Tony Wood, local resident and business owner
The National Planning Policy Framework (NPPF) often means planners focus on Financial Sustainability; a problem faced over the whole country, not just in Botley. To maximise the financial sustainability, prioritising productivity should be the prime concern when decision making about land resources. Making such decisions must have regard for the surrounding economic landscape and strategic imperatives. Proposals that build on existing strength can be considered as low risk. Those that revolutionise what an area delivers to the economy are high risk. The higher the risk there will be an expectation of a higher return to justify the investment. If there is doubt about the business case the proposal should be rejected. So is this a case of a developer pushing the law of mathematics – lets consider the numbers and risk factors of this proposal.
The Mace proposal:
Retail – This development continues to focus on serving the local population and workforce. There is limited scope to increase customer base but the housing and employment infrastructure needs a sustainable local retail offer to be viable. To increase its value you could:
- Promote flexibility and ease of trade (perhaps using the internet)
- Improve product value
- Build more buildings to contain more customers
Mace has pursued the build more buildings approach. Specifically, given the local limits on transport and parking, they have elected to build various types of accommodation. The size of the existing catchment area means this approach is unlikely to add more than 5% to the potential customer base.
At its peak, before the recession, the 2000/2500 sq ft retail units were generating c.£36,000/year; around £14-£16/sq ft. This is unlikely to increase, as the value of trade will remain broadly similar.
Student Flats – Student rents are lowest near the station, rising to their highest levels in Cowley (c.25-30% higher). Clearly location matters to students, valued more than accommodation standard; prices do not vary within the popular student areas. Students look for a minimum standard, not a gold standard. Landlords face a price cap.
Assuming new student accommodation will be worth the same as accommodation near the station, the 200 sq ft rooms will be worth c.£100/week, amounting to c.£26/sq ft. However, as communal areas cannot be charged for separately (unlike for leasehold flats), this means the real value will be closer to £18-£20/sq ft.
Development of student accommodation in more desirable locations may affect the rents chargeable for the student flats in Botley, for example the Carfax development for Christchurch College. Whilst Mace may succeed in letting these units, longer-term occupation will need a price competitive strategy; £18-£20/sq ft may be optimistic.
The Hotel – At 122 beds, this does not seem to add significantly to hotel accommodation in Oxford. Whilst the location is close to the City, poor transport links due to congestion and parking constraints count against it. Redbridge and Pear Tree sites, the closest competition, are co-located with the park and ride car parks. Pear Tree is undergoing substantial investment in transport and other infrastructure. It is growing its park and ride. There are many large business parks in the immediate vicinity providing a natural client base. Oxford Parkway station gives guests easy access to the city, all major business parks, London and eventually Cambridge. Growing the capacity, particularly at Pear Tree will be easy. Finding an operator for a Botley hotel is possible but they may end up discounting rooms more often than they may like.
Residential flats – more housing is required in Oxfordshire. However, the idea of building 100s of homes on green land next to a small town is becoming a challenge politically; therefore brown field sites look attractive. To grow economically there is a competing need. Commercial sites benefit from the principles of business clustering and need large sites; housing can be built on small sites. The government is adapting NPPF to prioritise small plot development.
The proposed 2-bed apartment fitted to a high standard currently has a rental value of c.£1200/month, based on an apartment size of between 700-750 sq ft – a value of about £20/ sq ft. These flats will be valued at around £260k. The flats are liquid assets meaning each unit is saleable for a relatively small sum of money. This is their true value to Mace.
An Alternative – Carter Jonas commercial letting agency recently said grade A accommodation developed in Oxford would command an asking price £30/ sq ft. Milton Park already averages £27/ sq ft. Oxford averages slightly less but that is because the legacy stock is lower grade. We always had office accommodation at West Way but tenants left because the buildings were poor quality.
Of course transport links into the city and parking limitations would still be a problem. They are issues confronting all landowners and businesses in the area and local councils are pondering solutions to these problems. There are exciting initiatives such as the Oxford City deal to consider and what challenges park and ride strategy or the Oxford flood relief scheme might pose. These are not considered in this application.
In conclusion, the vulnerability of the financial argument has driven the scale of the building. However it is questionable if the risk factors that are inherent in the proposal are sufficiently compensated by the expected return to describe it as ‘financially sustainable’. There is still an opportunity irrespective of what happens at the planning meeting. If we are serious about NPPF goals, let’s get round the table as a collective and solve the fundamental barriers to economic growth. Perhaps then we should decide what should be built on individual sites and Mace can deliver what they are really good at, which is creating a set of quality buildings.