Copyright: David Lawson/Financial Times 1998Home page
When the world's media turn up on your doorstep, things start to happen. When they come back several years running, the affect can be revolutionary. That, at least, is the Cardiff's conviction. The city is about to shake off its reputation as the biggest village in Britain by opening putting itself on front pages across the world.
Visitors always compliment the calm, intimate nature of Europe's smallest capital. But this has often worked against the attraction of big companies. 'A lovely place to visit, but does it have the heavyweight business culture for a major office?' says one London chairman looking for a new home.
A combination of the inter-government summit, the rugby world cup and the new Welsh Assembly are expected to change that view by bringing in cameras and raising perceptions. 'This city is set to become a big hitter,' says Bob Lloyd, the hyperactive head of property consultant King Sturge's local operations. 'In fact, it is already making big hits.'
With 500m pounds of development under his belt, he cannot be accused of hyperbole. The fact that major names like Norwest Holst and Sumitomo Bank are putting 120m into a spectacular link between the city centre and its dockland redevelopment zone tells its own story. Blue-chip developer MEPC could add another 50m to the Citilink private finance initiative by backing major office buildings. Plans are to reshape the neglected southern section of the city centre into a world-class location and punch a continental-style boulevard right through to the Bay.
Less well-known names have already made their bets on a brighter future. Two empty office hulks from an earlier development phase have been snapped up and are turning into gold mines as the local professional sector booms. Criterion Properties paid 5m pounds last year for Brunel House, at 230,000 sq ft the biggest commercial building in Wales. Chesterton has already let a large slug of the former BR centre on Newport Road at rents of up to 9 pounds a sq ft.
The Pearl Building, Cardiff's landmark 'skyscraper' overlooking that other landmark, the Edwardian civic centre, is also being refurbished to tap the same market after being bought for 3.25m by Portfolio Holdings.
Even these big chunks will not satisfy expanding takeup, which languished during the early 1990s but soared to almost 500,000 sq ft last year - a huge proportion of the 6m sq ft office stock. The new Assembly will only make things worse. Owain Llywelyn of Chesterton has calculated that it will create extra demand for more than 400,000 sq ft of office space by drawing in media, lobbying and business service groups.
On the other hand, this could be considered a vast improvement. Peter Kelly of DTZ Debenham Thorpe says that in his 25 years in the city he has not seen better prospects for growth. Rents are expected to rise at an annual 5% over the next five years.
That may finally drag in developers. While action has been non-stop in the Bay and some giant leisure schemes are being proposed, office investors have been strangely reticent to move in to the city centre. That is partly because prime rents are hovering below 17 pounds a sq ft and the fact that it does not offer similar government grants to the Bay.
It does not help that two new, high-profile blocks remain stubbornly unlet. No 1 Kingsway, built by Helical Bar and CIS, is 'superb and admired', according to joint agent Roger Thomas of Cooke & Arkwright. So is Norwich Union's Oakleigh House. But tenants are still living in a past when they could get short leases and bargain rents.
Helical's MD Mike Slade, may be disappointed to see his profits disappearing but says the investment is too good to dilute. That is about as good a bet on Cardiff's promotion to the big league as you could find.
There is no shortage of big tenants waiting in the wings. The AA, Hyder and Admiral are all sniffing around for as much as 200,000 sq ft of expansion space. This has attracted another smaller developer with big dreams. Frontier is willing to take a crack at a one-acre site in Churchill Way that has lain fallow for a decade in the hope of hooking one of these big fish.
He will be competing with stiff competition. Lloyd is planning an 80,000 sq ft speculative development to launch Citilink - hopefully with MEPC - and an eventual 500,000 sq ft of high standard space. Grosvenor Waterside also packs a hefty punch with its grants and sites in Cardiff Bay. It holds the record high for rents so far, at 16.50 a sq ft for the Bank of England letting at Scott Harbour.
The provincial image is certainly waning fast. The international rugby stadium with its proposed 200m shopping and leisure complex next door, the panoply of Cardiff Bay regeneration, not to mention the Assembly and its spin-offs, all promise to push Cardiff into the big league it has aspired to join for so long.
'We will have two five-star hotels soon, a Forte and a Hilton,' says Kelly. 'That is a sure sign of an international centre.'
A couple of shadows hang over the future. Regional aid could disappear around the same time as the Bay Development Corporation. But by then the city may not need such incentives, says Mike Rees of Chesterton. His worry is the limit to expansion, as Cardiff has so little developable space around its boundaries.
After years languishing in the shadows, few will want to worry about the problems expansion may bring. The 'villagers' are more interested in enjoying the graduation to international city.