high yielding office investment let to secretary of state ... › d2 ›...

High Yielding Office Investment Let to Secretary of State

with Residential Conversion Potential

Bridge House, Waterfront East, Merry Hill, Dudley, DY5 1XR

Executive Summary

• Well located office building let to the Secretary of State.

• Prominently positioned on The Waterfront Business Park within close proximity to the Merry Hill Shopping Centre (10 miles west of Birmingham city centre).

• Provides a modern office building totalling 42,841 sq ft and benefiting from excellent parking provision.

• Long leasehold interest (222 years unexpired at a peppercorn rent).

• Let to The Secretary of State for Communities and Local Government with a term certain of 3.4 years (and 9.4 years to lease expiry).

• Gross passing rent of £544,000 equating to £13.25 psf.

• Potential to convert to residential use from April 2021 (not subject to Article 4 directions).

• Offers are invited in excess of £5,550,000 (Five Million Five Hundred and Fifty Thousand Pounds).

• Assuming purchaser’s costs of 6.6%, this reflects a very attractive Net Initial Yield of 9.19% and a low capital value of £129 per sq ft.



Bridge House


Location

Bridge House is located on Waterfront East in

Brierley Hill, Dudley and is conveniently located 10

miles west of Birmingham and 7 miles south of

Wolverhampton.

The property is situated on the north side of

Waterfront Business Park, a modern and attractive

site, with Dudley Canal running through its centre,

a view of which the property enjoys.

Continued development over the last few years

has cemented the business park’s popularity with

the addition of canal side bars, cafes and lunch

stops. As part of this effort, the Waterfront

Estate’s large areas of landscaping and public

amenity spaces are maintained to a high standard.

Other nearby amenities include Intu Merry Hill, a

large shopping centre to the south of the business

park, offering a large selection of shops,

restaurants and a Vue Cinema.

Other well established nearby occupiers include:

Royal Mail, Lloyds TSB, Dudley Magistrates Court,

Virgin Media, Adecco, Arco, Copthorne Hotel, FS

Legal, Gallagher Health Insurance, Griffiths Pegg,

Home Start, MSO Workspace and Waldrons

Solicitors.


Transportation

There are several mainline rail options available in

the local area which are accessible by car:

Lye Station (5 minute drive) to:

• Stourbridge Junction - 4 mins (Connections to London Marylebone).

• Birmingham Moor Street - 30 mins.

Sandwell & Dudley Station (22 min drive) to:

• Birmingham New Street - 10 mins.

• London Euston - 1 hr 35 mins.

Dudley is well placed for access to Birmingham International Airport which can be reached by car via the M5/M6 in under an hour.

Business travellers and holiday goers alike benefit from its wide European and international destinations.

Road travel is a popular option for locals and commuters, with the A4036 connecting Waterfront to the M5 which can be reached within 25

minutes.

To the east, Birmingham city centre can be reached within 50 minutes by car, and to the north, Wolverhampton is a 30 minute drive.

In addition, a number of regular bus routes run through the Brierley Hill and Merry Hill area.

MIDLANDS METRO INVESTMENT

The Prime Minister has announced £250 million is to be invested in transport for

the West Midlands as part of a wider £1.7 billion ‘Transforming Cities’ initiative

across regional cities in England. The money will fund a new metro line running

from Wednesbury to the DY5 Enterprise Zone, supporting commuters within the

technology business park at Brierley Hill. The line will run through Great Bridge,

Horseley Heath, Dudley Port, Dudley town centre, the Waterfront and Merry Hill,

terminating at Brierley Hill town centre.

There are wide benefits to the investment including new job opportunities and

the potential for new housing sites which will add to the vast regeneration plans

for the area.

Description

Bridge House is a modern purpose built office building over basement,

ground and three upper floors.

The building is L shaped with a central double height atrium. The

building subdivides very naturally with West and South wings either side

of the central core which features a stair well and 2 lifts.

Features of the property include balconies, natural ventilation, double

glazing throughout plus a storage area and parking for 36 cars at

basement level reserved for Bridge House.

A further 1,500 parking spaces are provided for the wider business park.


Floor Area (sqm) Area (sq ft)

Basement 183.73 1,978

Ground 923.97 9,946

First 926.17 9,969

Second 972.96 10,473

Third 973.19 10,475

Total 3,980.02 42,841

Area Schedule

Within the lease, the floor area is stipulated as 41,050 sq ft.


Market Commentary

The Midlands has seen a rise in occupier

demand for offices located outside of town

centres and close to the motorway -

vacancies have fallen since the global crash

and rentals have increased substantially

across the region.

The combination of office stock being

removed from the supply line due to PD

Rights and a shortage of development since

the financial crisis has led to a fall in

vacancies, and a subsequent increase in

rents plus a shortening of incentives, and

net effective rents growing throughout the

Midlands.

Waterfront Business Park has become the

largest purpose built office stock for Brierly

Hill and Dudley. With its excellent location,

modern feel and well kept estate, it is

seeing an increasing number of professional

occupiers taking up leases including

Eurotool Ltd, Insurance Protector Group

and Arthur J Gallagher (UK) Ltd who all

took office space this year.

Investment in office space within the UK

remains strong, evident by the £1.4 billion

which was invested in the first half of 2017.

The West Midlands too has seen annual

increases in office investment (£3.4 billion in

2016, £2.7 billion in 2015 and £2.5 billion in

2014) showing that demand has not slowed.


Tenure Long leasehold interest from 24 June 2000 and expiring 22 December 2239, at a peppercorn rent.

Tenancy

The tenant has recently vacated and has sublet the whole of the third floor and the

larger south wing of the second floor of the building.

These sublettings have been carried out at below market level rents as evidenced by the letting at Pedmore House (86,649 sq ft) immediately adjacent which is let at £9.23 per sq ft.

Asset Management The property lends itself well to a number of asset management angles:

• Convert to residential under Permitted Development Rights.

• Add up to 3 storeys - we believe the property is well suited to benefit from an additional 1-3 storeys (subject to planning consent) based on the height of the Landmark building directly opposite (part 7-storeys) which was converted from office use, to provide 181 residential units in 2016.

• Negotiate a surrender and dilapidations settlement with Secretary of State, refurbish and re-let taking advantage of the new Enterprise Zone designation*.

* Since April 2017, the property has been situated in an Enterprise Zone (www.dy5enterprisezone.co.uk) Any new tenants (arriving before April 2022) who will benefit from Business Rates Relief of up to £55,000 pa for 5 years.

Tenant Lease Start Lease Expiry Tenant Break Rent

The Secretary of State

for Communities and

Local Government

19-Apr-1993 2-Apr-2027 2-Apr-2021 £544,000 pa

(£13.25 psf)


Further Information

Proposal

Offers are invited in excess of £5,550,000 (Five Million Five Hundred and Fifty Thousand Pounds).

Assuming purchaser’s costs of 6.6%, this reflects a very

attractive Net Initial Yield of 9.19% and a low capital value of £129

per sq ft.

VAT The property has been elected for VAT purposes. It is the intention of the

vendor to treat this transaction as a Transfer of a Going Concern (TOGC).

EPC The building has been awarded an EPC rating C.


Contact

+44(0)20 7266 8500

Chaim Aziz +44(0)7970 824 292

[email protected]

Barry Marshall +44(0)7968 037 643

[email protected]

www.estate-office.com

DISCLAIMER: The particulars are set out as a general outline only for the guidance of intended purchasers or lessees and do not constitute or constitute part of an offer or

contract. All descriptions, dimensions, reference to condition and necessary permissions for use and other details are given without responsibility and any intending

purchasers or tenants should not rely on them as statements or representations of fact, but must themselves by inspection or otherwise as to the correctness of each of

them. No person in the employment of Estate Office has an authority to make or give any representation or warranty whatsoever in relation to this property. Nov-17.

high yielding office investment let to secretary of state ... › d2 ›...

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