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The Daedalus Enterprise Zone: Off the radar
Estates Gazette – 30 March 2013

Southampton and Portsmouth's aviation and marine industry-themed enterprise zone has scored a couple of early hits with lettings, but for most in the property market it is not on their radar. By Mark Smulian

Of the first two occupiers found by the Homes and Communities Agency for the Daedalus site, Sapphire Aviation is stationed in hangars, while Bournemouth Avionics is using temporary buildings pending a move into a hangar once asbestos removal is complete.

Both are happy to make do because their businesses require access to an airfield, and Daedalus is a former military airport.

The HCA has a package of infrastructure works to complete to properly ready the site and will survey the 130 hangars for asbestos and structural problems. It appointed Jones Lang LaSalle in February to market the zone, replacing DTZ.

Sapphire Aviation managing director Steve Ford chose Daedalus because his new business needed an airfield that could handle storage and maintenance for private aircraft. "We need somewhere that will be available as an airfield long term before we can invest," he says. "Other sites were owned by property developers and we did not have confidence that at some point they would not apply for change of use, and we couldn't take that risk."

A planning policy favouring air and marine industries, and the HCA's ownership, gave him the necessary confidence, and the business rate concession has freed money to invest in the business.

He has taken three hangars totalling 19,500 sq ft and hopes to replace these with a new 20,000 sq ft hangar and then build another of similar size. Meanwhile, Bournemouth Avionics owner Brian Cook says it was "quite a draw" that Daedalus has an all-weather runway rather than a grass one unusable in wet weather.

"Private flying airfields rarely have hard runways," he says. "The business rate concession was nice to have too, so I didn't really look anywhere else.

The only other definite occupier is Fareham College, which has bought a site at Daedalus for its 12m Centre of Excellence for Engineering, Manufacturing and Advanced Skills Technology. It is due to open in September 2014 if the planning application submitted in early March is granted.

However, local property industry figures think any significant market impact from Daedalus is some way off.

Robin Dickens, director of business space at Lambert Smith Hampton, says: "I don't think the market is really aware of Daedalus yet. Having an airfield and a lot of new infrastructure is quite a USP, and I doubt there are many opportunities elsewhere with an airfield in close proximity to large centres of the population.

"With the college also going in you could well see it attract some major player that needs that, possibly from another part of the country, if marketed right."

There is debate about whether Daedalus, with its incentives (see box), will be competition to existing industrial sites. Dickens sits in the unconcerned camp, pointing out that regular warehouse occupiers want easy access to the motorway, which the enterprise zone does not have.

CBRE senior director Jon Diaper agrees: "It is a difficult location as it's 10 miles from the M27, and the road links are not great. I could see aviation and marine industries going there, but few general commercial ones. I suspect when people are making location decisions the amount of business rates is not a major factor."

Martin Hastelow, head of Savills' Southampton office, says the industrial market in the area is already competitive because of the lack of suitable stock available to occupiers. However, he adds: "I have not had many enquiries yet about it [Daedalus] and I think its market is some way off."

The common response from agents seems to be that the enterprise zone currently has a low profile, but that it is early days.

Naturally, those involved are more optimistic. Gary Jeffries, managing director of local property firm Hughes Ellard and a director of Solent Local Enterprise Partnership, which works with the HCA to promote the enterprise zone, says there has been 70-80 expressions of interest so far, from "a who's who of the aviation industry".

"My sense is that enquiries and occupiers are coming from those who would be new to the area," he adds.

This is a good thing because the policy is to encourage inward investment into the enterprise zone rather than relocations from within the existing area. The key question then must be how much of that inward investment interest will follow the likes of Sapphire Aviation and actually take space. Jeffries says: "We are talking to some big names and working on getting a prime contractor in, that will be transformational."

Daedalus Enterprise Zone

The enterprise zone occupies 200 acres of the 470-acre former Daedalus military airfield, a small part of which is still used by the Maritime & Coastguard Agency.

It offers a business rate reduction of up to 255,000 over five years.

The Solent Local Enterprise Partnership has a target of creating 3,500 jobs at Daedalus by 2026.

The Hangars East and West areas together offer 17,500 sq ft of space adjacent to the runway.

Fareham and Gosport borough councils have a joint planning policy for employment uses that maximise use of the runway and a slipway to the Solent.

The HCA also plans to build 200 homes on the site.