The Docklands Business Centre is housed in what were 4 buildings, each self contained and complete with all services, and built on 2 sides of a square with an enclosed common car park and podium. The buildings are now interconnected and function as one, but the short history of the site is interesting because it encapsulates several slices of modern financial history.
The Buildings were originally put up to take advantage of the Enterprise Zone tax relief incentives. The site was assembled in 1987/8 from two warehouse operators and the 50,000 sf development designed to consist of 4 units, each marketed as a tax efficient investment for a Landlord with large pre-tax profits. Rents were high – more than they are currently – and the boom was in full swing. Hastingwood did all the design work and then carried out the actual building using our construction arm. One building was earmarked for retention by Hastingwood and the others put on the market as investments or for owner occupation.
Construction was finished in 1991. The boom ended at about the same time.
Hastingwood had “sold” each building a number of times to a number of companies, each of whom failed to complete the purchase for a variety of excuses and two main reasons – no profits and no money. Some very well known companies of the time failed to perform and indeed 3 of them subsequently went into liquidation.
We were therefore in the uncomfortable position of having 4 buildings approaching completion, with normal bank finance in place, interest clocks ticking away ever more quickly as the boom was throttled back, no buyers, and a collapse in property values generally. The only solution was to keep the buildings ourselves and make them income producing before our banks ran out of nerve. It should also be said that we had other developments in a similar position, and perhaps the biggest difference between Hastingwood and other developers is that we had no one who did the obvious thing and gave up.
Our early lettings were conventional. Docklands had no infrastructure and little beyond its pioneering spirit, but the initial take up was good – and then the general crash of the early nineties developed out of the property slump and all our tenants started to either disappear or ask for their rents to be halved or worse. Our rescue had led us into fresh problems – instead of desperately looking for buyers, we were now desperately searching for tenants. Around us, all the people who had not yet decided to give up were reconsidering.
As part of a ‘try anything’ strategy, we started the Business Centre operation alongside conventional lets and short term lets, and as the nineties proceeded, the Docklands Business Centre took off. It soon took over the whole building, or rather all four of them. This was comparatively early in the story of managed offices and so we worked out for ourselves by listening to our tenants what was needed to make things work, and all the ‘added value’ services now offered by ourselves and others were put in place.
Currently the financial waters are calm, rents have recovered, but there is a degree of oversupply in Docklands which has led other Landlords in trouble to follow (unknowingly) in our footsteps and pursue the now fashionable Managed Office model as a way of taking some income until occupancy improves. They are somewhat burdened by high basic costs and the fact that floors on high rise tower buildings are not entirely suitable for Business Centres (in our view). They should be grateful that interest rates are low, even if the service charge costs are not. Those that confronted us in the early nineties – about 12% base rates for quite a time – made us determined to reduce or eliminate bank debt.
So, we survived disaster by a mixture of luck and hard work. We were fortunate that our basic building design turned out to be perfect for a Business Centre. We have been developing the Docklands Business Centre for over 10 years, and we have spun several value added businesses out of it, the most exciting of which are the Data Centre and Telephony engineering activities. It is also fortunate that our location happens to be right on top of an internet fibre backbone. Finally, in 10 years of sharing our buildings with a mixture of the great and the good, the small and the good, the well intentioned and the others, we have enough material to start a TV series – or has East Enders got there first?