stop secure-office-investment-located-on-a-premier-business-park-birmingham - Singer Vielle Sales

Secure Office Investment located on a Prime Business Park

6060 Knights Court | Solihull Parkway | Birmingham Business Park | Birmingham | B37 7WY

£3,100,000

subject to contract

SOLD

Summary

  • A high quality office investment

  • Located on the most established out-of-town office park in the Midlands

  • Exceptional transport links

  • Secure income

  • Let to Galliford Try Building Ltd (Net Assets £52 million)

  • New lease from August 2017

  • £3,100,000, subject to contract

  • 7.0% net initial yield

Location

Established as the United Kingdom’s second city, Birmingham is located 191 km (119 miles) north west of London, 31 km (19 miles) west of Coventry, 82 km (51 miles) south east of Nottingham and 140 km (87 miles) south of Manchester.

2016 was a record year for Birmingham’s visitor economy. Visitor numbers increased by 2.5% to 39 million and it is estimated that visitor spend in the city rose to £6.5 billion, supporting around 70,000 jobs.

During 2016 employment in Birmingham increased by 12,900 on the previous year, to stand at 517,000, an employment growth rate of 2.9% for the year. This is a faster rate than nationally (1.6%) and London (1.4%) and above the average growth for the core cities (2.3%). Since 2010 Birmingham has seen overall employment grow by 49,000 an increase of 10.5%. (Source: Birmingham City Council)

Birmingham has been ranked the top UK regional city for quality of life (Mercer Living Index) and the number one regional city for Startups in the UK. The growth of Birmingham University and UK Central development will ensure Birmingham continues to flourish, cementing itself as the UK’s second city. UK Central & HS2 are set to generate 100,000 new jobs and more than £18 billion per annum by 2040 (Source: Visit Birmingham / Birmingham Business Park).

Connectivity

Situated at the heart of the United Kingdom’s motorway and rail network, half the UK’s population lies within two hours and 90% within a four-hour travel time of the region (Source: Business Birmingham).

Road

The city benefits from excellent road communications given its position at the heart of the country and is served well by the national motorway network. The M5 Motorway is 13.5 km (8.5 miles) to the east, the M6 Motorway is 3.2 km (2 miles) to the north and the M42 Motorway is 9 km (5.5 miles) to the west. These motorways service the city from all directions, connecting to all major UK cities.

Rail

There are 4 mainline train stations in Birmingham; New Street, Snow Hill, Moor Street and Birmingham International all of which provide frequent services to all parts of the United Kingdom.

Birmingham International station serves the airport and the National Exhibition Centre, plus over 100 towns and cities. Rail times from the station are:

Birmingham New Street 10 mins
London Euston 1 hr 10 mins
Manchester Piccadilly 1 hr 45 mins
Bristol Temple Meads 2 hr 00 mins
Leeds 3 hr 00 mins

High Speed 2 (HS2)

HS2 is the UK’s new high speed rail network which will increase capacity on Britain’s railways, slashing journey times. The first phase of the £55 billion project is due to open in 2026 and will see trains travel at high speed between London and a new Birmingham Interchange station next to Birmingham Airport and the NEC, with a journey time of less than 45 minutes. Phase 2 takes the high speed line to the north-east and north-west of England with the line estimated to be finished by 2032/2033. Once complete, the number of passengers between London, Birmingham, Manchester and Leeds per hour could treble to 15,000. Research predicts that with a fully operational HS2, the West Midlands could see 50,000 additional jobs (26,000 of which would be in Birmingham/Solihull) and a £4 billion increase in economic output per year.

Air

Birmingham International Airport is 16 km (10 miles) to the south east of the city centre, accessed from Junction 6 of the M42 Motorway. The Airport handled over 10 million passengers between August 2014 and August 2015, making it the third largest regional airport in the UK and the second largest regional airport in England. Passenger numbers have grown by around 13% over the last five years and the airport is one of the most important economic drivers in the West Midlands region.

Situation

Birmingham Business Park

Set within 148 acres of parkland, Birmingham Business Park is the most established out-of-town office park in the Midlands. Providing 2.4 million sq ft of high quality office space, the Park is home to over 100 companies, over 7,000 employees and is the European and UK office headquarters for over 20 organisations. With 24 hour security and an on-site management team, the Park is equipped to support the growth of any business.

Comprising six phases of office development providing buildings ranging from 1,500 – 60,000 sq ft, the Park has an impressive range of high profile occupiers including Rolls Royce, Fujitsu, EE, IMI, WHSmith, Atos, Capita, Metro Bank, Nivea, Canon and Morgan Sindall. Amenities on the Park include a café, newsagent, on-site nursery, fitness studio and landscaped gardens & nature trails.

The Business Park benefits from exceptional road, rail and air links:

  • Junction 6 of the M42 Motorway is 4.8 km (3 miles) to the east and Junction 4 of the M6 Motorway is 1.6 km (1 mile) to the north.

  • Birmingham City Centre is 19 km (12 miles) west of the Park and a 10 minute train journey.

  • Birmingham International Railway Station is approximately 3.2 km (2 miles) to the south of the Park.

  • Birmingham International Airport is approximately 3.2 km (2 miles) south of the Park.

  • The National Exhibition Centre (NEC) is 1.6 km (1 mile) south of the Park. The venue welcomes 2.1 million visitors and over 34,000 exhibiting companies to over 500 events a year. It is the UK’s largest exhibition centre, 80% larger than the UK’s next largest venue.

  • The proposed HS2 Interchange Station will be located adjacent to the NEC, approximately 1.6 km (1 mile) from the Park.

  • Solihull is 9.6 km (6 miles) south-west of the Park and, with a net population of 207,000, has previously been voted the best place to live in the UK.

For further information please visit www.birminghambusinesspark.co.uk.

Birmingham Office Market

It has been reported that over the next five years economic growth in Birmingham, Wolverhampton, Coventry and Warwick is expected to exceed the national average and that all-property average rental growth for the West Midlands is expected to exceed the UK average in 2018. Subdued development levels have resulted in a shortage of prime stock and have insulated rental levels.

Prime headline rents in Birmingham city centre have reportedly now reached £32 per sq ft whereas prime rents in Solihull are at a marked discount to this at £23 per sq ft. It is anticipated that this gap is likely to narrow due to a lack of supply.

In September 2017 it was reported that Birmingham Business Park secured the largest 2017 Solihull & M42 Corridor letting at 1320 Solihull Parkway where 20,774 sq ft of office space on ground and first floor was let to BCA Logistics on a new 10 year lease at a rent of £17.50 per sq ft.

In terms of investment volumes, Birmingham reportedly saw £433 million worth of transactions in 2016, up 8% on the long-term average, and Birmingham office prime equivalent yields stood at 5.25% in the first quarter of 2017.

Description

The property forms part of Knights Court which is located directly off Solihull Parkway, the central access road through the business park. The property comprises a detached, purpose built office completed in 2007 arranged over ground and first floor. The property is of a steel frame construction under a pitched roof with brick elevation and has excellent levels of natural light.

The property is laid out to provide a feature entrance/reception area at ground floor with predominantly open plan office accommodation at both ground and first floors.

The internal specification includes comfort cooling/heating, raised access floors, kitchenette, suspended ceilings and recessed lighting.

Externally there are 64 on-site designated car parking spaces (1 disabled) providing an overall ratio of 1:19 sq m (1:202 sq ft).

Accommodation

The property has been measured by Commercial Measured Surveys and provides the following accommodation:

Net Internal Areas
Ground Floor Reception 55.6 sq m 598 sq ft
Ground Floor Office 570.7 sq m 6,143 sq ft
Ground Floor Storage 3.6 sq m 39 sq ft
First Floor Office 563.3 sq m 6,063 sq ft
First Floor Storage 6.3 sq m 68 sq ft
TOTAL   1,199.5 sq m 12,911 sq ft

 

IPMS 3
Ground Floor Office 638.1 sq m 6,868 sq ft
First Floor Office 609.6 sq m 6,562 sq ft
TOTAL   1,247.7 sq m 13,430 sq ft

A set of floor plans is available to download and the measured survey report can be re-addressed to a purchaser.

Site

We estimate the site area to be approximately 0.069 hectares (0.17 acres).

A Phase I Environmental Review was carried out by WSP in October 2017. The report concluded that the site represents a low risk with respect to potential contaminated land liability issues. A copy of this report is available to download and can be made assignable to a purchaser.

Tenure

Freehold.

Tenancy

The property is entirely let to Galliford Try Building Limited on a Full Repairing and Insuring lease for a term of 10 years from 2nd November 2007, expiring on 1st November 2017 at a passing rent of £230,926 per annum (£192.52 per sq m / £17.88 per sq ft overall). A reversionary lease has been granted for a term of 10 years from 2nd November 2017 expiring on 1st November 2027. There is an upwards only rent review on 2nd November 2022. The lease is outside 1954 Act protection.

There is a tenant’s break option on 25th December 2021, subject to 6 months’ prior written notice. If the tenant does not exercise its break option then it shall be entitled to a 3 month rent free period commencing on and including the break date and expiring on 24th March 2022.

The tenant has a right to use 64 allocated car parking spaces on an exclusive basis.

The tenant is paying a half rent of £115,463 for a period of 9 months and 15 days from 2nd November 2017 until and including 16th August 2018. In order that a purchaser does not suffer an income shortfall the vendor will top up this element of the rent on completion by way of an adjustment to the purchase price.

Rateable Value

We understand the rateable value for the property is currently £171,000.

The Uniform Business Rate is 47.9 pence per pound for 2017/2018.

Covenant

Galliford Try Building Limited (Co. No. 02472080) has reported the following figures:

  30th June 2016 30th June 2015
Turnover £1,028,160,000 £638,019,000
Pre-Tax Profits (Loss) (£1,598,000) (£2,724,000)
Net Assets £52,026,000 £53,105,000

The Company’s principal activity is to provide a comprehensive range of construction services to public and private sector clients across the United Kingdom.

Operating from regional centres in Scotland, the North East, North West, Central and Southern England, the businesses carry out building projects ranging from under £1 million to over £100 million with specific expertise in the areas of education, health, commercial, prisons, leisure, affordable housing and facilities management.

During the year, the Company won a place on the Ministry of Defence’s South West and South East Next Generation Estates Contracts regional frameworks, which are worth up to £1 billion in total over four years. The Company was also appointed to the YORbuild2 framework, which covers 91 local authorities in the North of England and has a potential pipeline of approximately £1.9 billion over four years. In the commercial building sector, the Company won a £66 million contract to construct the 2 Arena Central building in Birmingham, which will include 210,000 sq ft of office space. The Company was also awarded a £40 million contract to construct 185,000 sq ft of office space in the Forbury Place development in Reading. Other notable wins in the education sector included a contract with Birmingham City University to build the £46 million Conservatoire.

The ultimate parent company and controlling party is Galliford Try PLC, a FTSE 250 business and one of the United Kingdom’s leading housebuilding, regeneration and construction groups, operating through three businesses: Linden Homes, Galliford Try Partnerships and Construction & Investments. The Group employs around 5,500 people, meeting the demand for new homes in the private and affordable homes sector, regenerating neighbourhoods and working to improve the UK’s built environment.

For the year ended 30th June 2017 the Group reported a Revenue of £2,662.1 million, Pre-exceptional profits before tax of £147.6 million and Net Assets of £575.5 million.

For further information, please visit www.gallifordtry.co.uk.

VAT

The vendor has elected the property for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Proposal

We are instructed to seek offers in the region of £3,100,000 (Three Million, One Hundred Thousand Pounds), subject to contract, reflecting a net initial yield of 7.0% and capital value of £2,585 per sq m / £240 per sq ft, assuming purchaser’s costs of 6.46%.

Investment Considerations

  1. An opportunity to acquire a high quality office investment;

  2. Birmingham is the UK’s second largest city and the commercial centre for the West Midlands;

  3. The property benefits from exceptional transport links and is strategically located on Birmingham Business Park, the premier out-of-town office park in the West Midlands;

  4. The investment provides secure income being let to Galliford Try Building Limited, one of the UK’s leading construction companies with Net Assets of £52 million;

  5. The tenant has recently demonstrated their commitment to this property by entering into a new reversionary lease from November 2017;

  6. A purchase at the asking price reflects an attractive net initial yield.

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
Richard Wolfryd richard@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 LLP +44 (0) 207 160 3393
Hanan Taousi-Chahboun hanan.taousi-chahboun@addleshawgoddard.com
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