11 ST JAMES S SQUARE MANCHESTER, M2 6WH Freehold City Centre Office Investment and Refurbishment Opportunity

Transcription

1 11 ST JAMES S SQUARE MANCHESTER, M2 6WH Freehold City Centre Office Investment and Refurbishment Opportunity

2 INVESTMENT SUMMARY A prime location Manchester City Centre office refurbishment opportunity Located on John Dalton Street, close to the junction with Cross Street adjacent to Albert Square, in the heart of the CBD The immediate location will improve as a number of office redevelopments and infrastructure projects are completed An office building arranged over four floors above ground floor retail units with a total net internal floor area of 19,862 sq ft (1,845 sq m) (excluding storage areas) Opportunity to refurbish the office floors and re-let in a strong occupational market with an anticipated estimated rental value of 21 per sq ft Refurbishment project is supported by the current passing rent of 297,424 per annum, comprising income from the ground floor retail units and short term agreements on two of the office floors, storage areas and car parking The property is held freehold We are instructed to seek offers in excess of 4,750,000 subject to contract and exclusive of VAT. (N.B. the property is not elected for VAT purposes) A purchase at this level, assuming that the retail accommodation is analysed at 6.5% and the car parking at 50,000 per space, reflects a low capital value of 161 per sq ft across the office accommodation At this level, the purchaser will also benefit from a net initial yield of 5.88%, assuming normal purchaser s costs Manchester 11 St James s Square 2

3 TO M60 (J15) OLDFIELD ROAD ADELPHI STREET TO LIVERPOOL M62 (VIA M602) REGENT ROAD A57 SILK STREET DAWSON STREET FRIARS ROAD TRINITY SALFORD CENTRAL LIVERPOOL STREET LOCATION WAY CHAPEL STREET BRIDGE STREET QUAY STREET SPINNINGFIELDS DEANSGATE BRIDGEWATER VIADUCT DEANSGATE VICTORIA STREET PETER STREET LOWER MOSLEY STREET OXFORD ROAD PRINCESS STREET CENTRAL SPINE Manchester is the largest and fastest growing regional centre in the UK, generating wealth equal to that of Leeds, Liverpool and Sheffield combined. It comes second only to London both in business terms and the quality of its city environment and retail and leisure amenities. Greater Manchester is home to a population of 2.6 million and accounts for 28 billion of the region s GDP. The workforce, of which 65% are under 45 years old, has excellent language, technical and customer service skills. Approximately 7 million people live within an hour s drive of the city allowing employers to draw upon a large and skilled workforce. The city has a broad based economy with expertise and scale in a number of industries including Financial and Professional Services, Technology, Bio Science, Medical, Creative, New Media and Digital, Aviation, Food and Logistics. Indeed, 80 out of the FTSE 100 companies have a base in the city together with over 50 international banks and 600 major overseas companies. Manchester received 1.6 billion of FDI investment between 2003 and VICTORIA MILLER Metrolink OXFORD STREET STREET SHUDE HILL PORTLAND STREET ROCHDALE ROAD LEVER STREET NEWTON STREET PICCADILLY LONDON ROAD A664 A6 OR STREET OLDHAM ROAD A62 MANCHESTER GREAT ANCOATS STREET PICCADILLY STARD TO M60 (J23) POLLARD STREET Financial and professional services account for 56% of jobs in Manchester, ranking it in the top 30 cities in the world for this sector and office based employment is forecast to rise over the coming years. Postcode: M2 6WH Manchester has one of the largest student populations in Europe with approximately 100,000 students at four universities providing the city with leading research and development capabilities, coupled with a highly qualified workforce. This is a key part of the city s economy as it results in a wide range of high quality skilled employees being located in and around the city. The city s importance as a cultural and media hub is underlined by the significant relocation of elements of the BBC including Sports, News and Children s television/radio from London to Manchester. Manchester s ever growing profile as a tourist destination has continued to be boosted by the improved rail network with Manchester Piccadilly Station now within two hours travel distance of London and benefiting from three services an hour. Manchester Airport is the UK s third largest Airport and is 20 minutes from the city centre, handling in the region of 22 million passengers per annum, with this figure anticipated to rise to 50 million by Manchester is recognised as an international sporting destination and in 2002 the city hosted the Commonwealth Games. The city is home to Manchester United and Manchester City football clubs, both of which draw in a high number of visitors in both domestic and European competition. The region s sporting importance remains strong with recent major events including the Paralympic World Cup, UEFA Cup Final, FINA World Swimming Championships, UCI Track Cycling World Championships and Bupa Great Manchester Run. Manchester 11 St James s Square 3

4 INWARD INVESTMENT Manchester has attracted significant inward investment with recent examples including the BBC, Bank of New York Mellon, Ford, Worldpay and Freshfields. Inward investment has also originated from the Middle East, China, USA and Europe, with the strength of demand resulting in yield compression on prime assets over the course of the past 24 months. This is set to continue over the next five years as a number of major strategic developments progress, many benefitting from involvement of non UK based investors, including: An 800 million, 20 acre mixed use redevelopment scheme. The first building, One Angel Square attracted bids from six continents. It was purchased by a Joint Venture involving both European and Far Eastern equity. A three phase scheme on land adjacent to Manchester City Football Stadium as a result of inward investment from the United Arab Emirates through sponsorship by Etihad Airways. This is one of the largest development schemes in the UK with a proposed 5 million sq ft of office, logistics and manufacturing accommodation. There has been a reported 800 million investment by Beijing Construction Engineering Group one of the largest single investments by a Chinese company in Britain. We understand that the United Arab Emirates also provide investment in the scheme alongside investment in the Etihad Campus. A 200 acre mixed-use development with 350 million invested in the first phase of 36 acres completed in MediaCityUK is supported by MIDAS (Manchester Investment Development Agency Service) which works with the ten Local Authorities of Greater Manchester to attract inward investment into the region by promoting Manchester as a leading European business location. The site which was home to Granada Television for 50 years has a masterplan including over 2,400 residential units, a new world class cultural venue, innovative work space and a rich mix of retail and leisure. Mayfield A planned 850m mixed-use community development on a 24 acre site adjacent to Piccadilly station. It is envisaged that the site, once home to the Mayfield railway station, will provide 1,300 homes, 75,000 sq m of office space, a 350-bedroom hotel, retail and leisure facilities and a new city park in total creating over 7,500 office, retail, leisure and construction jobs. Manchester 11 St James s Square 4

5 Ordsall Chord CGi Oxford Road Station CGi Second City Crossing In addition to inward investment, there are also a number of ongoing infrastructure projects in the pipeline, which will improve the city. Second City Crossing A new cross City Centre route and station to increase capacity on the Metrolink. Victoria Station HS2 CGi Ordsall Chord A new railway line currently under construction to link Manchester s Piccadilly and Victoria stations which will enable faster, more frequent services to run across the North of England. Victoria Station Recently completed 44m upgrade including new platforms and tracks which improve links into Manchester City Centre. HS2 and HS3 High speed rail links to the South and across the North which will shorten journey times between major economic centres and free up capacity for local services across the region. Manchester is seen as a progressive city and is the focus of the Government s Northern Powerhouse initiative. The proposal involves improvement to transport links, investment in science and innovation, and devolution of powers. Greater Manchester will be run by an elected mayor from 2017 and, as part of plans to devolve fiscal power closer to the point of spending, the city was given power over its health budget in February Manchester 11 St James s Square 5

6 SITUATION The property is situated at the heart of Manchester City Centre s prime financial and professional district. The building is located on St James s Square at its junction with John Dalton Street, close to Manchester Town Hall and broadly equidistant from Spinningfields and St Peter s Square. The property benefits from excellent retail and leisure provision being within close proximity to the retail core, Albert Square, Spinningfields, St Peter s Square and Peter Street. Additionally, St Peter s Square Metrolink Station is within 300 metres of the property, providing connectivity to the city centre and suburban network and the mainline train stations - Manchester Piccadilly and Manchester Victoria. The micro-location will continue to improve as a number of initiatives and development schemes progress as illustrated below: Metrolink Second City Crossing A new cross City Centre route linking St Peter s Square and Manchester Victoria will increase capacity on the Metrolink. A new station has also opened nearby at Exchange Square. C Union A 66,229 sq ft office acquired by Bruntwood in 2015 who are now on site refurbishing and remodelling the building. Second City Crossing A Heron House A joint venture between Manchester City Council and Bruntwood which will provide a refurbished office scheme. B Dalton Place Immediately adjacent to the subject property, Dalton Place is being redeveloped by Tesco Pension Fund to offer 65,000 sq ft of office space over six upper floors. The ground floor has been reconfigured into four units aimed at restaurant and café operators. F G E B JOHN DALTON STREET D A C Albert Square CROSS STREET PRINCESS STREET Bing maps 2016 D Brazennose House M&G are proposing a new 103,700 sq ft Grade A office due for completion in E Island Site A GMPVF owned site to be brought forward for redevelopment. F OneTwoFive Deansgate Proposed 125,000 sq ft office re-development scheme. G John Dalton House A Hotel scheme by Axa. Manchester 11 St James s Square 6

7 Royal Exchange House of Fraser DEANSGATE St Ann s Square 40 Spring Gardens KING STREET OneTwoFive Deansgate John Dalton House Island Site CROSS STREET Chancery Place Spinningfields Brazennose House Heron House Union Second City Crossing Albert Square 55 Princess Street METROLINK Belvedere Town Hall Central Library St Peters Square Great Northern Warehouse Bing maps 2016 Manchester 11 St James s Square 7

8 DESCRIPTION The property is arranged as offices over four floors above ground floor retail units. All the office floors benefit from suspended ceilings, comfort cooling, perimeter trunking, male and female WCs and shower facilities. The first floor accommodation has been previously refurbished and benefits from a more modern specification and full height glazing. The main entrance is from John Dalton Street into a double height reception which gives access to two passenger lifts serving all floors. ST JAMES 7 FOUR YARDS Three car parking spaces are located within a secure car park accessed from Four Yards. ACCOMMODATION EET 11 The Property has been professionally referenced in accordance with the RICS Property Measurement [incorporating International Property Measurement Standards] 1st Edition, May The measured survey will be assignable to the purchaser. Floor areas are set out in the tenancy schedule n Entry Ordnance Survey Crown Copyright All rights reserved. Licence number Plotted Scale - 1:413 For indicative purposes only. Manchester 11 St James s Square 8

9 TENANCY The property is let in accordance with the tenancy schedule below. Unit Tenant Area NIA (sq ft) Rent pa Rent psf / ITZA / per space Lease Start Lease Expiry 4th Floor Offices WH Ireland 4,510 76, /09/2017 3rd Floor Offices WH Ireland 4,502 76, /05/2017 2nd Floor Offices Vacant 4,478 1st Floor Offices Vacant 3,107 Unit A Retail Unit B Retail Unit C Retail Kiosk Kenner AV solutions Donald F Cooper My Thai St James Square Limited Yellow Jersey Coffee LLP 937 (793 ITZA) 710 (530 ITZA) 1,476 (1,085 ITZA) 142 (142 ITZA) Rent Review 43, /10/ /10/ /10/ , /06/ /06/ /06/ , /07/ /06/ /07/ , /04/ /04/2017 Car Parking WH Ireland 3 9,000 3,000 30/09/2017 Store A1 Vacant 252 Comments A new contracted out lease will be entered into upon completion. WH Ireland will have no dilapidations liability or reinstatement obligation at the expiry of the lease. A new contracted out lease will be entered into upon completion. WH Ireland will have no dilapidations liability or reinstatement obligation at the expiry of the lease. t/a Loewe. Rent review outstanding. t/a Dalton Street Salon. Rent review outstanding. Lease originally granted to Karen L Lyons but assigned to Donald F Cooper. Guarantee from My Thai Leeds Limited. Lease assigned to My Thai St James Square Limited. Rent deposit of 25,000. Lease was originally to Caffiene & Co Ltd and was assigned to the Yellow Jersey Coffee LLP with an AGA from the outgoing tenant. Rent deposit of 2,275. Three car parking spaces. A new licence will be granted to run alongside the 4th Floor lease. Store A2 WH Ireland /09/2017 A new licence will be granted to run alongside the 4th Floor lease. Store B My Thai St James Square Limited Store C Vacant 193 Store D1 My Thai St James Square Limited /06/ /06/2020 Annual Fee subject to annual RPI increases /06/ /06/2016 Annual Fee subject to annual RPI increases. Store D2 Donald F Cooper 74 Tenant has a right to use this space pursuant to a right granted in the lease of Unit B. Additional Storage Vacant 1,630 Electrics Room Seddon Estates 22/06/ /06/3003 TOTAL 22, ,424 Comprises two further store rooms and the old bank vault. The bank vault will remain in situ upon disposal. Peppercorn rent. Lease of a meter room used by Seddon Estates (or the current owner of the adjoining property). NB: IPMS areas for office accommodation are available upon request. Basement and storage areas stated are on an IPMS basis. Manchester 11 St James s Square 9

10 OCCUPATIONAL MARKET Manchester is the best performing UK regional city centre market outside London. Above average levels of office space was transacted in Manchester in both 2014 and 2015 and take up is expected to hit the 5 year average of 1 m sq ft in Key features of the Manchester City Centre leasing market include: Good performance following the EU Referendum result with a number of significant deals completing since the end of June. Q take up was the highest quarterly amount for 2016 so far. The supply of Grade A space in the Manchester city core has declined by 61% since This has resulted in a significant amount of pre-let activity, further restricting new supply. As a result of this, occupiers are instead considering refurbished Grade B accommodation putting further upward pressure on rents in this sector. Recent comparable transactions include: Building Date Size sq ft Rent (psf) Tenant 2 Mount Street Sep , Headspace 55 Princess Street Sep , Amicus 26 Cross Street Aug , D Reid Centurion House July , St James WM Clarence House July , Maven Capital Manchester 11 St James s Square 10

11 INVESTMENT MARKET Manchester is ranked 46th globally for direct commercial real estate investment since 2008 with over 4bn transacted. The city has a diverse base of UK and International real estate investors due to its pricing discount from London, market leading rental growth prospects and its status as the UK s second city. Over 650m of office CBD transactions were recorded in Manchester during Prime city centre yields stand at 5%. In the second half of 2016, we have seen continued demand for asset management opportunities given the rental growth prospects that these provide. The table below demonstrates recent, comparable vacant possession investment transactions for buildings requiring refurbishment. Building Date Size (sq ft) WAULT/ Vacancy Price Capital Value ( psf) Fountain Court Jan ,000 Vacant 4,650, Fountain St Aug ,619 Vacant 8,600, St James s House Jun ,294 Vacant 18,000, St James Court Jan ,665 Vacant 6,500, TENURE We understand that the property is held Freehold under registered title GM Manchester 11 St James s Square 11

12 EPC The Property has an EPC rating of D92. PROPOSAL VAT The property is not elected for VAT. VAT will therefore not be payable on the purchase. All figures listed are exclusive of VAT. We are instructed to seek offers in excess of 4,750,000 subject to contract and exclusive of VAT. A purchase at this level, assuming that the retail accommodation is analysed at 6.5% and the car parking at 50,000 per space, reflects a low capital value of 161 per sq ft across the office accommodation. At this level, the purchaser will also benefit from a net initial yield of 5.88% assuming standard purchaser s costs by virtue of the passing rent on the ground floor units and short term income on two of the office floors. FURTHER INFORMATION For further information or to arrange an inspection of the property, please contact: Andrew Hilbourne andrew.hilbourne@eu.jll.com Joshua Downes joshua.downes@eu.jll.com MISREPRESENTATION ACT JLL, for themselves and for the vendors of this property, whose agents they are, give notice that (i) the particulars and any further information communicated by any means to potential purchasers of the property described in the particulars, or their advisers, in connection with the possible sale of the property are provided solely for the purpose of assisting potential purchasers in deciding whether they wish to proceed with further investigation of the property and do not constitute either the whole or any part of an invitation, offer or contract for sale of the property; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation and other details are given in good faith and are believed to be correct as at the date of the particulars (or the date of the relevant information if earlier). However, potential purchasers are not entitled to rely on them as statements or representations of fact but should satisfy themselves by searches, enquiries, surveys and inspections or otherwise with regard to the accuracy of such details. No responsibility or liability is or will be accepted by JLL, the vendor(s) of the property or any of their respective subsidiaries, affiliates, directors, officers, representatives, employees, advisors, or agents for any loss or damage suffered by any party, resulting from reliance on the particulars or any other information communicated by any means to that party, or its advisers, in connection with the possible sale of the property. No person in the employment of Jones Lang LaSalle or the vendor(s) has authority to make or give any representation or warranty, express or implied, in relation to the property. References to JLL include any joint agents acting with Jones Lang LaSalle. Designed by Graphic Outlines Ltd Manchester 11 St James s Square 12