Property Market Review

1.1 This report is to provide a commercial property overview of Northampton for the Design, Development and Movement Framework. The main basis of the report will be an examination of the key property market sectors relevant to the town centre. Throughout this review we will aim to give particular consideration to opportunities and constraints in the different sectors specific to the Northampton area.

Background

1.2 Northampton was designated a ‘new town’ in 1968, and is continuing to grow rapidly (Promis Property market Analysis). This has been reinforced Northampton being placed at the heart of Area Growth initiative determined by the ODPM, which could potentially increase the area’s population by 50%.

1.3 Northampton town centre currently has a reasonable retailing offer, with the majority of the main stream multiples present. Engineering is a key industry in the town. There is also a moderately developed office sector with a number of business parks in out of town locations (and a large distribution industry is growing in the region).

1.4 In order to ensure Northampton becomes a more attractive destination and continues to meet the needs of its growing population, this report aims to identify the development opportunities in the retail, leisure, office and industrial market in the town centre.

Demographic and Socio Economic Factors

1.5 Northampton has a district population of 194,458 (Office of National Statistics, 2001 Census). In 2001 the Northampton area, contained a moderately above average proportion of working age adults (those between 18 and 44). There was also a relatively high proportion of children aged 0-14 and an under-representation of those ages over 65. This suggests a relatively youthful population.

1.6 Promis Live Property Market Analysis (Promis) predicts that Northampton will see above average economic growth over the period 2004 – 2009 at 0.5% per annum. This supports the 2003 area growth initiative.

1.7 The population in the Northampton area is classified as ‘moderately affluent’ by both Promis and the Focus Town Report (Focus). The class groupings in comparison to the UK average are shown in the graph below:

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc 2001 Class Groupings (%)

35 30 25 20 Northampton District % 15 UK 10 5 0 AB C1 C2 D E Class Groupings

AB. – Higher and intermediate managerial/administrative/professional C1. – Supervisory clerical junior managerial/administrative/professional C2. – Skilled manual workers D. – Semi-skilled and unskilled manual workers E. – On state benefit unemployed, lowest grade workers (Source: 2001 Census Report, as found in Focus)

1.8 As previously mentioned, the district population also has an above average level of car ownership, with a high proportion of 2 car households. Household tenure rates are also above average, with 72% of the population owner occupiers in 2001, compared to a national average of 68%. (Promis, 2006).

1.9 The Claimant Count Unemployment Rate shows consistently below average unemployment rates for the Northampton ‘travel to work area’ since 2001. In October 2005 this unemployment rate was 1.9% for Northampton compared to a UK average of 2.4%. Total employment in Northampton has increased at a faster rate than the UK average since 2001, and Promis predicts this above average employment growth to continue in the 2004-2009 period.

1.10 The service sector provides the majority of employment, accounting for 75% of total jobs in the area. The full breakdown of employment by sector is show in the chart below:

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Employment by Sector 2001 (%)

30 25 20 Northampton District

% 15 10 UK 5 0 l i g s d d d , y a t n es e n g , n n on i i r t r r c n g ti i a i tr o a es u n r i v i t p s e a e a r Re l r m e uc t i k c s t e tr s n a te n dus ag f Pr o anc S Ca u In or n Ba t H n i ons Tra Indu S F her C t Ma O Employment Sectors

(Source: Focus Town Report, 2006)

1.11 Engineering is a key industry in the town despite some rationalisation in recent years. The town has also emerged as a key distribution location due to its central location and proximity to the M1. Key employers in the area are shown in the table below:

Company Name Number of Staff Employment Sector Barclaycard* 2500 Banking, Finance and Business St Andrews Hospital 2000 Other Services Royal Mail 1500 Distribution Avon Cosmetics 1200 Distribution Curtis Instruments (UK) Ltd 750 Engineering

* Barclaycard is planning several hundred redundancies in the near future as part of a nationwide restructuring programme. This will heavily influence these figures.

Property Market Analysis

1.12 In this section of the report we review the property market sectors relevant to Northampton central area as follows:

• Retail

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc • Hotel and Leisure • Office • Residential • Industrial

In doing this we aim to highlight the specific constraints to, and opportunities for, development in the town centre.

The Retail Sector

1.13 Northampton currently has an average retail offering for a town of its size and population. 90% of the top 20 high street retailers are present in the town (Focus), and there are 2 department stores (Beatties (House of Fraser) and Debenhams). The quality of the fashion retailers, a key driver of visitor numbers in a town centre, is above the UK average (Promis). The majority of these target the ‘middle’ sector of the market, including all major mainstream retailers (for example Next, Topshop), however the ‘upper-middle’ sector of the market are also well catered for.

1.14 Northampton has a total of 518 retailers covering a total floorspace of 123,000 sq m (1,321,000 sq foot). There are 3 managed shopping centres in the town, The Grosvenor Centre, Peacock Place, and St Peters Way. These centres account for 31% of total retail floorspace, which is average for a UK town centre (GOAD Town Centre Report).

1.15 The Grosvenor Centre is the major centre within the town, and is the ‘prime retail pitch’ in the town. This centre and Abington Street is considered to be the retail core, with on average the highest footfall and the highest rents achieved. Peacock Place has a number of key tenants including Next and Evans, but no anchor tenant. St Peter’s Way is in a secondary area of town, accessed via Gold Street, with predominantly ‘big box’ tenants, focused on value retailing.

1.16 Northampton has a limited offering of speciality and more up-market retailers. Those in the town are predominantly located in St Giles Street, and Beatties department store (in The Grosvenor Centre) has a number of upmarket concessions, for example Jaeger, Coast and Planet.

1.17 Retail warehousing floorspace is estimated at 131,000 sq m (1,414,000 sq ft), the majority of which is found outside the town centre. This is higher than the actual town centre retail floorspace. St James Retail Park and Nene Valley Retail Park on Towcester Road are the major locations for retail warehousing. There is also the Riverside Retail Park which also has a number of high street retailers, such as Next and

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Blacks. The Sixfields area also houses a number of ‘big box’ retailers, although this is currently the smallest of the parks in terms of floorspace.

1.18 Out of town food retailing is also well provided for with an above average provision per household (Promis). There are 2 Tesco stores, Morrisons, J Sainsbury, Waitrose and an Aldi within 5 miles of the town centre. The food store provision within the town centre is below average however, with only a small J Sainsbury store 4,130 sq m (44,425 sq ft, located in The Grosvenor Centre), an Iceland (on St Peter’s Way) and a Marks and Spencer’s ‘Simply Food’ store. This highlights an opportunity for new town centre food retailing.

1.19 The high level of retail warehousing is a major threat to the ‘health’ of Northampton town centre. A recent survey conducted by CB Richard Ellis, ‘Fashioning a Shopping Experience’, shows that the average shopper now has a preference for out of town location due to the availability of free parking and larger shops. A number of major retailers who have traditionally been town centre based, such as Next, Boots and Marks and Spencer, are now developing a trend for opening new, larger units on retail parks. There are also improved shopper facilities provided, such as restaurants and cinemas. Increasingly crowded town centre conditions, (due to a lack of large modern units), are further pushing shoppers to out of town locations.

1.20 A further threat to Northampton town centre is the improvement of ‘competing centres’ in the area, that have the potential to attract local shoppers to those centres rather than shopping in Northampton. The development of the Bull Ring in Birmingham city centre and the proposed expansion of the retail provision in Milton Keynes are attracting increasing number of shoppers from the locality and other surrounding areas. Both these centres can be considered as superior shopping destinations to Northampton, and may encourage ‘leakage’ of the local population from Northampton town centre.

1.21 Despite this, Northampton does not appear to be suffering as much as would be expected. The town centre has a comparison goods spend of £412,000,000 per annum, and the vacancy rate for the town is has been stable at around 7.5% of retail floorspace for the last year, slightly below the UK average (GOAD Town Centre Report). There is currently 114 retailer demand requirements for floorspace in Northampton, which is above average for a town of this size and status. However this may reflect future requirements based on the planned expansion of The Grosvenor Centre, as current take-up levels are below average at 5.3% of units. This unit take-up has been based primarily in the first floor of The Grosvenor Centre and on Abington Street.

1.22 Retail rents generated in the town centre are a maximum of £140 per square foot in terms of Zone A (ITZA). This is only achieved in the ‘prime retail pitch’, i.e. the first floor of The Grosvenor Centre. Less dominant retail locations, such as Peacock Place, achieve rents up to £85 per square foot ITZA, and secondary locations outside the retail core only

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc achieve £40 per square foot ITZA. These levels of rental income are below the average for UK centres (Promis), and have been increasing at a slower rate than the national average for the last 5 years.

1.23 These relatively low retail rents are reflected in investment yields for the town. Prime retail yields have been estimated at 5.25% (based on evidence of recent deals), whereas yields in secondary area’s are between 7% and 8%.

1.24 The above figures indicate that Northampton town centre requires some retail development in order to maintain its current shopper levels, and become a more desirable location for both the resident population and visitors to the town, as well as investors. The Council have recognised this need with the proposed extension of the Grosvenor Centre, however there is a low level of other development activity in the town. The only other retail development currently taking place in Northampton is the refurbishment of the former Courts unit on the St James Retail Park, which will create additional retail units.

1.25 In order to identify the levels of demand for space in Northampton town centre, we carried out an independent, targeted demand survey of a number of businesses including retailers and leisure operators. To supplement this information, we have also undertaken an analysis of the requirements for Northampton published on the ‘Focus’ and ‘EGI‘ property databases. These are requirements advertised in the public domain by a number of retailers and leisure operators. We have included all requirements lodged for Northampton and the Northampton area on the databases (some retailers for example may be looking for a unit at an out of town site however this detail is not provided) and this provides an indication of the level of demand for space in Northampton.

1.26 Focus ranks Northampton as 38th of all retail centres in the country for the number of retailer requirements (Focus town centre report). This is an average level of requirements given the size of the town centre and its catchment population. Promis ranks Northampton as 44th of all the centres the company reviews for the number of retailer requirements, and 45th of all the Promis centres in terms of town centre floor space (Promis retail report). This again indicates an average level of demand.

1.27 Focus has a total of 93 retailer requirements for Northampton, giving a minimum floorspace requirement of 86,879 sq m (934,282 sq ft) and a maximum requirement of 139,167 sq m (1,497,440 sq ft) of floorspace. Please see Appendix A for a full list of these requirements.

1.28 EGI shows that 49 requirements have been published for Northampton in the last 12 months. This is lower than the number of requirements found on the Focus database, predominantly due to EGI filtering the requirements more comprehensively (for example company’s registering a requirement at County level would be included in the

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc requirements for the towns in that county on Focus, but not on EGI). Many of the requirements are duplicated on the two databases, indicating consistency amongst the retailers in their requirements for the town. EGI has a minimum floorspace required of 23,068 sq m (248,220 sq ft) and a maximum requirement of 79,537 sq m (855,820 sq ft) of floorspace. Please see Appendix D for a full list of the EGI requirements.

1.29 In order to fully understand the level of demand in Northampton, we have supplemented the published demand information with our own bespoke survey of retailers and leisure operators. To carry out this survey, we contacted 103 retail and leisure companies, covering a broad range of operators, asking for information on their requirements for space in Northampton town centre.

1.30 From the 103 companies contacted we received 14 responses. This is approximately a 14% response rate. This is less than the level of response we would expect from similar surveys of this type, however this in part reflects the broad nature of the operators contacted, many of whom do not operate in the Northampton area.

1.31 From the 14 responses received only 2 were positive, stating an immediate requirement for space in the town centre. These were received from a department store already in the town, who indicated that they would like to extend this existing facility into a larger store as part of the extension to the Grosvenor centre. The other positive response was received from a national Italian restaurant operator, who already has 1 brand operating in Northampton, and would like to open their other brand in the town centre, requiring 279 sq m – 325 sq m (3,000 – 3,500 sq ft) of space.

1.32 The negative responses received, and the reasons given for these negative responses, are shown in the table below:

Respondent Reason Given Natural cosmetics retailer Already has a unit in the town Homeware store Recently opened store in Milton Keynes, insufficient population for another store in Northampton Town centre homeware store Currently focussing on other areas of the business, however may consider Northampton in future if expansion plans are resumed Lingerie store Company has another brand present in the town and do not want more representation at the moment. May reconsider depending on the impact of the Grosvenor extension Menswear store The population size and demographics are not appropriate Menswear store Population size, demographics and current retail mix are not desirable

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc High street book and music Not as strong a centre as Milton Keynes. Would be store interested in an out of town site Department store Northampton is too close to Milton Keynes where they have a store. Will review the requirement based on the success of a store opening in Leicester in 2008 Upmarket bar chain Demographics of the town do not fit with the bar Large bar and nightclub Population too low to support facility brand Bar/Pub chain Demographics of Northampton do not fit Cinema Operator Strong existing multi-screen provision in the town

1.33 This high number of negative responses does not correspond with the level of demand shown on the property databases, as described above. These results are heavily influenced by the Grosvenor extension scheme coming forward, which many retailers have already expressed an interest in. This means that they have no further interest in the town, which provides some explanation for the lack of demand we have recorded. We expect that the number of retailer requirements will increase significantly as the scheme opens in the town.

The Leisure Sector

1.34 There are a number of leisure activities in Northampton, available both in and out of the town centre. There is a large multi-screen cinema at Sixfields and another ‘Sol Central’ multiplex situated on Marefair in the town centre. There is a Mega Bowl centre located at Sixfields, a bingo hall and a number of health and fitness centres both in and out of the town centre. The Derngate Theatre, the major theatre in Northampton, is currently undergoing a major redevelopment programme which will result in a larger facility with the aim of attracting mainstream touring companies.

1.35 Northampton also has a developed ‘evening economy’, in other words strong bar, pub, restaurant and nightclub provision. There are 71 food outlets in the town, which is above the UK average (GOAD Town Centre Report), with a number of upmarket restaurants within this category. Bridge Street is an established bar area, with a number of national bar chains as well as independent public houses. We are also aware of two quality restaurant chains who have published requirements for space in Northampton. It would be reasonable to expect with the area growth initiative that there may be potential capacity for additional restaurants of this type within the town, especially those which are capable of catering for the family market.

1.36 There are a number of hotels covering all sectors of the market in Northampton. This includes national chains as well as a number of smaller private hotels predominately in the luxury end of the market. The budget hotel market is catered for by two Premier Travel Inn’s, a Travelodge hotel, a Holiday Inn, Holiday Inn Express and Ibis Hotel (located close to Castle Station). An Inn Keepers Lodge (twinned with

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc a Toby Carvery) and a large city centre based Moat House Hotel fulfil the mid-market sector, with a Marriott Hotel and a number of smaller luxury hotels in the town centre catering for the luxury market. This high number of hoteliers suggests a high level of existing demand; but it also indicates high competition between hotels in the area in a market that is close to saturation.

1.37 There is therefore sufficient hotel provision at present, however as the Masterplan aims to increase the level of office space provision within Northampton town centre it is likely that demand for hotel bed space may potentially increase accordingly. Despite the current level of provision we are aware that a budget hotel operator, a mid market- market hotel operator and a real estate investment company have all expressed a specific interest in acquiring hotel sites in Northampton (Focus Retailer Requirements).

1.38 Revenue generated by tourism within the Northampton Borough Council administrative area increased by 6% between 2004 and 2005, from £222.12 million to £235.17 million, and there was an average increase of 6% across the whole county. There was also a 7% increase in the number of tourists visiting the county, increasing from 18.37 million in 2004 to 19.73 million in 2005. However, the majority of this increase came from day visitors and the maximum number of bedspaces in serviced accommodation within the County only increased by 0.2%, from 10,678 in 2004 to 10,704 in 2005. Given the figures quoted above, tourism does not appear to be currently increasing the demand for hotel bedspaces within Northampton. However, if the level of visitors to Northampton continues to increase this could have an impact on demand for bedspaces, and therefore increase the need for hotel provision. (Source: STEAM 2005 Survey for Northamptonshire by Northamptonshire Enterprise Ltd (NEL)).

1.39 A number of the hotels in Northampton, for example the Marriott and the Park Inn Hotel, provide conference facilities for business use as well as large private events. Our research suggests that these conference facilities are not fully utilised, with a number of vacant facilities in the average week day, therefore there appears to be limited capacity for further conference facilities in the town centre at this time. Again, if office provision within the town centre increases as a result of the Masterplan, demand for conference facilities may also increase.

The Office Sector

1.40 The office sector has become increasingly focused in out of town locations over the past 10 years in Northampton. This has been heavily influenced by the lack of good quality office space and associated parking provision in the town centre. A large proportion of the office provision in the town centre is out dated secondary space, some of which has recently been converted into other uses such as retail or residential units.

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc 1.41 The office market in Northampton is predominantly based on local businesses rather than national companies. This is due to the distance of the town from London, and there being no strong business sector in the area. The town has not developed as an area for businesses regionalising (out of London), in comparison to Peterborough for example, which has seen a number of large office tenants move into the town from London in the late 1980’s. Although recent office growth has been higher in Northampton than in Peterborough.

1.42 The breakdown of employment numbers per business sector (which indicates size and importance of each sector), is displayed in the graph below:

Employment Structure

Manufacturing Industries

Primary Industries

Construction

Hotels and Catering

Transport, Storage and Communication Banking, Finance and Business Communication Other Services

Retail

(Source: Focus)

This chart shows that the ‘other services’ business sector is the largest employer. This includes public sector employment, one of the main employers in the town, and British Gas Energy Centre, another large employer in the area. (A table of the major employer’s is shown below). In contrast, it is the Banking Finance and Business Communication which provides two-thirds of office take-up (Promis). This sector is the third largest employer in Northampton, and employs slightly more people than the UK average, within the context of its own market area. However, this is lower than the average across major towns in the UK (Promis). Barclaycard currently employs up to a fifth of these employees in a large out of town office at Brackmills, however it will soon be making a large number of redundancies as part of a national restructuring programme. This will further reduce the size of this sector.

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc 1.43 The manufacturing sector has seen decreasing employment numbers in Northampton in recent years. The Transport and Distribution areas and the Computing, Research and Development, and Telecoms sectors of the economy have been expanding at significantly above the national average, and could have ‘soaked up’ these manufacturing employees. As previously mentioned, Northampton is rapidly developing as a Transport and Distribution hub due to the central location of the town and it’s excellent transport links. But this is unlikely to have a beneficial impact on the town centre office market, as these firms have predominately taken office space on out of town parks close to the road network, often with associated warehousing space.

1.44 The major employers in the town are as follows:

Employer Sector Employees Barclaycard B, F and BC 2000-4999 Nationwide Building Society B, F and BC 2000-4999 Northamptonshire County Other Services 2000-4999 Council Avon Cosmetics Manufacturing 500-999 Barclays Bank B, F and BC 500-999 Northampton Borough Council Other Services 500-999 St Andrews Hospital Other Services 500-999 University College Other Services 500-999 Carlsberg Tetley Brewing Manufacturing 500-999 Telfer Foods Manufacturing 500-999 Airflow Streamlines Plc Manufacturing 500-999 Cosworth Racing Manufacturing 500-999 KAB Seating Manufacturing 500-999

Only a small number of these employers are users of office space, and are therefore potential town centre office occupiers.

1.45 From the above analysis, and information provided from the CB Richard Ellis Office Agency team, we can conclude that the demand for town centre office space is predominantly driven by the local businesses rather than national firms. Office take-up in the town has remained stable over the last 6 months in comparison to a decline in take-up across the UK. However it is difficult to ascertain trends for Northampton office take-up, as the market is fairly small and therefore large occupiers taking out of town space, predominantly in the

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc distribution sector, have ‘skewed’ trend patterns. The majority of space taken in the town centre in the last 5 years has been in units of fewer than 25,000 square feet, again suggesting this has been local firms.

1.46 Overall employment forecasts for Northampton indicate fairly subdued growth prospects, with the number of employees likely to rise by 0.6% per annum compared to an average across major towns of 0.8% per annum. However sectors dominated by more local firms, such as the fast developing IT sector, are seeing much more positive growth prospects.

1.47 Current town centre office stock is estimated at approximately 4.4 million square feet. The office space in the town is older and of a lower quality than average across the UK with only 7.1% regarded as new (completed since 1999). It is also predominantly in smaller sized units. All major lettings deals have been in out of town locations in recent years, with the exception of National Grid Transco taking space at the former Scottish and Newcastle headquarters in Lakeside Business Park which is closer to the town centre.

1.48 Recent new office development in Northampton has been limited, with only a 7% increase in stock since 1999. All these recent completions have been in out of town locations, with the majority being purpose built or constructed on a pre-let basis. There are no office developments currently under construction in the area. In the long term, there is some development in the pipeline. However this is significantly below the levels seen in surrounding towns, and is all planned for out of town locations.

1.49 Office availability in Northampton is currently at 8.1%, a figure which is significantly below the UK average of 12 – 13%. This is due to the low levels of development activity mentioned above, increasing levels of take-up, and the conversion of some outdated town centre office space to other uses reducing the supply.

1.50 The top office rents achieved on space in Northampton are £16 per square foot (Promis). This level was obtained on new out of town office space. This rental level is above both the UK average and the average across the UK major towns, and is one of the highest in the West Midlands region, exceeding rents achieved in competing towns such as Milton Keynes and Leicester. Currently, investment yields in Northampton are approximately 6.75% (Promis). This is above the UK average of 6.33%, reflecting slightly higher risk from a smaller office market which is primarily dominated by local firms.

1.51 The relatively high rental levels, low availability and lack of high grade office space in the town centre highlight a development opportunity for new town centre based office accommodation. However this opportunity appears with a number of caveats, in that large scale new developments may not be suitable for the market as the town does

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc not attract large national occupier, and parking would be required in order to compete with out of town provision.

The Residential Sector

1.52 The residential property market in Northampton has been fairly stagnant in the last year, in line with current trends. The town experienced negative house price growth of 0.3% in 2005. The graph below demonstrates how this is the third lowest rate of growth in the region:

House Price Changes 2005

15

10

5 nge a h

C 0 %

y ry h g h n n ll ter e t g n to e s n n u ri ug p de n e e o te ro h g Ol v r t o m a -5wc o us P o Da b Ke rb tha R t T g or llin or p e t Ha N e ew W rk N -10 Ma

1.53 This has lead to a current house price average in Northampton of £166,560. This is in the lower end of the local housing market as displayed below:

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Average House Prices

300000 250000 200000 £ 150000 100000 50000 0 l y g n ter gh el try on e gh ne s n in d u l e ou e pt er O agn tt sh ro wc or P av o rb rt D tham Ke Ru bo T a o r ng o lli t H wp N e e rk N We Ma

1.54 There is a wide range of housing available in Northampton and surrounding areas. Period and luxury properties are available in the Northampton suburbs and surrounding villages, many of which are affluent areas. There has been a high level of new developments around the town in recent years, resulting in a high supply of new detached and semi-detached family homes. There are also a number of terraced and Local Authority properties in closer proximity to the town centre.

1.55 Local agent information has indicated that the market for new family housing in Northampton has become saturated due to the high number of developments recently completed and under construction. However there is limited supply of town centre housing, in particular flats and town-houses aimed at the lower end of the market, more specifically in the price range up to £120,000. This is also the case for the rental market, where town centre properties up to £550 per month are sought after.

1.56 The majority of existing town centre accommodation is in the luxury bracket, such as office conversions or new luxury developments. Local agents inform us that some of these units have had difficulty in selling due to many of those attracted to town centre living priced out of the market.

1.57 There are a number of projects currently in development in the town centre. These are predominantly flat and town houses, targeting the market we identified above. Kings Oak are currently in the construction phase on the ‘Centro’ development on Broad Street in the north of the town centre. This development will provide a total of 250 one and two bedroom apartments, with concierge services, underground parking and gymnasium facilities also provided. Despite this range of services, prices for these apartments range from £99,999 to £155,999, placing them in the lower to mid-market range. Westleigh Developments are

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc currently constructing 135 one and two bedroom flats on Woolmonger Street, due for completion in November 2007. This development will provide a mix of private ownership, part ownership and fully affordable housing, and therefore will be aimed at the lower end of the market. Finally, Bellway Homes are nearing completion on the final phase of West Cotton Close, a large development apartments on the riverside at Cotton End. This final phase of the development comprises 76 one and two bedroom apartments aimed at the higher end of the market, all of which were sold ‘off plan’ before the development was finished. No further development is currently planned on this site.

1.58 Despite this high level of development at both ends of the flat market in Northampton, local agents still feel that further development of this kind is demanded and would be successful in the town. There appears to be evidence to support this view, for example to speed with which the Bellway Homes development was sold. However, benefits such as riverside views, parking and gymnasiums are strong factors in the demand for apartments, and the riverside location of this development may have increased its desirability.

1.59 Typical land values for residential development in the Northampton area are as follows:

Small Sites (less than Bulk Sites (in excess Sites for Flats or 5 houses) of 2 acres) Maisonettes £ per Hectare £ per Hectare £ per Hectare 2,470,000 2,250,000 2,470,000

CB Richard Ellis residential team estimate that values of £220 – £250 per sq ft could be achieved on town centre flat developments, based on evidence of recent schemes.

The Industrial Sector

1.60 Northampton lies within an industrial area of the UK, and is a significant industrial location. This sector includes both Manufacturing and Transport and Distribution, (which is included in both the office sector as Transport and Distribution companies take both office and warehouse space).

1.61 The industrial sector as a whole accounts for 19.5% of total employment in Northampton (above the UK average of 17.6%). This equates to 23,100 employees. The majority of this sector is Manufacturing, which creates 13.2% of total employment, leaving 6.3% of total employment created by Transport and Distribution. However

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc this breakdown may change in the future as Manufacturing has decreased by 1% per annum in the last decade whereas Transport and Distribution is a major growth area in the town, and has experienced a 3.6% increase over the same period.

1.62 Future assessments of employment change estimate Manufacturing to further decrease by 3.7% per annum and Transport and Distribution to increase employment numbers by 0.4% per annum in the period 2004 – 2009 (Promis). This is not as high as previous growth levels, as there is some concern over the future of Northampton as a prime Transport and Distribution location due to low unemployment and emerging labour shortages. However, population growth stimulated by the ODPM Area Growth Initiative may go some way towards combating this. Other distribution centres in the region, such as Daventry, are predicted to grow significantly in this period, which could attract some companies away from Northampton to these locations.

1.63 Major manufacturers in this sector are shown in the table in 1.42. Avon Cosmetics now only retain their office function in Northampton having moved their manufacturing abroad, but Carlsberg Tetley Brewing, Cosworth Racing and KAB Seating all employ up to 500 people. In the Transport and Distribution sector New Wave Logistics, Royal Mail, and Unique Prepared Food are major employers, also employing up to 500 people each.

1.64 The majority of firms in this sector are based on the out of town business and industrial parks, strategically located close to the M1. Grange Park, Swan Valley and Brackmills house a high number of these firms. Recent developments on these parks have been successful due to this proximity to the road networks, increased space, and the flexibility of uses allowed.

1.65 Northampton has an existing industrial stock of 26.8 million square foot, 62% of which is warehousing and office space and 38% factories. There is an above average level of new stock in the town at 6.8% compared to 6.1% UK average (Promis). The warehousing stock has increased by 93% to this level over the last 20 years, representing the rise of the Transport and Distribution sector in the town.

1.66 In the last 5 years ‘big sheds’ (units over 100,000 sq ft) have accounted for 63% of floor space in Northampton. This is a high share of take-up in comparison to the national average of 38%. However this has reversed in the last 12 months, with take up falling to 45%. The greatest share of take up in the last 12 months has been in the 25,000 – 50,000 sq ft bracket.

1.67 Industrial vacancy levels have declined by 30.4% in 2005 to a current estimated level of 4.6% of units. This is a low vacancy level compared to the average of 6.8% across UK industrial centres (Promis).

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc 1.68 There is 110,000 sq ft of industrial development currently taking place in Northampton, but this is all purpose built or developed on a pre-let basis, and therefore will have a reduced effect on availability levels. It is also a distinctly smaller amount than surrounding centres, for example Leicester has 900,000 sq ft under construction, and the industrial centre average is 190,000 sq ft. However there is 9.9 million sq ft of space in the development pipeline, which places Northampton third in the area and above the UK industrial centre average.

1.69 Top rents achieved on industrial space in Northampton are currently at £5.50 per sq ft. This figure has been stable for the last 5 years, and seen little increase since 1998. This is below industrial centre averages which are over £6 per sq ft, but approximately average for the East Midlands region. Industrial yields are currently 6.9%, which is consistent with the UK average.

1.70 The above statistics, such as stagnant rental rates and lack of speculative development, support the risk that Transport and Distribution firms may move to surrounding area’s such as Daventry. However, local agents advise us that there is a consistent demand from local firms for smaller freehold units on industrial parks, again in out of town locations.

1.71 There are 2 existing industrial locations within the central area; the Castle Station, which houses a number of railway sidings, and the Grafton Street Industrial Estate has a number of local industrial firms including engineering company’s, mechanics and a printer company. We do not feel that further industrial development (B2/B8 general industrial) is appropriate for the town centre as it generates low land values and can be detrimental to surrounding uses. However, small scale B1 uses, particularly those related to the fashion/art/cultural/media industry would be welcome.

Summary

1.72 Northampton is an important growth area, with an expanding population that will support all property market sectors.

1.73 The town has a relatively youthful population, and the area is classified as ‘moderately affluent’, again supporting opportunities in all property markets. However, the current low unemployment rates hinder growth in employment sectors.

1.74 There is a well developed leisure sector in Northampton with a good provision of leisure facilities and evening economy uses.

1.75 The retail provision in Northampton caters for all sectors of the market, with big box tenants, high street stores and a small number of specialist and upmarket retailers in the town. There is a high level of retail warehousing around the town and significant improvements proposed

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc at competing centres both of which threats to the town centre. Retail development is required in order for Northampton to maintain its current size and status, however, there is currently a low level of development activity with only the extension to the Grosvenor Centre planned.

1.76 The results of our demand survey show demand exists from restaurant operators which may be suitable to further expand the current provision, particularly to cater for the family market. We currently see very limited potential for increased hotel and conference provision.

1.77 Northampton has a broad residential market with a high number of new build family housing. There has been an increase in the number of town centre apartment developments, however many of these have been in the luxury bracket. Local agents have identified demand for these properties in the mid-market, despite a current increase in development of these properties.

1.78 There is limited scope for development in the industrial sector in Northampton. The main growth area in this sector, Transport and Distribution, is predominantly based on out of town business parks close to the transport links. However, some small scale B1 uses may be welcome on the town centre periphery.

1.79 The town sector office market is dominated by local firms, with most larger employers located on out of town business parks. Low vacancy levels, second hand stock and a lack of development suggest an opportunity for town centre office development, however, this needs to cater for local business tenants and provide parking in order to compete with out town space.

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Appendix A – Focus Retailer Requirements

Retailer Minimum Requirement Maximum (square foot) Requirement (square foot) 99P Stores 3,000 10,000 Again 2,250 2,270 Aldi Stores 14,600 14,600 Art 600 1,200 ASK Central 2,500 5,000 Bakers Oven 1,750 2,500 Bargain 1,080 1,320 Brownhills Leisure Group 1,000 1,000 Base Menswear 2,500 3,000 Best Cellars 3,000 3,000 Boys Base 2,500 3,000 Brighthouse 1,000 2,000 Carphone Warehouse 500 1,500 Cash Generators 2,000 2,500 CMG 2,000 2,000 Costa 750 2,000 Costco Wholesale 350,000 520,000 De Vere Hotels and Restaurants 130,700 152,500 Decathalon 20,000 60,000 Dolphin Bathrooms 800 3,000 Dominos Pizza Group 1,000 1,200 DTB 1,000 2,500 Elvi 1,500 1,500 Ember Inns 7,000 7,000 Ethel Austin 2,500 5,000 Farmfoods 4,000 6,000 Fat Face 1,500 1,500 Formula One Auto Centres 2,500 10,000 The Fragrance Shop 250 800 Furniture Village 10,000 15,000 Gambado 14,000 15,000 Game Station 700 1,200 Garden Park Investments 100,000 100,000 Glyn Webb 15,000 20,000 Golden Tulip 40,000 60,000 Gourmet Joes New York Pretzel 100 600 Greggs 800 2,500 Hair Express International 700 900 Hammonds Furniture 1,000 5,000 Hawkins Bazaar 1,000 1,750 HPJ Retailing 800 1,200 The Hotspot UK 1.500 3,000 Jordans Residential Letting 500 1,000 KFC 2,550 2,900 La Senza 2,000 2,000 Linens Direct 2,000 4,000 Livingstones 8,000 15,000

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Lush Retail 600 1,500 Machine Mart 2,000 15,000 Millies Cookies 300 500 Moben Kitchens 500 1,200 Moda in Pelle 300 1,200 Nando’s Chickenland 2,500 3,500 O’Briens Irish Sandwich Bars 200 1,400 Papa Johns 800 2,000 Partners the Stationers 1,500 2,000 Pastry Presto 300 2,500 Peacocks Stores 5,000 15,000 The Perfume Shop 250 600 Pizza Express 2,500 5,000 Pizza Hut 800 1,000 Poundland 2,500 10,000 Presto 300 500 Quicksilver 2,000 4,000 R&B Leisure 5,000 5,000 Regents Inns 6,000 10,000 Robert Dyas 500 1,000 SAKS Hair 1,000 1,000 Savers Health and Beauty 2,000 2,500 Scope 750 5,000 Size Up 1,500 2,000 Slater Menswear 5,000 8,000 Snow & Rock Sports 6,000 8,500 Sports Café International 10,000 15,000 Sports World International 15,000 30,000 Starbucks Coffee Holdings 700 1,800 Stationery Box 1,500 2,000 Strada 2,000 5,000 Subway 500 1,500 Supercuts 500 700 TJ Hughes 25,000 150,000 TK Maxx 15,000 40,000 Travelodge 20,000 20,000 Treds 750 750 The Tuscany restaurant 2,500 2,500 Vets4Pets 2,000 2,000 Vintage Inns 7,000 7,000 The Watch Hospital 100 300 Whitbread Group 4,000 6,000 Wholesale Wooden Floors 3,000 6,000 Yankee Candle Co 500 1,000 Zara UK 10,700 16,150 Zumo UK 500 900

Key Comparison Goods Other High Street Bulky Goods Food and Drink Supermarket

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Leisure Other

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc EGI Retailer Requirements

Retailer Minimum Requirement Maximum (square foot) Requirement (square foot) Aldi 15,000 15,000 Argos 10,000 15,000 ASK 2,500 5,000 Benjys 800 1,500 Birthdays 4,000 5,000 Budgens 3,000 5,000 Burger King 500 2,500 Caffe Nero 800 2,000 Carphone Warehouse 1,000 2,000 Costa Coffee 750 2,000 D2 2,150 3,200 Dominos Pizza 1,000 2,000 Ethel Austin 2,400 5,000 Gamestation 1,000 1,000 Greggs 750 1,120 Hargreaves 1,800 4,000 Iceland 4,000 7,500 IKEA 25,000 270,000 Julian Graves 500 2,000 La Tasca 3,500 5,000 Land of Leather 8,000 15,000 Levi Strauss 1,000 1,600 Moda in Pelle 300 1,400 Music Zone 1,300 3,000 Netto 12,500 13,000 O’Briens Sandwich Bar 500 1,500 Pathfinder Pubs 20,000 33,000 Peacocks 5,000 6,000 Pets at Home 4,000 10,000 The Pier 1,500 7,000 Pizza Hut 850 1,000 Poundland 2,500 7,000 Reg Vardy Republic 2,000 4,000 River Island 6,000 20,000 Slater Menswear 5,000 13,000 Space.NK 700 1,200 The Sports Café 10,000 18,000 Sports World 5,000 30,000 Strada 2,000 5,000 Subway 800 1,500 Tchibo 800 800 TGI Friday’s 3,500 6,500 TJ Hughes 2,000 150,000 TK Maxx 20,000 70,000 Travelodge 20,000 20,000 Tuscany Pizza 2,500 2,500

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc Waitrose 25,000 42,000 Zara UK 5,000 16,000

Key Comparison Goods Other High Street Bulky Goods Food and Drink Supermarket Leisure Other

C:\Documents and Settings\DBlandamer\Local Settings\Temporary Internet Files\OLK1F4\Property Market Review.doc