Croydon office development
Strategy says on office development
The Strategy assumes that the huge Stanhope Schroders' development adjacent to East Croydon station will be constructed within a relatively short timeframe. This mixed retail, residential and office development incorporates 1 million square feet of new office space. As central Croydon currently contains 5 million square feet of office space, this single development seeks to increase the office space stock by 20%.
In the Strategy's evidence base, the consultants Pacec indicate a 7% office space vacancy rate for the entire borough in 2007. More recent indications from the Council were of a current vacant space rate in central Croydon of 12%.
In the Strategy's evidence base, the consultants Pacec indicate a 7% office space vacancy rate for the entire borough in 2007. More recent indications from the Council were of a current vacant space rate in central Croydon of 12%.
Partnerships say on office development
Joe Arnold is the principle of Arnold & Baldwin, a well respected Croydon firm of chartered surveyors and valuers. Mr Arnold surveyed 134 office blocks in Croydon's centre. His survey revealed that the vacant space rate is 30%, not the 12% figure the Council was quoting. Of the occupied space, roughly one third is leased to shrinking government departments. Mr Arnold estimates that the true market rent for this empty space is between £8 and £12 per square foot (“psf”), not the £20 plus that the landlords dream of. At 2007, the agents Gerald Eve estimated that the average rent for the 10 years up to 2007 was £20 psf. Based on that information, Gerald Eve advised the Council that £30 psf was possible for the Strategy period. That £30 figure underpins the Strategy — which now looks optimistic.
We believe that this huge overhang of dirt cheap space damages the business case for many of the Strategy's proposed office developments. However, on a positive note, we believe that Croydon should exploit this situation by offering bargain priced space for new businesses – which would address Croydon’s chronic lack of historic job creation.
Although during the public consultation, the public had to focus on Pacec’s 7% or the more up-to-date indication of a 12% vacancy rate, the Council had accurate figures. The Council knew from the business rates that 16% of office space is vacant in central Croydon. The Council also undertakes an annual survey which showed that a further 14% of office space was vacant or underused, especially where owners are looking to re-let or re-use the space.
The impact of this huge overhang of vacant office space is well illustrated by the developer Menta's revised planning application for its Cherry Orchard Road site - close to East Croydon station. The revised application focuses on residential and hotel space - 499 flats and a four star hotel (165 beds and 22 serviced apartments). The amount of office space is relatively modest at only 71,000 sq feet – which suggests that the demand from potential tenants is modest in the current economic environment.
We believe that this huge overhang of dirt cheap space damages the business case for many of the Strategy's proposed office developments. However, on a positive note, we believe that Croydon should exploit this situation by offering bargain priced space for new businesses – which would address Croydon’s chronic lack of historic job creation.
Although during the public consultation, the public had to focus on Pacec’s 7% or the more up-to-date indication of a 12% vacancy rate, the Council had accurate figures. The Council knew from the business rates that 16% of office space is vacant in central Croydon. The Council also undertakes an annual survey which showed that a further 14% of office space was vacant or underused, especially where owners are looking to re-let or re-use the space.
The impact of this huge overhang of vacant office space is well illustrated by the developer Menta's revised planning application for its Cherry Orchard Road site - close to East Croydon station. The revised application focuses on residential and hotel space - 499 flats and a four star hotel (165 beds and 22 serviced apartments). The amount of office space is relatively modest at only 71,000 sq feet – which suggests that the demand from potential tenants is modest in the current economic environment.
Sources of information on Croydon office development
The following article from The Evening Standard dated 12th November
2010 discusses the amount of vacant office space in central Croydon and
the associated rock bottom rentals:
Croydon looks to the future in bid to avoid grim present
Croydon looks to the future in bid to avoid grim present
 Croydon's glut of vacant space extends even to the iconic No 1, Croydon (the 50p building) - despite its prime location beside the station |
Current status of key development sites in CroydonStanhope Schroders (Ruskin Square - previously the ill-fated Arena)
Menta (Cherry Orchard Road) Mid Croydon (Minerva's site between the Clocktower and Allders) Public Services Delivery Hub (Fell Road - the Council's new offices) Taberner House (Scheduled for demolition in 2013) NHS site (The former site of the Croydon General Hospital) |
Office development discussion board
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