Retail Investment and Residential Development Opportunity

139-143 Stoke Newington High Street | Stoke Newington | London | N16 0NY

£1,000,000

offers in the region of

EXCHANGED

Summary

  • Legally binding clicktopurchase® "best offers" to be submitted by 1pm, Thursday 15th November. Exchange of contracts to occur the same day

  • Located in a “trendy” and gentrified London suburb

  • Prominent position on Stoke Newington High Street

  • Ground floor shop under offer to Crisis UK (Total Funds £15m)

  • Upper parts offering significant residential development opportunity with adjoining properties significantly higher.

  • Freehold

  • Offers in the region of £1m, subject to contract (reflects only £265 per sq ft gross on 1st floor existing, with significant potential to extend)

Location

Stoke Newington is a “trendy” and improving area within the London Borough of Hackney in north London, centred around the shops and cafes of Stoke Newington High Street and Stoke Newington Church Street. It is becoming increasingly more affluent and has been a beneficiary of gentrification. As reported by Hackney Council at the time of the 2011 census, Stoke Newington was home to 13,658 people, it was reported that over 55% of residents are between the ages of 20 and 44, two thirds of the working age population are in employment with over half of these possessing degree level qualifications. The area is known for having a youthful demographic and an increasing popularity amongst young professionals.

Stoke Newington is located approximately 5 km (3 miles) north of the City of London, 6.4 km (4 miles) north east of the West End, 6.4 km (4 miles) west of Stratford, 1.6 km (1 mile) north of Dalston and 2.6 km (1.6 miles) east of Finsbury Park.

Stoke Newington benefits from good road communications. The A10 (Stoke Newington High Street) provides direct access south to the City of London, as well as to the North Circular road 6.9 km (4.3 miles) to the north. Stoke Newington is also situated approximately 14 km (8.8 miles) from Junction 25 of the M25 Motorway, which in turn provides access to the A1(M), M1 and M11 Motorways.

Stoke Newington is well served by public transport. Stoke Newington Overground Station is situated just north of Stoke Newington High Street and Rectory Road Overground Station is situated on Evering Road, both providing London Overground services with an approximate journey time to London Liverpool Street of 20 minutes. Numerous bus routes provide access to London via Dalston and for air travel, London City Airport is situated approximately 13 km (8 miles) to the south east.

Situation

Stoke Newington itself is centred around the shops, cafes, restaurants and bars of the popular Stoke Newington High Street and Stoke Newington Church Street. The tenant mix in the area provides a selection of national multiple retailers along with independent shops, cafes, restaurants and pubs that give Stoke Newington its increasing popularity.

The subject property is situated in the heart of Stoke Newington High Street occupying a prominent position on the western side of the street, opposite Iceland and Savers and close to the junction with Stoke Newington Church Street. Other nearby retailers include Costa, Sports Direct, Halifax, Sainsbury’s Local, NatWest, Halfords, KFC, William Hill and Franco Manca.

Significantly, the property abuts The Rochester Castle public house which is significantly higher than the subject property, as are the properties immediately on the south side of the property.

Description

The property comprises a two storey mid-terraced mixed- use building currently arranged over ground and first floor levels.

The ground floor retail unit benefits from access to a rear open courtyard. The shop is currently vacant.

The first floor currently comprises self-contained office accommodation, accessed from a staircase/hall opening on to the High Street at the side of the retail unit. The office accommodation is basic in nature as can be seen from the internal photographs.

It is suggested that the low roof and rear courtyard, over-looking the Kynaston Gardens open space at rear, offer significant potential to extend and improve the property.

Planning

The property is located within the Stoke Newington Conservation Area. The local plan provides the planning framework and development plan for the borough and can be viewed here.

Planning consent was obtained in January 2012 for “change of use of the first floor from office use (Class B1) to residential use (Class C3), comprising a 3-bedroom flat…”. A copy of the planning consent is available to download. Application was submitted at the time knowingly for only a modest residential scheme. It is suggested that a purchaser would envisage a significantly larger scheme.

It is suggested that a reconfiguration of the ground floor layout would enable a larger entrance and access to new upper parts.

Accommodation

In accordance with a Plowman Craven & Associates measured survey from May 2000, the property provides ground floor accommodation as follows:

  Sq m Sq ft
Gross Frontage 10.80 m 35 feet
Net Frontage 9.38 m 31 feet
     
Zone A 57.3 617
Zone B 55.6 598
Zone C 9.2 99
Total Retail 122.1 1,314
ITZA   941
     
Storage 8.1 87
     
Ground Floor Total (NIA) 130.2 1,401
Gross Internal Area (GIA) 149.9 1,614
Gross External Area (GEA) 159.7 1,719

We are advised that the first floor provides accommodation as follows:

Offices (NIA) 71.6 767
Offices (GIA) 101 1,092*

*Note: the gross internal area has been estimated from the scaled lease plan which is available in the data room.

Tenure

Freehold.

Tenancy

The ground floor retail unit is under offer Crisis UK on an effectively full repairing and insuring lease for a term of 10 years with a tenant’s option to break at the end of the 5th year subject to 6 months prior written notice. The agreed initial rent of £45,000 per annum with a 5th year rent review.

The landlord is to undertake “Schedule of Landlord Works”. The full Heads of Terms and these proposed works are provided in the data room.

The proposed rent equates to £47 Zone A. Overall, the proposed rent equates to £345 per sq m / £32 per sq ft.

The first floor office accommodation is let to Elbagate Limited for a term of 5 years from 29th November 2013, expiring on 28th November 2018. The current passing rent is £7,670 per annum, equating to £180 per sq m / £10.00 per sq ft.

The Landlord is currently in discussions with the tenant regarding a lease renewal and has proposed a new 5 year term at a rent of £14,000 per annum £195 per sq m / £18.25 per sq ft.

Covenant

Crisis UK (Co. No. 4024938) has reported the following figures:

  30 June 2017 30 June 2016
Total Income £35,218,000 £29,500,000
Net Investment Gain £86,000 £11,000
Total Funds £15,396,000 £15,676,000

Crisis UK was founded in 1967 and, as reported on their website, is the national charity for homeless people. Crisis was setup due to the realisation of an increase in homelessness in the UK and provides education, employment, housing and well-being services to address individual needs and help homeless people transform their lives. Crisis operate from ‘Crisis Skylight Centres’ in 12 areas across England, Scotland and Wales. In 2016/2017 over 1,400 members of Crisis progressed to external education or a paid job.

Crisis’s patron has been HRH Princess Alexandra since 1988 and in addition, the charity have a range of high profile Ambassadors and Celebrity Supporters including Jo Brand, Jonathan Pryce CBE, Alastair Stewart OBE, Jeremy Paxman, Al Doyle, Sir Ian McKellen, Ed Sheeran, Chris Martin, Ellie Goulding, Richard Gere and Anthony Joshua. For more information visit: www.crisis.org.uk.

Elbagate Limited (Co. No. 04750700) are the UK partners of EAE Busbar Trunking Power Distribution and Lighting Products and supply products for clients such as Transport for London, Crossrail, Royal Mail, Heathrow Airport, Gatwick Airport, British Gas, Nissan and Hilton Hotels. For the Year End 2017 they reported Total Net Assets of £14,488. For more information visit: www.elbagate.com.

Market Commentary

Residential Capital Values

As an indication of the attractiveness of the Stoke Newington area, it has been reported on Zoopla that the average price paid for a house in Stoke Newington over the past 12 months is approximately £685,555. This shows an increase of 42.64% in average value over the past 5 years.

It was reported by Savills in a recent press article that Stoke Newington residential property prices increased 93% over the last decade, compared with 66% across Greater London, and that a third of sales were over £1 million with an average second-hand sale price in the last 12 months at £752,514, over £100,000 more than the average across Hackney.

Our enquiries indicate that residential accommodation in the area has been selling at up to £800 - £900 per sq ft (£8,608 – 9,684 per sq m).

For example, the Cotton Exchange is a recently built residential scheme situated just west of Stoke Newington High Street, approximately 0.3 km (0.2 miles) from the subject property. The development comprises a warehouse conversion providing 35 apartments where prices achieved have been between £650-£850 per sq ft (£6,994 per sq m-£9,146 per sq m).

The Woodberry Down 8 phase Berkeley Homes scheme is located adjacent to Finsbury Park and approximately 1.77 km (1.1 miles) from the subject property. Capital values achieved on sales have been between £800-£900 per sq ft (£8,608-£9,684 per sq m).


Retail Rental Values

In support of the agreed transaction with Crisis at £32 per sq ft overall and £47 Zone A, we understand that the nearby premises at 131/133 Stoke Newington High Street was let to Costa Coffee in August 2017 on a ten year lease. Comprising 1,645 sq ft on ground and 1,449 sq ft on basement, the initial rent of £65,000 per annum equates to £35 per sq ft by applying £5.12psf to the basement.

In addition, we are advised that 120 Stoke Newington High Street was let to Horc & Co in March 2017. Comprising a ground floor area of 542 sq ft and a basement of 504 sq ft, the property was let for a term of 10 years at an initial rent of £25,000 per annum, equating to £47.44 Zone A.

VAT

The property has not been VAT elected, therefore the purchase will not be subject to VAT. 

Proposal

We are instructed to seek offers in the region of £1,000,000 (One Million Pounds), subject to contract, for the freehold interest.

Allocating an investment yield of 6% to the retail accommodation equates to a value of only £290,000 in relation to the upper parts. This equates to £265 per sq ft based upon the approximate gross internal floor area of the first floor compared to sale values in the area in the region of £800-900 per sq ft.


Please note that a purchaser will be re-charged the costs of surveys and searches which are provided in the data room.

Please note a purchaser will be charged a transaction fee of £5,000 + VAT.

Investment Considerations

  1. An opportunity to acquire a freehold investment and residential development opportunity in a “trendy” and popular North London area.

  2. The property occupies a highly prominent position on Stoke Newington High Street;

  3. The ground floor is under offer to the significant covenant of Crisis UK (Total Funds £15m);

  4. Significant opportunity exists to extend and development the property for residential, subject to the necessary consents.

  5. Attractive lot size to an investor;

  6. A purchase at the asking price reflects a capital value on the upper areas at a significant discount to residential exit values, by applying a fair investment yield to the retail accommodation.

Contact Us

Singer Vielle   +44 (0) 207 935 7200
Neil Singer neil@singervielle.co.uk +44 (0) 203 478 9120
Dale Henry dale@singervielle.co.uk +44 (0) 203 701 1356
Ed Jeffs ed@singervielle.co.uk +44 (0) 203 701 1353
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Addleshaw Goddard +44 (0) 161 934 6557
Paul Barnard paul.barnard@addleshawgoddard.com
customer service