MEPC uses the procurement route best suited to the needs of a project. For schemes that are well defined, it uses negotiated, lump-sum, design-and-build contracts. This route is taken for the vast majority of its work.
For projects that are more difficult to define, and where there is a need to react to change or the tenant has particular needs, the company will use construction management contracts. This procurement route is also applicable for buildings requiring complex laboratories and research facilities.
MEPC has used traditional lump-sum contracts, although not often. It has a limited number of suppliers and will benchmark work across its business parks. These benchmarks include time and cost measurements.
Current and future projects
MEPC continued its transformation to a business space developer in 2001 when it sold £1.8bn of property. Capital released through disposals have been either ploughed back into current developments, or returned to shareholders. The group achieved capital expenditure of close to £280m in 2001. Major projects completed include: Granta Park in Cambridge (14,700 m2); Chineham Park in Basingstoke (8000 m2); Babcock Park in Glasgow (10,400 m2); and Axis Park near Heathrow (11,800 m2).
At the end of 2001, the group had 14 projects under way with a development value of £222m. The total anticipated rental income from this development stage was estimated at £19m a year (excluding pre-sold projects). At the end of 2001, nearly 60% of the space was already let. Notable projects being developed included Bute Square Cardiff (13,000 m2) and Leavesden Park near Watford (27,600 m2, the majority of which is let to BT).
MEPC's next stage of development looks less certain, especially given the present downturn in the office market. The company has close to 100 ha of land with, or upon which it expects to gain, planning permission. From this they expect to develop close to 450,000 m2 of lettable space. The total cost associated with the developments is £750m. Looking beyond that programme, MEPC owns 267 ha of land upon which it hopes to develop business park space.
In its latest interim results, MEPC announced that of its £1.4bn of assets held, nearly 80% related to the office and business park sector. The group also holds joint ventures with Westfield at six shopping centres. Planning has recently been secured on major retail extensions in Guildford and Derby.
In the most recent six months, MEPC developed 82,300 m2 of space, of which 60% was reported as let. The group has only 19,900 m2 to complete in the current development phase. Looking ahead, it has significant sites available, although will await pre-lets before commencing. No speculative starts have been progressed since early 2001.
Head of projects Andrew Scrivener Contact details
103 Wigmore Street,
London W1U 1AH
phone: 020-7911 5300
fax: 020-7499 0650
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