Slough Estates

Most projects let to external contractors are done so under the company's progressive design and construction form of contract. This is a negotiated contract where risk is shared between company and contractor, and is a mix of construction management and design-and-build. The project starts as a construction management form of contract; then, as risks decrease and the design becomes defined, the contract becomes fixed-price design-and-build.

Slough Estates has long-term relationships with its main contractors, with which it has developed strategic alliances.

Current and future projects
Slough Estates is a major player in the development of business and warehouse parks. The majority of its activity in the UK centres on the South-east, notably around Slough and the Thames Valley. The company's latest annual results show a modest fall in total UK investment to £118m. Looking to the future, the company states that projects currently under construction and land held under account will result in development costs of close to £1 bn.

The group's current development programme in the UK totals close to 70,000 m². About 30% of this is centred around Slough and comprises office/research and development schemes. The majority of the remainder is located in the South-east. Development opportunities in the UK currently amount to about 326,000 m². The estimated cost of developing these is £335m, which at the current expenditure levels suggests a three-year development pipeline.

The largest development is the Farnborough Business Park (155,000 m² at a cost of about £200m). Although the group notes that in the current climate, tenant demand is weaker, Slough Estates does benefit from having a very diverse customer base, and so will suffer less than others.

Essential information
In its recent interim statement, Slough Estates reported investment and property purchase costs of close to £77m. This was lower than recorded in the six months to June 2001, when £108m was spent. This probably relates to softer conditions in key markets. The company reported lower tenant demand in the office sector and flat conditions in the industrial market, but buoyancy in the retail sector. The group's UK occupancy rate has fallen to 92%, largely the result of two industrial park completions.

Meanwhile, work on the Farnborough Business Park continues, with 80% of infrastructure work completed, as well as two office buildings. At Cambridge Business Park, infrastructure work has been completed to support 53,000 m² of development.