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The RO Developments and Office Agents Society (OAS) Roundtable Debate: Is the Market Ready for Office Development and Refurbishment in the South/South East? Pt 4

wantspacegotspace.co.uk - RO Developments / OAS Roundtable DebatePrupim’s Hugo Henkes said this can be done if a developer is realistic about the type of demand it can expect. “Gone are the days where there were new buildings coming out of the ground everywhere and you could easily secure a tenant. There are a lot of core centres in the South East that have no new buildings coming out of the ground but everything has got to be right for it to work”.

Another alternative, given the market, is to make best use of what is already out there. Tenants want top quality space, but few make much distinction between shiny new offices and refurbished buildings. Edward Smith, head of national markets office agency at Strutt & Parker suggested that here lies a key opening. “I think the next phase is more likely to be good quality extensive refurbishments. Either a fund that’s tired of spending the extra money on new builds and finding the returns aren’t there or it will be forced on a fund with a void coming up”.

But the same strict rule, that developers need to be at the top of their game to woo the tenants, still very much applies. As Steven Wright of Palmer Capital Partners explained: “The refurb has to be of a better quality than something you might have done in the good times. You need to get a building on a proper FRI long term lease to make it stack. If you’re looking at developing Grade A you can find it’s not possible to do after a development appraisal. At least with a refurbishment you know that some of the costs are not there”.

Posted by The Editor (wantspacegotspace) on 8th April 2013 (updated 09/04/2013)

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