Co-founder of Jeffersons Commercial, Will Mooney
“...No region is completely immune, but everything seems to points to the fact that Cambridge is one of the areas best placed to beat the recession because it has a highly skilled workforce and relatively low numbers employed in vulnerable sectors...”
Will Mooney is co-founder and partner of Cambridge-based Jeffersons Commercial, which has been named the most active local commercial property agent throughout Cambridgeshire, Suffolk and Norfolk by industry ‘bible,’ Estates Gazette for the second year running. The team received the award for completing more commercial property deals than any other local agent during 2008. Jeffersons’ deals increased by a third over the winning number of deals last year. Jeffersons Commercial was formed in January 2005, following a buyout 18 months earlier from Januarys Commercial by partners Will Mooney and Ben Oughton. Between them Will and Ben have more than 40 years’ experience of commercial property in the Cambridge and East Anglia region. Clients include Travelodge, for whom it acts as consultant development managers across East Anglia, Capital Park, The Crown Estate (Cambridge Business Park) X-Leisure (Cambridge Leisure) and Turnstone Estates (Iconix Cambridge).
1) How resilient is the Commercial Property scene in Cambridge and the East of England?
From our point of view deals in 2008 were a third up on 2007, so at this point in the downturn it’s still positive. However, there is always a time lag in the market and we expect any negative impact to become increasingly noticeable from April. Our advice to clients has been to think laterally and not just blame the credit crunch if they are not getting the most out of properties. The property scene from my past experience of the 1991 recession is relatively resilient. But this can depend as much on the decisions taken by both occupiers and owners as it will on the state of the economy. All parties need to liaise closely and work together for mutual benefits. Overbearing landlords will have empty properties leading to a lack of income and under recent legislation a rates liability. Tenants need to keep landlords informed of their predicaments and work out short term solutions to enable business to continue. Advice from a chartered surveyor is advisable.
2) Can you sketch the current availability in Cambridge and its immediate environs of office space, industrial units and lab space in terms of sq ft and quality?
In Cambridge and 10 mile radius there is over 600,000 sq ft of industrial space. The majority of lies between 10-20 miles outside Cambridge in the necklace of towns and villages such as Newmarket, Royston, Huntingdon and Ely, mainly due to lower land values. Lab space is highly specialised and tends to be built bespoke. There is some 165,000 sq ft currently available, with a new development at Granta Park, called Riverside, offering 68,000 sq ft in three buildings with individual units from 2,500 sq ft upwards. Office availability stands at about 650,000 sq ft. In each of the past four years take-up has been about 425,000 sq ft. With no new speculative develop-ment planned for the next few years it will not be long before supply levels are critical. Across the board there is a wide range of quality levels. A substantial amount of the industrial stock is old and tired – but cheap! The majority of lab space is high quality, however. Money conscious companies seeking lower running costs are now taking lower grade premises, such as industrial units, and upgrading them. The quality of offices, particularly at business park locations is extremely high and many have canteens and gyms for evermore demanding staff.
3) Is lack of suitable property holding back the growth of businesses in any sectors in Cambridge?
The last few years have seen a shortage of larger HQ type buildings and the current downturn in the economy is likely to ensure that the lack of suitable property will continue for some time to come. To meet this demand landlords are looking to bring existing buildings up to 21st century standards. The Crown Estate, for example, has undertaken a comprehensive programme of imp-rovement and refurbishment works on a number of buildings at Cambridge Business Park (which dates back to the 1980s). Currently they are refurbishing a 22,000 sq ft building formerly occupied by Philips. Various business sectors have for years been putting up with sub-standard accommodation. It is not all the landlord’s fault as tenants are continually seeking to pay as little as possible. 4) Are developers building enough speculative space: If not could they benefit long term by getting back into action? We have been warning for some time that there isn’t enough speculative building happening. With the recession confirmed there is likely to be even less and therefore a shortage of larger Grade A office buildings. When things start to pick up again it will be years before any new building comes to fruition. We would not expect any new speculative schemes of note to start until spring 2011. Those who can read the timing of the return of the market 12-18 months in advance will benefit greatly. There is a lack of funding available even to long-standing developers and even those that can produce a pre-let of their proposed property, are not being offered terms that are conducive to taking the risk to get development underway. There is a supply problem and those companies needing to move will have less quality choice and will need to compromise.
5) Do companies’ boards of directors give a high enough priority to their long-term property needs or are they more generally knee jerk?
In my 23 years experience in the area, I would have to say that many companies only think about what they need in terms of space when they absolutely need it – not unusually, three months beforehand. This is a mistake because it can take three months to find the correct property, two-three months to complete a lease and two months to fit out the premises and relocate staff. So, at a minimum, they need to be planning six-eight months ahead. I have noticed that over the past two years a higher percentage of the international companies are appointing a commercial agent to advise them in the acquisition. This is not something many Cambridge companies do as the norm but it is a practice that the American and Japanese parent companies employ; hopefully others will take note.
6) How important is having sufficient choice in business space to the region’s growth prospects long term?
Very important in any area such as Cambridge that “grows it’s own” companies. By this I mean there are a high level of start-up companies (typically comprising one-five people), usually spin-outs from University departments or large science/research companies. They need high quality premises to further their research (100-1,000 sq ft) and have quite specific needs which are usually not available until their size requirement exceeds 5,000 sq ft +. At or above this level there is usually a reasonable choice although the supply is dwindling for reasons mentioned earlier. Choice is vital, but the cost to provide can be prohibitive.
7) Are you gloomy or fairly optimistic about this region’s ability to ride out the economic downturn?
No region is completely immune, but everything seems to points to the fact that Cambridge is one of the areas best placed to beat the recession because it has a highly skilled workforce and relatively low numbers employed in vulnerable sectors – over 40 per cent are employed in the public sector. I believe that, as in the 1991 recession, the region will come through this better than others, but it will be three to five years before any feelgood factor may return.
8) Has Jeffersons had to adapt its business model to provide solutions for clients during the slowdown?
Our philosophy has always been not to tell clients what they want to hear but to give them the professional advice they have asked us to give them and this is now more crucial than ever. In the current climate this means making the property they wish to dispose of, or acquire, as attractive to the market as possible. I and my business partner Ben Oughton worked through and survived the recession of 1991 and the knowledge we gained has put us in good stead to advice clients now. The fact that we just won the Estates Gazette most active Regional Agent award for the second year running with a third more deals than last year and came first in the Business Weekly New Year Honours Awards for Commercial Agents, shows that our approach is working – to our benefit but most importantly our clients.
9) How crucial are property consultants to the region’s sustainable growth ambitions?
Commercial property consultants are specifically trained to deal with all aspects affecting property, including acquisitions, disposals and manage-ment of property, lease renewals, rent reviews and valuations. Surveyors also provide strategic advice and can formulate property needs for the future from the trends they see emerging in the market. There is hardly a major development in the past 50 years that has not had a commercial agent involved, from it’s conception to completion.
10) How has Cambridge matured as a place to do business and what would improve the business environment?
Cambridge led the way with science parks when the Cambridge Science Park opened in the 1970s and has continued to develop in terms of the business environment since – now playing its part with 21st century standard sustainable buildings. As development has moved further out of the city, transport has become an increasingly thorny issue. It remains to be seen how the latest developments, such as the guided bus and the possible introduction of a congestion charge, will affect the business environment. However, restrictive and overly zealous planning policies are having an impact. This can be seen on the delay in getting the CB1/station development underway. Many central office occupiers have been holding on for the past five years to relocate into new buildings which have not materialised. By example, the BBC finally had to move out to the northern fringe at Cambridge Business Park as they could not find an alternative option available in their timescale in Hills Road and Station Road. In planning consents for most new office buildings there is a Local User Restriction essentially preventing many international companies new to Camb-ridge from bringing their businesses and jobs to the city. This can also apply if the company serves as a regional function for it’s organisation. It is appreciated that the intention of this policy was originally to prevent an influx of people to the area which would put pressure on the existing infrastructure and housing, however, in these difficult times new employment opportunities and staff needing housing would be a good thing and should be welcomed by all.