuant to establishing that various uses exist at the estate that are arguably outside of a B Class Use we have sought firstly to assess the availability of secondary/tertiary retail units in the location.

3.2 At the date of the report the following are examples of available units within Southport and District that have an asking rent of £10,000 per annum or less (NB this list is not exclusive):

9 Hoghton Street (Southport) 2 Somerset Buildings, Hill Street (Southport) 66a Sandon Road (Birkdale) 637 Lord Street (Southport) 651 Lord Street (Southport) 7 Bold Street (Southport) 49 Tulketh Street (Southport) 75/77 Queens Road (Southport) 44-46 Shakespeare Street (Southport) 30 Hoole Lane (Banks) 55 Manchester Road (Southport) 26 Union Street (Southport) 28 Avenue (Southport) 80 Station Road () 26 Market Street (Southport) 2 Crown Buildings, Liverpool Road (Birkdale) 3 Hillside Road (Birkdale) 3-5 Walks (Southport) 18 Cambridge Walks (Southport) 66 Tulketh Street (Southport) 58 Ranelagh Drive (Ainsdale) 29 Botanic Road (Churchtown)

3.3 A brief availability search therefore demonstrates there is ample local relocation opportunity for a number of estate occupiers. There are further vacancies and areas of availability that have not been investigated, such as the recently redeveloped Southport Market and any new or proposed development schemes. We would furthermore note that the majority of these units are likely to be significantly more suitable to retail type occupiers given their greater prominence, visibility and highways access, which does not apply to Birkdale Trading Estate.

3.4 In view of the remaining occupiers, these are majority storage type uses, with the exception of the café and the following, more ‘industrial’ operators:

Units occupied by TD Welding Unit occupied by Weldon Metals Units occupied by Mr Farrell for Garage/Tyre Bay Unit occupied for wheel refurbishment

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG

3.5 A search of our own Fitton Estates agency database for available industrial instructions to let, again with advertised rental around £10,000 or below per annum yields the following results:

75a Newton Street (Southport) Unit 1 Old Hall Farm Business (Southport) Unit 25 AK Business Park (Southport) Unit 3 47-49 Stamford Road (Birkdale)

3.6 We are furthermore aware that Fireguard Developments Ltd are currently marketing garage premises at 140 Road, Southport, with an asking rent of £7,800 per annum.

3.7 Recently Fitton Estates have agreed lettings at the following premises (same criteria as above):

Unit 1 Pool Hey Farm, Pool Hey Lane (Scarisbrick) Unit 5 Old Hall Farm (Southport) Unit 9 Old Hall Farm (Southport) Unit 1 55 Crowland Street (Southport) Unit 4 Dalweb Industrial Estate (Banks) Unit 3 Gravel Lane (Banks)

3.8 Other industrial estates in the Southport location include:

Rose Hill Business Park Portland Trading Estate Enterprise Business Park Crowland Close/Crowland Street

3.9 It is worth noting that moving slightly away to the nearby West Lancs areas of and further increases the availability. Industrial/trading estates include, but are not limited to the following:

Merlin Business Park (Burscough Industrial Estate) Halsall Business Park (Halsall) Scarisbrick Business Park (Scarisbrick) Plantation Rd/Langley Rd (Burscough Industrial Estate) Osprey Place (Burscough Industrial Estate) Waterside Business Park (Burscough) Wood End Business Park (Burscough) Abbey Lane Industrial Estate (Burscough) Platts Lane Industrial Estate (Burscough) New Court Way (Ormskirk)

3.10 The Stephenson Way estate at furthermore provides a significant industrial/trading estate presence in North Sefton.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG

3.11 In terms of the storage occupiers, the availability is more difficult to quantify as typically at the low rents involved it is not economical to instruct an agent to undertake lettings.

3.12 However an internet search results in several entries for storage solutions, such as Southport Storage Solutions and Southport Self Store (the modus operandi of which we have not investigated however we anticipate the container occupiers on the subject estate and those with pure storage use could feasibly utilise).

3.13 We believe on account of the above that at any one time there are adequate relocation prospects for the estate occupiers.

4.0 Viability and Sustainability of the Industrial Estate

4.1 In the context of the planning framework the estate would theoretically be a primary area for B Class development/redevelopment.

4.2 We have therefore undertaken a shortened residual appraisal to assess the viability of the estate for redevelopment.

4.3 Considering a redevelopment we have assumed a like for like quantity of accommodation (20,557 sq ft) and referred to the recognised Spon’s Architects’ and Builders’ Price Book, which gives the following parameters of building prices per sq meter:

B1 Light industrial / office buildings economic shell, and core with heating only £290 – £670

Industrial buildings Shell with heating to office areas only 500 – 1000 sq m £470 – £820 1000 – 2000 sq m £220 – £600 greater than 2000 sq m £290 – £600

For the purposes of this commentary we have adopted the approximate mean, this being £500 psm (£46.46 per sq ft). It is of course possible rates will fluctuate upwards or downwards.

The excerpts for the above are provided following for reference only:

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG Fig 2.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG 4.4 In terms of establishing GDV we have utilised the following comparable evidence of both older and more modern industrial accommodation to approximate £ per sq ft values for the existing accommodation at the estate and for any proposed modern redevelopment.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG

4.22 From the above we would anticipate the existing units at Birkdale Trading Estate to amount to circa £37.50 per sq ft, and this to raise to circa £55.00 per sq ft on a redeveloped scheme. Any higher than this would surpass most of the above and given the likely restrictions on hours of operations/deliveries to prevent neighbour complaints, together with poor visibility, this would likely become unsustainable.

4.23 Assuming a similar approx 22,557 sq ft new build could be developed on site, a simplified appraisal exercise may take the following form:

GDV 22,557 sq ft @ £55psf 1,240,635

(cross check £5psf @9% 1,253,166)

less

Build cost 22,557 sq ft @ £46.46psf 1,047,998 Demolition 60,000 On costs @ 10% build cost 104,799

Finance @ 5% (1.25% per qtr – 5.09% APR) on 50% build cost for 4 qtrs 26,695 75% fees for 4 qtrs 4,004 Void on 1 qtr (sales) on all costs 15,543

Agency/legal @ 1.5% GDV 18,609 Developer’s Profit @ 15% build cost 157,199 Contingency @ 5% build cost 52,399

Residual - £246,611 (minus)

4.24 The above demonstrates this redevelopment example not to be viable/cost effective. Furthermore a negative result is yielded even reducing developer’s profit to nil.

4.25 It should be noted in respect of any residual calculation that it is subjective by inputs. There are principle cost variables (e.g. construction cost, development period, interest rate) and revenue variables (e.g. gross development value). Changes in these variables will create the majority of the risk in the development and can significantly affect the development profitability.

4.26 We have endeavoured to adopt appropriate or ‘average’ rates where possible, and the above is outlined for transparency. Again, assumptions have been made which we feel reasonable for the purposes of this commentary.

4.27 A significantly more favourable built contract and more favourable finance would need to be obtained, and less profit considered to balance the above example, although this may still lead to a poor result in context.

4.28 We have made enquiries as to the present situation with the Government’s Department for Social Development, specifically the position with regards to Urban Development Grants. These are discretionary grants used for promoting job creation, inward investment and environmental improvement, by developing vacant, derelict or underused land or buildings in priority areas. However we are advised ‘’The Department’s budget for Urban Development Grants has been fully allocated for the 2014/15 financial year. The Department will therefore not be accepting any new applications for funding.’’

4.29 On a more local level we have investigated Invest Sefton and although subject to various factors we are aware of the Business Growth Grant, which is ultimately funded by the Government. This is designed to unlock private sector investment, which must result in business growth and create sustainable jobs as a result of investment. Typically the grant pays out 15-20% of projected costs. It is noted however that the Birkdale Trading Estate falls outside of the Assisted Areas, which we understand makes funding more difficult, should it meet the criteria in the first instance.

4.30 Projecting the full 20% of the development costs in the example above equates to £242,259, which, subject to the other factors, still results in a negative figure if deducted from the residual.

4.31 It is of course difficult to appraise the redevelopment of a site in the absence of a defined scheme.

4.32 It is generally accepted that the buildings currently in situ are approaching the end of their economic life and the estate is clearly therefore not sustainable in its current guise for the long, or mid, term. However an industrial/similar redevelopment scheme appears not to be viable based on the parameters defined through the course of these investigations.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG 5.0 Conclusion

5.1 Ostensibly, the estate gives an appearance of being lively and active, due to the high occupancy levels at present.

5.2 However, the benefit of high occupancy is quashed by a cripplingly high turnover of tenants, provoking a lower tenancy profile and associated problems, such as rental arrears, incentivised deals, nuisance occupiers and a miscellany of uses that the estate was likely not intended for at inception.

5.3 This is exacerbated through the buildings themselves, which are of a relatively poor specification and are approaching the end of their economic life. Given this was referenced in a report prepared some 4 years ago, it is reasonable to deduce the condition of the property and infrastructure has deteriorated yet further.

5.4 Consequently, it is unlikely the estate will remain sustainable for anything but the immediate short term.

5.5 We have therefore run a simplified residual appraisal to determine the viability of industrial redevelopment at the subject site.

5.6 Although broadly subjective in terms of the data input, and in the absence of a defined or proposed scheme, it was nevertheless determined that industrial development on a similar basis would not be cost effective, severely impacting its viability.

5.7 It was furthermore noted that the number of industrial / B Class operators on site is considerably less than anticipated (amounting, arguably, to 4 in total), as the de facto operation of many occupiers fall into other categories, predominantly retail.

5.8 Questions remain as to whether or not the estate would actually be useable for 100% pure industrial use, should this be put into effect.

5.9 Perhaps more pertinently a fully industrial scheme would have the effect of enacting a sizable relocation effort regardless, as a large number of occupiers are arguably outside the class use.

5.10 This elicited an enquiry as to the stock availability of secondary/tertiary retail units in the location, and of available/recently available industrial units. In both instances relocation prospects were considered positive, should the estate be developed for alternative use.

5.11 In sum we believe the estate is not sustainable in its current format, nor is it viable for redevelopment on a similar basis. We believe alternative use proposals should be considered, as there are adequate relocation options for the existing occupiers (who are subject to short term contracts with no security of tenure). Alternative use would also allow for proposals more in keeping with the residential area that surrounds the estate.

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG Provisionally we trust the above is of assistance in this matter and we await hearing from you pending further instructions.

Yours faithfully,

Graham Bowling BSc(Hons) MRICS

Partner

Fitton Estates Hoghton Place 47 Hoghton Street Southport Merseyside, PR9 0PG