FOR SALE PRIME TOWNHOUSE OFFICE INVESTMENT 21 YOUNG STREET EDINBURGH, EH2 4HU OFFERS IN EXCESS OF 790,000 REPRESENTING AN ATTRACTIVE NET INITIAL OF 5.75% AND A LOW CAPITAL VALUE OF 265 PSF.
INVESTMENT SUMMARY Let to City & Wharf Ltd on a lease expiring on 1st May 2026, with a tenant option to extend for 5 + 5 years on giving 6 months notice to the landlord. There is a tenant only break option on 2nd October 2022 on giving 6 months notice Annual rental income of 47,712 per annum equating to a low passing rent of 16 psf The next rent review is due on 2nd May 2022 and is subject to a fixed rental increase in line with RPI, compounded every 5 years, capped and collared at 2% and 4% respectively A rare opportunity to acquire a single let end of terrace townhouse located within 40 metres of Charlotte Square in the city centre Offers in excess of 790,000 representing an attractive net initial of 5.75% and a capital value of 265 psf. All figures quoted assume the usual purchaser s costs including LBTT LOCATION Edinburgh, Scotland s capital city and UNESCO World Heritage Site, sits at the heart of a diverse regional economy that provides the seat of Scotland s government, is home to the nation s legal system and is a globally recognised financial centre. The city has a population of approximately 498,800 and a large regional catchment of more than 1.6 million people. Edinburgh s biggest strength is the range of successful technology companies in the city. Many of them were started in the city and are now competing on the world stage. Some of the best known names include Skyscanner, Fanduel and Rockstar. Edinburgh is recognised for its strength in the financial sector, with around 500 billion worth of funds under management, ranking it as the eleventh largest hedge fund management centre in the world. The city is home to financial institutions such as Aberdeen Standard Investments, Royal Bank of Scotland, Lloyds Banking Group, Clydesdale Bank, Virgin Money and Tesco Bank. QUEENSFERRY ST MELVILLE ST SHANDWICK PL MORAY PLACE E ST ER L ANE CHARLOTTE ALBYN PL LOTHIAN R OAD HERIOT R OW CASTLE ST QUEEN STREE T GEORGE STREE T Edinburgh Castle HANOVER ST ST ANDREW SQUARE SQUARE P R INCES S T REE T OWE ST FREDERICK ST H I LL S T THISTLE ST THISTLE ST ROSE S TREE T THE MOUND GEORGE IV BRIDGE YORK PLACE Bus Station Waverley Station HIGH STREET ST CEN NORTH BRID High value service industries account for 86% of Edinburgh s employment. It is therefore not surprising that Edinburgh s gross value added (GVA) per head is 1.7 times the UK average, totalling 34,562. The city has four universities providing an education hub for over 100,000 students, including 16,000 international students. This in part accounts for Edinburgh s workforce being one of the most highly educated in the UK with 55% holding a degree or professional level qualification. ORPHICHEN ST SON ST ROAD GROVE ST SEMPLE ST CASTLE TERR BREAD ST LADY LAWSON ST WEST PORT L AU RISTON PLAC E GRASSMARKET CHAMBERS S PONTON ST Edinburgh attracts 3.5 million tourists every year and is the second most visited city in the UK after London. In addition, the city is host to the world s largest annual arts festival adding an estimated 245 million to the local economy. OUNTAINBRIDGE MEADOWS
George Street Princes Street 2 8 6 7 1 3 D 5 E 9 F Charlotte Square A 21 YOUNG STREET B C SITUATION 21 Young Street is situated within Edinburgh s golden rectangle which is considered as the preferred location for office occupiers within the city. Young Street is ideally located just off Charlotte Square, providing excellent connectivity to the square, the West End, George Street and Princes Street all of which offer a wide range of shops, boutiques, bars, restaurants and cafes. The Cambridge Bar, Browns, Gusto, Gourmet Burger Kitchen and Los Iguanas are all within a few minutes walking distance. Nearby office occupiers include Walter Scott & Partners, Old Mutual Global Investors, Institute of Directors and Hampden & Co. There are several public transport links close by, including multiple bus routes and tram stops on Princes Street. Both train stations Haymarket and Waverley are also within walking distance and Edinburgh International Airport is approximately 8 miles away. There is also on street metred car parking outside the property. Nearby Occupiers: Bars & Restaurants: A B C D E F Cazenove Capital Hampden & Co Institute of Directors Lomond Capital People s Postcode Lottery Walter Scott & Partners 1 2 3 4 5 6 Browns Copper Blossom Gourmet Burger Kitchen Gusto Los Iguanas The Cambridge Bar 7 8 9 Tigerlily Tonic Whighams
DESCRIPTION 21 Young Street is a self-contained end terrace townhouse office. The property extends over basement, ground and two upper floors with the following approximate net internal areas: FLOOR SQ M SQ FT Basement 54.28 584 Ground 73.59 792 First 74.60 803 Second 74.58 803 Total 277.05 2,982 The property provides cellular office accommodation over the ground, first and second floors with amenity space in the basement, including a kitchen, break out space, WCs, shower room, comms room and secure storage. As a result of its prominent corner position the property benefits from fantastic levels of natural daylight. The property, which benefits from good floor to ceiling heights and original features, was entirely overhauled in 2013 including new plumbing, wiring and CAT5 cabling throughout, new central heating and boiler, new WC s, kitchen, shower room and breakout room, new comms room and a total internal and external redecoration.
PLANNING The property is Category A listed and is located within the New Town Conservation Area and the UNESCO World Heritage Site. 21 Young Street currently benefits from Use Class 4 (Business) and is used as an office. The property has the potential for conversion to a number of alternative uses, subject to obtaining the relevant planning consents. TENANCY The property is let on FRI terms to City & Wharf Ltd trading as Nexus Business Space until 2nd May 2026, with a tenant option to extend for a further 5 years on giving 6 months notice, with a further option to extend for 5 years should the initial option be exercised. There is a tenant only break option on 2nd October 2022 on giving 6 months notice. Interested parties should make their own enquiries with City of Edinburgh Council Planning Department. FLOOR PLANS LOWER GROUND FIRST GROUND SECOND
TENANT COVENANT City & Wharf Ltd as at 30th June 2017 reported fixed assets of 2.242m, a turnover of 472,386, and an operating profit of 45,466. The business has opened 4 new business centres since incorporation in 2012 and has shown steady growth over the last 3 years as detailed below. 2015 2016 2017 Turnover 250,425 262,345 472,386 Operating Profit 45,515 38,483 45,466 EBITDA 74,736 69,707 93,882 Group Total EBITDA 74,736 56,357 101,599 NEXUS BUSINESS SPACE The UK serviced office market has grown by 31% since 2008. This growth is attributed to a change in working practices along with the rise of smaller businesses and entrepreneurs. The impact of Brexit and resulting uncertainty is also set to boost the fortunes of the serviced office market as occupiers look for increased flexibility and move away from traditional leases. Nexus Business Space started in a single office on Young Street, Edinburgh in 2012. The company has expanded significantly and now occupies 3 townhouse offices on Young Street and a major office block in the centre of Glasgow. Nexus is home to around 70 companies housing around 260 employees in a variety of creative and related industries. The company provides top quality, interior designed office space in a highly professional serviced office environment. Occupancy levels consistently average between 90% and 95% across the portfolio.
MARKET COMMENTARY Letting Market The letting market in Edinburgh remains resilient despite continued economic and political uncertainty. 2017 H1 take up in Edinburgh was 739,860 sq ft, well in excess of the total figure for 2016. There still remains strong demand from occupiers seeking 2,500 5,000 sq ft, with many looking for good quality city centre accommodation within the Golden Rectangle. With a severe lack of good quality stock, rents have started to rise and incentives fall. Prime city centre headline rents are now in excess of 33 psf with townhouse rents in excess of 25 psf. Investment Market The Edinburgh townhouse investment market continues to perform well, the lack of good quality stock and attractive residential conversion end values have kept the sector buoyant. Demand is coming from private investors and developers who are keen to secure good quality prime assets within the city centre. Date Property Tenancy Under Offer 7 Walker Street Let to Robinson Medical Recruitment Ltd with a term certain of 3.5 years Price (Per Sq Ft) 334 (Asking) Size (Sq Ft) 3,129 Net Initial Yield 6% (Asking) Dec 2016 1-3 St Colme Street Let to Citibase Plc until Oct 2024 210 16,677 5.73% Aug 2016 5 Melville Crescent Multi-let to several tenants with vacancies. Unexpired term less than a year 271 5,918 3.94% TENURE Absolute ownership (Scottish equivalent of English Freehold). EPC RATING Further information available on request. VAT The property has been elected for VAT and therefore VAT will be payable on the purchase price. INVESTMENT PROPOSAL We are instructed to seek offers in excess of 790,000 excluding VAT for our client s interest in the property. A purchase at this level would reflect attractive net initial of 5.75% and a capital rate per sqft of 265 psf. All figures quoted assume the usual purchaser s costs including LBTT. FURTHER INFORMATION For further information or to arrange an inspection please contact: Gavin G Scott M: 07982 716 633 D: 0131 202 6783 E: gavin@cuthbertwhite.com Stephen Kay M: 07971 809 226 D: 0131 202 6782 E: stephen@cuthbertwhite.com CuthbertWhite Ltd 38 Thistle Street, EH2 1EN T: 0131 202 1880 IMPORTANT NOTICE: CuthbertWhite Ltd for the landlord of this property, whose agents they are, give notice that: 1. The particulars are intended to give a fair and substantially correct overall description for the guidance of intending purchasers and do not constitute part of an offer or contract. Prospective purchasers ought to seek their own professional advice. 2. All descriptions, dimensions, areas, reference to condition and necessary permissions for use and occupation and other details are given in good faith, and are believed to be correct, but any intending landlord should not rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each of them. 3. No person in the employment of CuthbertWhite Ltd has any authority to make or give any representations or warranty whatever in relation to this property nor enter into any contract on behalf of the landlord. 4. No responsibility can be accepted for any expenses incurred by intending purchasers in inspecting properties which have been sold, let or withdrawn. Photographs taken September 2017. Particulars prepared September 2017.