In 1979 Richard was valuing the industrial group known as Metal Closures and as a result of routine enquiries he ascertained that a property owned by this company at London Colney was going to be affected by a new orbital motorway later to be known as the M25. There was to be a restricted access on to and off the motorway at the Bell Roundabout and effectively the motorway took away some six or seven acres of agricultural land by compulsory purchase. The remaining land extended to approximately 23 acres of which 10 acres was the factory, 8.5 acres was the remaining agricultural land left and there was a site of 4.5 acres under lease to the Local Authority as a place for homeless persons. The only problem was that the whole ownership was within the greenbelt with only established use rights for the factory.
Over a period of some six or seven years, with the prospect of a motorway running through part of the site Richard managed to take the site out of the greenbelt, negotiate an all movements access on the Bell Roundabout and divert the electricity lines which previously ran across the site thereby negating any development opportunity. He had to revalue the property again in 1986 and its value as existing industrial and agricultural use was some £1.5 million. There was, however, a planning application in for industrial units on the 8.5 acres of fields adjacent to the factory units but this had not been approved.
However, his clients were fearful of a new Government introducing legislation for Development Land Tax and accordingly asked him to sell the property by way of a binding unconditional tender in September 1986 some two weeks before he was due to be married.
There were a number of conditional bids offered, but at the end of the day only three unconditional bids were forthcoming. The best offer came from Sainsburys who offered £10 million unconditionally for 23 acres with a top up of £7 million if they achieved planning consent for retail. Some five or six years later Sainsburys achieved a planning consent for a Savacentre unit of some 130,000 sq ft having also bought some land in the interim from Alcan.
Some years later when Sainsburys decided to close down the Savacentre concept half of the building was sold to Marks & Spencer for a price of £12 million in 1996. As part of that transaction, Sainsburys also granted an option to Marks & Spencer to purchase an additional site of 15,000 sq ft if they were successful in obtaining planning consent for an extension.
That option was due to expire in 2003 and eventually Marks & Spencer decided to exercise the option and offered a price of £3.85 million. Richard was then instructed by Chris Templeman of Sainsburys to act as Expert Witness in the subsequent Arbitration. As a result of Richard’s representations to the Arbitrator, his Award was made at a figure of £6.85 million. As this figure was above the Calderbank offer made of £6.5 million, costs followed the event.
As a result of that negotiation Richard secured the sale of the retail park opposite that Sainsburys were building and had substantially pre-let. A price of £62.66 million was achieved which reflected a yield of approx 4.35%.
The moral of this story is location and planning.
The existing use value of the 23 acres in 1986 was £1.5 million. With the prospect but no certainty of development value, the property was sold for £10 million plus a top up of £7 million. Some 17 years later some 15,000 sq ft of the site was sold for a record price of £6.85 million whilst the retail park of 58,212 sq ft was sold for £62.66 million which represents a price per sq ft of built floor area of £1,076. Compare that with the price of £10 million achieved in 1986 which represented approximately £10 per sq ft of land purchased!
There can be few examples like London Colney where one person’s knowledge and experience has been involved with a site from inception through development to continuing redevelopment and Arbitration over a period of 25 years.