MEPC — a division of Hermes Real Estate — is shedding three of its seven business parks to allow it to pump at least £400m into Britain’s fast-growing science and technology sectors.
The three sites up for sale through commercial agents Jones Lang LaSalle (JLL) are the mixed-use business parks of Chineham Park in Basingstoke, Hillington Park at Glasgow, and Warrington’s Birchwood Park. The 123 acre-site near Warrington is home to 150 companies, ranging from international brands to start-ups, and provides work for more than 5,000 people.
The decision to off-load four-million sq ft of its traditional business parks is the biggest shake-up of the MEPC portfolio for more than 20 years. “We want to redirect the capital into more innovative investments,” explained Chris Taylor, chief executive of Hermes and chairman of MEPC.
Part of the sell-off profits will be invested in a biotech cluster at MEPC’s Milton Park, near Oxford, and some to kick-start a new business estate at Wellington Place in the centre of Leeds. Milton Park also looks set to benefit from MedCity — the biotech triangle between Oxford, Cambridge and London — launched last month by London Mayor, Boris Johnson (pictured), who claimed the cluster could compete with the giant US bio-tech hubs such as Boston and San Francisco.
The biggest beneficiary from MEPC’s investment realignment, however, will almost certainly be Silverstone Park, adjacent to the British Grand Prix race track in Northamptonshire, where the company has secured permission for 2.5 million sq ft of industrial and office floorspace. MEPC already has a 999-year lease on the site from the British Racing Drivers’ Club and recently announced plans to target Formula 1 spin-off companies as part of its £14m upgrade of the site.
Taylor said MEPC which, through Hermes manages the BT Pension Fund, would also consider building new science or high-tech focused business parks or buy and revive those that are struggling. “MEPC has the advantage of being close to the occupier, so this change in strategy is being led by occupier demand,” he stressed.
Hermes and MEPC are using the business park sales and subsequent investments to “call the recovery”, concluded the executive. “We think the timing is right now. As a generalisation, nothing much has been built outside London in these sectors for six or seven years, at least not since the crash, and we are now seeing demand improve dramatically … As investors we are trying to anticipate future tenant demand, rather than sit and collect rent from relatively mature assets.”
