Interchange Croydon highlights town’s resurgence as attractive office location

By - Monday 9th December, 2013

Real estate firm Savills gave Tom Lickley an exclusive look inside Interchange Croydon, which demonstrates why Croydon can once again be an attractive location for business

How Interchange Croydon will look once completed. Image courtesy of Savills.

With a reputation built upon its status as an office hub, in recent years Croydon has suffered significantly from the losses of major companies, such as Nestlé and Philips. Nestlé in particular was a major recent blow, with the confectionary giant moving fifteen miles down the road to Gatwick, albeit to an altogether different type of office space to the now vacant St. George’s Tower. The relocation of central government offices has also been damaging. Yet with the UK economy now on its way to recovery, and Croydon playing host to a swathe of residential, retail and infrastructure developments, is now the time for companies to re-invest in commercial office space in the town?

Certainly, on price alone Croydon offers a highly competitive package. With total occupancy costs in the town averaging under £40 per square foot (psf), and in particular proportionately low service charges, Croydon compares favourably with competitors. Elsewhere in south London, in Wimbledon for instance, total occupancy costs are near £50 psf. In Kings Cross, another part of London undergoing considerable regeneration, total occupancy costs are £80 psf. In the West End, this rises to over £160 psf.

Croydon has a unique mix of relatively cheap residential and commercial real estate

The fact that Croydon remains so cheap is perhaps surprising. Andrew Willcock, from Real Estate services firm Savills, is effervescent about the location Croydon occupies: “With Victoria accessible in 16 minutes by train, Croydon offers the benefits of central London at lower rents.” He continues, “The £1 billion redevelopment of Croydon’s retail core as well as the completion of Saffron Square – a residential development on Wellesley Road – will provide a new public square and an array of restaurants and shops. A number of other committed public realm and infrastructure improvements in the centre of Croydon and to both West and East Croydon stations will further change the area into a pleasant destination to visit, work and live.”

It is clear that Croydon is once again becoming an attractive location for occupiers. Following a low in 2011, when less than 10,000 sq ft of office space was taken up, in the year 2013 – up to October – just under 150,000 sq ft had been taken up, including big deals (between 20,000 and 50,000 sq ft taken up in a single deal). In addition to this, the percentage of  public, financial services and professional services sector take-up are all above the ten year average for the M25 area.

Indeed, Croydon is already outperforming both England and UK averages when it comes to average gross annual wages (around £26,000 compared to the UK average of £21,000) and has a higher than average educated workforce than the UK average, with just over 30% of Croydon residents holding a degree or above. With house prices still relatively cheap in the town compared to the rest of London, it is certainly arguable that Croydon has a unique mix of relatively cheap residential and commercial real estate.

How the completely renovated atrium of Interchange Croydon will look once complete. Image courtesy of Savills.

A great example of what Croydon can offer in terms of 21st Century business space is Interchange Croydon, the former BT offices located next to West Croydon station being marketed by Savills. The building offers a large, flexible, Grade A office space – at 182,000 sq ft – something which has been lacking in Croydon of late; 2013 is the first year since 2002 where Grade A space has become available – over 200,000 sq ft by October. Indeed, Willcock suggests that “until now, Grade A office space with flexible and large floor plates has been in short supply in Croydon and this has directly impacted the number of new corporate occupiers attracted to the area”.

As mentioned, transport connectivity is excellent; this will be further boosted by the completion of the new walkway linking East Croydon to the heart of the town, cutting walking time and distance to the office. The large atrium/lobby area wouldn’t look out of place in the City – high ceilings, large glass frontage and a spacious reception area offer a grand entrance to Interchange. On the higher levels, views over Croydon are excellent; and, with Westfield/Hammerson’s development on one side, Saffron Square’s tower on another, and ISLAND Croydon on a third, the town’s transformation will be observable.

One can certainly see tech companies thriving in the building

Savills are open to attracting a number of industries. Willcock even hints towards those involved in Croydon Tech City: ”Interchange aims to provide high specification accommodation that will encourage such businesses – whether professional, financial, construction, tech – to Croydon and moreover allows existing occupiers to upgrade to Grade A space at a cost comparable to the second-hand offices they already reside in due to lower total occupancy costs.” One can certainly see tech companies thriving in the building – with its large atrium and windows encouraging creative ideas and flexible space allowing for a number of different tech companies clustering on individual floors, the opportunities are high.

Of course, the redevelopment of Interchange does not just benefit business; with Croydon Council receiving £4.6 million in funding from the GLA for the improvement of the West Croydon area, which will include a new entrance for West Croydon station, the office development ties in well with Saffron Square, the future office to residential conversion of Delta Point and the Lazarus-like return of ISLAND Croydon. Added to the recently completed Renaissance building by East Croydon station, and Croydon’s revival is not just retail and residential focussed – but office activity can once again help drive the economy of the town.

All statistics thanks to Savills UK.

Tom Lickley

Tom Lickley

Contributing a variety of roles to the Citizen since early 2013, Tom now focuses upon regeneration, urbanism and real estate writing. He is a strategic communications consultant specialising in the real estate sector, and counts a number of the world's largest investment and fund management companies amongst his clients.

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