Copyright: David Lawson- Property Week 1999
Old developers never die. They just fade away into the background of an industry stripped of old-timers by the crash and repopulated by thrusting newcomers. But it is dangerous to dismiss old dogs in a harsh new world where bean-counters and spreadsheets have replaced gut feeling and back-of-envelope scribbles. Some of them can learn new tricks.
Dennis Beadle is anything but faded. His company, Dimsdale, was a household name in the Eighties but like many of the generation which dominated successive post-war property booms, it disappeared in the crash. Now he is back with the same word-a-second patter, the same idea-a-minute electricity.
After 30 years of chasing leads which produced more than 300 developments, he just couldn't stay away. The incentive was a great idea sitting unseen under the noses of the new hotshots.
Drive into every town or city and you pass a ragbag of odd little sites left vacant or packed with unremarkable sheds. 'Why?' he asked. They front main roads, so are highly accessible. They are cheap, yet many occupiers are crying into their profit and loss accounts about being pushed out to expensive business parks.
One sector in particular was aggrieved. Tenants with showrooms and trade counters want easy accessibility and high quality premises to impress customers - but at an economic rate. 'They usually end up being shoved to the back of an estate in standard buildings,' says Beadle.
A test drive at Acre Road, Reading, drove home the point. A clutch of trade tenants were willing to pay a premium over local industrial rents on Beadle's first post-Dimsdale development, which provided a main road location close to the town centre. This led to the first 'trade park' in Mitcham, Surrey, which has just been completed by his new company, Denvale. Four more are being built and another dozen are planned across the country.
This is not a one-man comeback, however. Beadle is running with a small pack of other old dogs eager to prove they can still do the business. Alan Marks' pedigree goes back to one of the post-war property giants, Gabriel Harrison's Amalgamated Investment & Property, followed by 17 years at DE&J Levy. He has provided a heavyweight financial reputation which is already bringing in fund managers such as Guardian Properties, which is forwarded funding the Mitcham park.
'Institutions are looking for ways of making property perform better in a low-inflation era,' says Marks. 'That means finding new ideas. This is one. There are hundreds of potential tenants out there willing to pay extra for the right premises.'
Beadle goes further. He says the market is potentially three times the size of retail warehousing, another new idea which started slowly before taking the investment market by storm.
Another old dog is persuading planners to open sites to this potential and then handling the nuts and bolts of construction. Peter Clayton ran with Beadle and Marks in his days as MD of CALA Properties, so he was another natural to help set up Denvale Trade Parks. 'We must be the oldest swingers in town,' jokes Beadle, pointing to a combined experience of more than 100 years.
One cub managed to shoulder his way in, however. Lettings director Andrew Robson, offers a mere 12 years with Gooch & Wagstaff and then Hicks Baker before joining Denvale. 'I'm learning a lot about Zimmer frames,' he says, but privately admits it takes all his energy keeping up with the old codgers.
The new sector they have discovered is maturing fast. Eighteen months ago one leading industrial agent dismissed the idea of trade parks as a marketing trick equivalent to the 'business park' label slapped on every tatty industrial estate a decade ago. Marks merely points to the average 25% premium over local rents being achieved. The 4,273 sq metres (46,000 sq ft) in Mitcham is almost full at rents as high as 12.50 pounds/sq ft compared with 7 pounds locally.
The secret is the high quality of design, says Beadle. Certain firms like Top Tiles want more than the drab and dingy trade outlets common on industrial parks. 'They are selling their image,' he says. But they cannot disappear out to classy business parks because they must be near customers and cannot afford to pay office rents.
This pent-up demand has become clearer as Denvale has brought on sites. About 15% of Mitcham is showroom space; a former oil depot being reclaimed at Newbury will have twice that amount; schemes in Cardiff Bay and Crawley are up to 70% and 100%. The extra 25% that goes into construction spending over a typical industrial site impressed Bristol planners so much that they went on the record to say it was a 'worthy frontage to a business park'.
Tiles, furniture, electrical goods and ceramics are some of the tenants being attracted. Robson says he no sooner lets in one location than he receives inquiries about repeat business in another. 'They are often already in an area but prefer this kind of showroom presence,' he says.
The typical site Denvale has targeted is between two and five acres close to town centres with a set number of vehicles/day passing along the main road frontage. That draws a wide field but just because the sites are there, it does not mean they are available.
Most will be contaminated in some way, which can defeat potential buyers even where they have tenants lined up. 'Another benefit of our long experience is that we have credibility with big owners that we won't be wasting their time,' says Beadle. BT, BP, Sainsbury, Bristol City Council and Cardiff Bay have all sold to the firm in the last year.
That credibility has also given the team resources to accumulate more than 25m worth of investments in a year. There are plenty of private investors willing to take the word of Beadle & Co that they are on the ground floor of a buoyant new sector. Conventional funding at this stage is more problematic, particularly when institutions are wary of any kind of property which cannot guarantee outperformance.
Marks says leases follow conventional 15 year tenures with five-year reviews. But these have been tweaked with a secret ingredient to maintain differentials with local rent levels when those reviews fall due. That should be enough to draw in funds who watched similar arrangements ramp retail warehousing values through the roof as that sector matured.