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The impressive B&Q store at Henry Boot Developments' Northfields Retail Park scheme in Rotherham opened for business.
Sandlands Court, Mansfield – the mixed-use district centre scheme completed and fully occupied during the year.
We have progressed certain sites during the year which we now believe should provide a profitable outcome on completion.
Property values during the early months of 2009 continued the decline seen in the last quarter of 2008. The second half of 2009 saw a measure of recovery resulting in a write back of some of the investment property valuation losses reported at the half-year stage.
It is no surprise that the falls in property asset values have pushed a considerable number of developers into difficulties, as it has lenders to the industry. As always, someone's problem is someone else's opportunity and we are finding that opportunities are becoming available as the problems resulting from the collapse in values begin to be resolved. In certain circumstances, in exchange for providing human and financial resource, we will be able to unlock opportunities which should allow us to create future value with modest financial exposure.
During the year a number of properties were sold. These included two Group occupied properties in London, retail units in York and Bromborough, a large distribution warehouse in Stoke-on-Trent occupied by the Co-op, land for an Asda supermarket in South Shields, land with planning permission for a Tesco in Worksop and a variety of industrial and office units on our large schemes at Hull and Markham Vale near Chesterfield. Future disposals will be considered in the light of market conditions and our stated objective of reducing gearing or recycling capital into profitable future property development.
On the lettings front, our efforts during the year were targeted towards securing tenants on commercial terms for the empty space in our completed developments. We met with some success, but retailers remain cautious with regard to acquiring new space and are demanding expensive packages to enter into leases. Whilst the letting market remains difficult, on the whole where we concluded rent reviews during the year we have not seen rental values fall.
Our largest retail investment at Ayr in Scotland saw the major part of the asset devaluation as yields moved out. We achieved further lettings during the year and have sufficient ongoing retailer interest to suggest we can expect further lettings during 2010; filling the vacancies will have a positive effect on the investment value. We also found it difficult to improve the office letting position at our mixed-use scheme in Bromley and once again we aim to improve the position in 2010. On a more positive note, our major mixed-use scheme at The Axis, Nottingham, a converted department store, is fully let and is now producing annual rental income of almost £1.8m.
We completed three developments in the year which were brought into valuation at the year end. The first 50,000 sq ft of our 100,000 sq ft retail warehouse scheme at Rotherham was built and fully occupied by B&Q during 2009. The infrastructure for the rest of the scheme has been put in place and we are marketing the remainder of the site to prospective tenants but the second phase of the scheme will not be built out until profitable pre-lets are secured. Secondly, Sandlands Court, Mansfield, a small 10 unit, mixed-use, district centre scheme was completed with all units either let or sold. In both cases, the construction contracts were undertaken successfully by Henry Boot Construction. Finally, in Port Talbot we completed a 23,000 sq ft retail scheme of four units and terms have now been agreed to let the final unit.
Our fashion based retail scheme with A1 retail consent at South Shields continued to perform well and was disposed of in the early part of 2010. During the year values were enhanced by the completion of the adjacent Asda supermarket which has now commenced trading and completes the wider scheme. Our retail investment scheme in Falkirk, which was purchased with the intention of it being part of a much larger redevelopment scheme, is being held pending a recovery in the market. We have not, at this stage, negotiated a satisfactory development agreement with surrounding landowners and the local authority to enable this scheme to progress.
It has been very encouraging to see the footfall at the port waiting facility at Saltwood, Kent double during the year. However, it has to grow quite a way yet to reach an acceptable level to attract the high quality retailers we aspire to. This was helped by us reaching agreement with a number of national coach operators for them to use the service area as their UK hub for European travel. In addition, we are in discussion regarding an extension to the car park to provide facilities for HGV drivers which we hope will, over time, significantly increase the utilisation of the facility.
We own a 70,000 sq ft town centre retail investment with plans for redevelopment at Beeston, Nottingham. A scheme has been agreed with Broxtowe Borough Council and solicitors are working on formalising the arrangements. Beeston is a prosperous area and we have strong interest from retailers wishing to take space in the new scheme. Our remaining interest on the Clifton Moor development at York, an 18,000 sq ft retail unit, remains unlet. Whilst we have occupier interest from retailers who have existing lease commitments, we are not yet close to securing a letting with them.
In many cases market yields are higher than the return on cost of a development and this, coupled with additional tenant and construction risk, means we have not actively progressed many of the development opportunities available to us. There are some indications that the recent stabilisation and initial recovery in valuations may allow certain prime developments, with a substantial pre-let line up of good quality tenants, to progress. However, we remain very cautious and will focus on those developments where we have already invested in site values or those which are demonstrably commercially viable in today's market. That said, we have progressed certain sites during the year which we now believe should provide a profitable outcome on completion. Planning permission was granted in late 2009 in respect of our food retail scheme at Warminster. It is envisaged that construction will commence during 2010 to relocate the existing occupier, with the construction of a supermarket and three associated retail units of some 26,500 sq ft commencing during 2011.
Markham Vale, our 200 acre business park at Junction 29A on the M1, continues to attract interest even in the current market and contracts have been exchanged which will see a number of design and build schemes undertaken during 2010. We also speculatively developed a 51,000 sq ft terrace of eight industrial units, with about half either sold or let by the end of 2009, and we expect to be able to report on more lettings as 2010 progresses. The position is similar at Priory Park, Hull, where we completed the letting of our 30,000 sq ft Bridge View office development on satisfactory terms. We are now working on the final 15 acres of this site where we will either sell sites, undertake bespoke design and build packages or, in a limited way, build out small industrial and office units speculatively. During 2010 we aim to improve the planning status of this site and recommence development as market conditions improve.
Under our development agreement with Daventry District Council we are planning two retail schemes, a 100,000 sq ft town centre redevelopment and a 140,000 sq ft edge of town retail park anchored by a major food retailer. A planning application for both schemes, which are anticipated to have a gross value of approximately £50m, will be submitted in 2010. Provided there are no delays in the planning and pre-letting processes, it is hoped we will commence the construction phase in 2011.
Planning permission has been granted for our 200,000 sq ft open A1 retail scheme in Tamworth town centre and matters will be progressed during 2010 with potential tenants who have expressed strong interest. In the meantime, we have concluded the site assembly and intend to demolish the existing buildings and derive a temporary income from its use as a car park pending redevelopment.
As regards our retail scheme at Rochdale, we intend to await an improvement in market conditions whilst attempting to improve the planning status to include food retailing on the site. We are in discussion with a variety of potential end users regarding the former Court House building on Deansgate, Manchester. We expect to finalise our development plans in 2010 which will enable a detailed planning application to be submitted. We believe this remains a strong development site and should allow us to create over 30,000 sq ft of mixed-use space for a variety of uses depending on which tenant line up we decide on. At Weston-super-Mare, the dated retail unit which we purchased three years ago is occupied on a temporary basis and will be retained until such times as redevelopment becomes viable.
Revisions to our 160,000 sq ft town centre retail scheme in Burnley have been finalised, making the scheme more readily deliverable in the current market. Our two schemes in Bodmin are currently on hold pending a market recovery, although alternative development solutions are being investigated which may allow us to commence earlier than we had thought if they successfully achieve our desired return.
We retain various other sites where we have tenant interest but will not commence development without acceptable pre-lets or plot sales. These include Longwell Green in Bristol, where we have a 20,000 sq ft small office unit scheme; Malvern, where we plan to develop a trade park, car showroom or hotel; Cumbernauld, where we own a seven acre employment site with planning consent for 83,000 sq ft of industrial accommodation; and at both Maidenhead and Richmond where we have office development opportunities and have improved the planning status so that as the market improves, the viability of these schemes will return sooner than otherwise expected.
