HADRIAN HOUSE - INVESTMENT OPPORTUNITY FOR SALE - HIGHAM PLACE NEWCASTLE UPON TYNE NE1 8AF - Fastly
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HADRIAN HOUSE HIGHAM PLACE NEWCASTLE UPON TYNE NE1 8AF INVESTMENT OPPORTUNITY FOR SALE
EXECUTIVE
HADRIAN HOUSE SUMMARY
HIGHAM PLACE NEWCASTLE UPON TYNE NE1 8AF
• Prominent eight storey city centre office building
occupying a highly visible position immediately
opposite Northumbria University campus and
200 yards north of Newcastle’s prime retail and
leisure core.
• 300 yards north of East Pilgrim Street
redevelopment scheme where demolition is
underway and redevelopment is expected in the
short to medium term.
• Immediately opposite a new 323 bed student
block completed by Kier Group in October 2017.
• The property comprises 5,688 sq m (61,231 sq ft) of
office accommodation with 41 car parking spaces.
The building is adjacent to a public car park.
• Gross passing rent before outgoings of £573,631
with a fully let ERV of approximately £855,000
based on £13.50 per sq ft on the offices, £10.00
per sq ft on the first floor, £1,000 per car parking
space and rooftop income.
• Two year rates and service charge guarantee to
be provided on vacant space.
• WAULT to expiry 3.6 years and to break 2.8 years.
• Total of 16 tenants including Zurich Insurance,
Alliance Management GB Gas Holdings Ltd,
Gordon Brown Solicitors, EE Ltd and Vodafone.
• Long leasehold interest for 150 years from
13 February 1987 at a peppercorn rent without
review. There are 119 years unexpired. The lease
contains a qualified user clause.
• Offers invited of £6,720,000 excl VAT (Six Million
Seven Hundred and Twenty Thousand Pounds)
reflecting a net initial yield of 8% or £110 per sq ft
capital value with the benefit of rates and service
charge guarantees. Fully let reversionary yield of
approximately 11.95%.
2
LOCATION Road
Rail
Newcastle upon Tyne is Newcastle is the seventh largest The Central Station also provides
city in the UK with a population the main interchange for the Nexus ABERDEEN
located approximately 286 of approximately 273,000 people, Tyne and Wear Metro light railway
miles north of London and extending to in excess of 1,000,000
people within the wider Tyneside
network, supporting 60 stations
connecting Newcastle to Gateshead,
105 miles south of Edinburgh conurbation. Newcastle upon Tyne Sunderland and Tyneside. Newcastle GLASGOW EDINBURGH
benefits from excellent road, rail International Airport is situated
and is the commercial and and air connections with Newcastle approximately 7 miles west of the M6
A1
administrative capital of the Central Station serving the East Coast
Mainline and providing a fastest
city centre providing regular flights
to key domestic, european and
A69
CARLISLE
NEWCASTLE UPON TYNE
SUNDERLAND
north east, located in the
MIDDLESBROUGH
journey time of 2 hours 40 minutes international destinations. A66
A19
to London Kings Cross and 1 hour 30
county of Tyne and wear. minutes to Edinburgh Waverley.
A1(M)
LEEDS
YORK
MANCHESTER
M1
M1
LIVERPOOL SHEFFIELD
M1
M6
A1(M)
BIRMINGHAM
M1
A1(M)
M40 M11
M4 LONDON
BRISTOL
3
LOCATION
Population within 30 minute drive
1,041,000 1,581,000
Working Age Total Population
11%
Born Abroad
4
HADRIAN HOUSE
NORTHUMBRIA UNIVERSITY CITY CAMPUS
(ELLISON PLACE)
SITUATION
Hadrian House occupies a highly prominent
NORTHUMBRIA UNIVERSITY
position immediately opposite Northumbria
University’s main student campus and 200 yards
north of Northumberland Street and Eldon
Square comprising Newcastle’s prime retail and
leisure core. The property is 100 yards from the
A167M ring road and within a five minute walk of
either Monument or Haymarket metro stations
and Newcastle Central bus station.
The building immediately overlooks the Laing
Art Gallery and adjoining public car park and
LAING ART GALLERY INTU ELDON SQUARE
is immediately opposite a brand new 323 bed ©Tony Hall
student development situated in Higham Place HAYMARKET METRO STATION NEWCASTLE CENTRAL LIBRARY
completed by Kier Group in October 2017. Within
a two minute walk there is a Premier Inn hotel,
Higham House and the Pearl office blocks.
The East Pilgrim Street redevelopment scheme
has started with demolition underway. Local
plans contain a clear emphasis of pedestrian flow
between this scheme, Market Street, Higham
Place and Northumbria University campus. Works
to change crossings are currently ongoing.
NORTHUMBERLAND STREET
5
NEWCASTLE ECONOMY
Newcastle has a significant presence of high profile The city is home to approximately 169,000
employees, making it the largest employment
The prime retail pitches in Newcastle include
Northumberland Street, the recently extended
office occupiers, representing international, national centre in Tyne and Wear with the economy largely Eldon Square Shopping Centre and the newly
and regional firms including Barclays Bank, PWC, Sage driven by the service sector, which accounts for refurbished Monument Mall. Combining this with
Europe’s largest out of town shopping centre,
approximately 84% of jobs.
Group, Virgin Money, Ernst and Young, Go-ahead The Metro Centre enables Newcastle to be ranked
In addition, the city has a thriving retail market, fourth in the regional centres and fifth out of 100
Group, Grainger plc, Sky UK and Brewin Dolphin. benefiting from extensive city centre provisions PROMIS centres in both spending and number
with over 2.2 million sq ft of retail space on offer. of multiple retailers.
Northumberland Street 6
NEWCASTLE UPON TYNE Pedestrian Priority
Science Central St James’
Park Royal
Newcastle Victoria
Business School Infirmary
Newcastle
University
INTU Eldon Square
HAYMARKET
EET
D STR
N
LA Civic Centre
ER
Monument MB
THU
N OR
HADRIAN HOUSE
Newcastle
Central Library
Laing Art Gallery Northumbria
Grey Street East Pilgrim Street University
Development
Student
Accommodation
Premier Inn
55 Degrees
North
A167(M)
Central Motorway
Northumbria
University
Manors
7
NEWCASTLE ECONOMY
The city is home to two leading Northumbria University is the largest in
the North East, enrolled by over 33,000
industry base, Newcastle was designated
as one of six UK Science Cities in 2005.
universities. The University of Newcastle students from over 125 countries. Both
Universities boast modern city centre
A multi-million pound project has been
announced that will build upon Newcastle’s
is a member of the Russell Group campuses and are renowned for their existing areas of excellence in Ageing and
world-leading commitment to research
– an association of research intensive UK and outstanding academic achievements.
Health, Sustainability, and Stem Cells and
Regenerative Medicine, and will involve the
universities. It attracts approximately In recognition of the world class research development of a number of sites across
being undertaken at its universities, as the city, with the aim of creating in excess
18,000 students from over 100 countries. well as the new potential of its science of 5,000 new jobs.
Newcastle Civic Centre
Northumbria University City Campus
(Ellison Place)
A167(M) Central Motorway
View from Hadrian House 8
DESCRIPTION
Hadrian House comprises a detached
prominent, eight storey office building
extending to 5,688 sq m (61,230 sq ft)
of office accommodation arranged
on ground and seven upper floors with
a number of aerial and antenna dishes
to the roof.
The property is of concrete frame construction clad in brick
walls incorporating flat roofs and alloy framed double glazed
windows. The property was refurbished in 2006.
Specifications include:
• Attractive large glazed reception area
• 41 secure car parking spaces
• Cycle store
• Male, Female and Disabled WC’s
• Solid Carpet covered floors
• VRF heating and cooling air system
• Two ten person Otis passenger lifts
• Suspended ceiling and recess lighting
• Good levels of natural light with top floors benefitting
from excellent views over Newcastle City Centre
EPC
The property has an EPC rating of D.
Certificate is available on request.
9
ACCOMMODATION
FLOOR USE SQ FT SQ M
Ground Office 2,088* 193.23
Level 1 Snooker Hall 14,101 1310.01
Level 2 Office 5,777 536.70
Level 3 Office 8,955 832.00
Level 4 Office 9,029 838.81
Level 5 Office 9,044 840.13
Level 6 Office 8,084 751.02
*Level 7 Office 4,153 385.82
TOTAL 61,231 5,688
* Car park on remainder of ground level
TENURE
150 year ground lease from 13 February 1987 at a peppercorn
rent without review. The lease permits use for showrooms and/
or offices and/or licensed premises or for any other use to which
the lessors may from time to time consent, (consent not to be
unreasonably withheld). Newcastle Council are the freeholder.
10SITE AREA
The site extends to 0.172 hectares
(0.425 acres), as detailed in the below plan.
lace
ille P
Sav
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Bo DU
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Co
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Hadrian t& RO
W AD
House ar
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Bd
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HADRIAN HOUSE
SM
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M
SM S
SM
mp
Ra
8
11TENANCY We have set out below the current tenancy position and net internal areas applicable to each suite.
FLOOR AREAS RENT PASSING £PER LEAST
LEVEL/PART TENANT BREAK REVIEW EXPIRY COMMENTS
(SQ FT) £/PA SQ FT START
Part Ground Medacas Healthcare plc 2,088 £28,910 £13.85 26/3/2013 - - 30/9/2019 Has self-contained entrance from Higham Place
Increases to
£5.67 Stepped £90,000 12/2017 Landlord to top
1st Starfirst Ltd 14,101 £100,000* 16/12/2016 - 15/12/2021 up rent to
(Net rate £2.48) Increases £100,000 12/2018
December 2018
£120,000 6/2021
Part 2nd Naylors Properties (Northern) Ltd 2,250 £34,253 £15.22 1/7/2011 - - 30/6/2021
Part 2nd Vacant 1,136 - - - - - - 2 year rates and service charge guarantee
Part 2nd Vacant 720 - - - - - - 2 year rates and service charge guarantee
Part 2nd Vacant 1,440 - - - - - - Vacated in Sept 2017 2 year rates & service charge guarantee
Part 3rd
Allianz Management Services Ltd 2,082 £27,360 £13.14 22/11/2010 - - 24/11/2020 -
Part 3rd Homecastle Executive Travel Ltd 3,096 £43,344 £14.00 5/11/2010 - - 4/11/2020 Lease granted outside the security provisions of 54 Act
Part 3rd Vacant 3,777 - - - - - - 2 year rates and service charge guarantee
Part 4th Five Three 7 Recruitment Ltd 3,780 £51,500* £13.62 28/11/2016 - 28/11/2021 27/11/2022 *Landlord to top up stepped rent
Part 4th Vacant 1,975 - - - - - - 2 year rates and service charge guarantee
Part 4th Vacant 3,274 - - - - - - 2 year rates and service charge guarantee
Part 5th
Zurich Insurance plc 3,775 £54,738 £14.50 29/1/2010 - - 28/1/2020 -
Part 5th Henry Riley LLP 2,065 £28,910 £14.00 24/10/2014 - - 24/10/2019 -
Part 5th Vacant 3,204 - - - - - - 2 year rates and service charge guarantee
GR Brown, DJ Coombe, IP Lawson
Part 6th 2,829 £42,540 £15.00 15/2/2010 - - 15/2/2020 -
t/a Gordon Brown Solicitors
Part 6th British Transport Police Authority 2,800 £39,200 £14.00 7/2/2012 7/2/2017 - 6/2/2022 Tenant not in occupation
Part 6th Vacant 2,455 - - - - - - 2 year rates and service charge guarantee
7th GB Gas Holdings Ltd 4,153 £56,066 £13.50 19/8/2013 19/8/2018 - 18/8/2021 Break on the 19th August yearly thereafter
Rooftop aerial Vodafone Ltd - £15,000 - 15/7/2011 - - 4/7/2021 Outside 54 Act
Rooftop aerial EE Limited - £18,088 - 1/5/2009 1/5/2019 30/4/2021 Outside 54 Act
Landlord’s only break
Rooftop aerial Arquiva Ltd - £5,850 - 3/11/2015 3/11/2018 2/11/2039 Tenant break 3/11/2030
3/11/2020
OTHER
2 Car Parking Spaces Homecastle Executive Travel Ltd - 2,500 - 5/11/2010 - - 4/11/2020 Lease co-terminus with main lease
2 Car Parking Spaces Homecastle Executive Travel Ltd - 2,700 - 5/11/2010 - - 30/4/2019 Licence
2 Car Parking Spaces Naylors Properties Northern Ltd - 4,000 - 1/7/2011 - - 30/6/2019 Licence
3 Car Parking Spaces Allianz Management Services Ltd - 2,400 - 22/11/2010 - - 20/10/2020 Licence
3 Car Parking Spaces Zurich Insurance plc - 4,500 - 29/1/2010 - - 28/1/2020 Licence
2 Car Parking Spaces Gordon Brown Solicitors - 2,625 - 1/3/2016 - - 15/2/2020 Licence
1 Car Parking Space Fivethree7 Recruitment - 1,800 - 28/11/2016 - - 27/11/2022 Licence
4 Car Parking Spaces G B Gas Holdings Ltd - 5,600 - 5/11/2013 - - 18/6/2021 Licence
1 Car Parking Space Medacas Healthcare plc - 1,750 - 28/3/2013 - - 30/9/2019
21 Car Parking Spaces Vacant - - - - - - - 2 year rates guarantee
TOTAL 61,231 £573,631 - - - - - 2 year rates guarantee
* Rent inclusive of service charge. This will be topped up by the landlord for the term of the lease.
12SERVICE CHARGE
The last three years service charge figures are summarised below.
Accounts are available on request.
SERVICE CHARGE
AMOUNT £/SQ FT
YEAR ENDING
December 2015 £266,403 £4.35
December 2016 £295,511 £4.82
December 2017 £4.64
£284,000
(projected) (projected)
The budget for 2018 is currently being set and expected
to be around £285,000 amounting to £4.65 per sq ft.
One-off works accruing through 2016, 2017 and 2018 have
increased the budget by approximately £32,000 per annum.
The service charge rate should decrease thereafter, subject
to works required.
13COVENANT PROFILE
PRE TAX SHAREHOLDERS CREDITSAFE
TENANT YEAR END TURNOVER PROFIT FUNDS RATING TAKE UP BY GRADE 2012 - H1 2016
Horncastle Executive Travel Ltd 30/06/2016 £10.293M £4,375 £611,333 76 (A) – Very Low Risk
Naylors Properties (Northern) Ltd 30/04/2017 - - £356,652 95 (A) – Very Low Risk 350,000
Allianz Management Services Ltd 31/12/2016 £397.515M £10.489M (£148.815M) 60 (B) – Low Risk 300,000
Zurich Insurance PLC 31/12/2016 £2,780.9M £126.604M £2,062.6M 73 (A) – Very Low Risk
TAKE UP (SQ FT)
250,000
FiveThree7 Recruitment Ltd 30/09/2016 - - £3,772 79 (A) – Very Low Risk
200,000
Gordon Brown Law Firm LLP 30/04/2016 - - £768,792 89 (A) – Very Low Risk
150,000
GB Gas Holdings Ltd * 31/12/2016 - £1,031.5M £2,792.6M 23 (D) – High Risk
Startfirst Ltd 30/09/2016 - - £70,431 80 (A) – Very Low Risk 100,000
Medacs Healthcare PLC 30/12/2016 £114.605M £4.304M £44.382M 95 (A) - Very Low Risk 50,000
Henry Riley LLP 31/03/2016 £15.218M £2.980M £1.475M 74 (A) – Very Low Risk
0
International Property Media Ltd 31/12/2016 - - £896,867 58 (B) – Low Risk 2012 2013 2014 2015 2016
Vodafone Ltd 31/03/2016 £6,183.5M (£636.8M) £7,199.4M 73 (A) – Very Low Risk
Arquiva Ltd Grade A Grade B
EE Ltd 31/03/2017 £7,991M £651M £2,948M 75 (A) – Very Low Risk
*Part of British Gas
14MARKET OVERVIEW
The Newcastle City Centre occupier market has remained Grade B rents in Newcastle range from £12.00 per sq ft to Hadrian House offers Suite sizes from 720 sq ft to 4,162 sq ft
strong in the post EU Referendum environment. 2016 full £17.50 per sq ft depending on location and quality, though with one floor of 14,100 sq ft. As the chart below shows, 91%
year take up was in line with the five year averages despite this sector is highly differentiated, with the majority of Grade of city centre transactions in 2016 were under 10,000 sq ft
the disruptive influence of the ‘Brexit’ vote, while Q4 2016 B space of poor quality and not fit for modern occupier with 74% under 5,000 sq ft. Hadrian House is therefore a
lettings of 99,000 sq ft resulted in the third highest quarterly requirements. Comparable space to Hadrian House is good fit for market requirements, with proven rental growth
take up in five years. arguably the most restricted in the city, with circa 9 months’ prospects off an average rent of £11.69 per sq ft against latest
availability against five year average take up figures. lettings within the building at £13.55 per sq ft.
Resilient demand coupled with declining good quality stock The graph below details Grade A and B take up from 2012.
has prompted rental growth and falling incentives across Hadrian House is also one of the best located offices of its
the city, particularly for good quality, well located space. type in the city centre in close proximity to road and public
CITY CENTRE TRANSACTIONS 2016
Achieved headline rents in Newcastle are now edging over transport links as well as retail and leisure facilities.
£23.00 per sq ft with landlords optimistic about moving
rents on substantially in the near future. Supply remains
severely limited, with no new development projected in the 9%
city until mid 2018. A number of landlords are undertaking
refurbishment projects in existing buildings to capitalize
on the favourable market dynamics, notably Schroders in
Earl Grey House and Standard Life’s Central Square South
17%
scheme, targeting rents of circa £21.50 and £25.00 per sq ft
respectively. Smaller scale refurbishment projects are
being undertaken sporadically. Hadrian House is among
the only schemes to genuinely cater for the robust 74%
B grade market.
0-5,000 sq ft 5,001 - 10,000 sq ft 10,001 sq ft +
LAING ART GALLERY NEWCASTLE CENTRAL LIBRARY ST JAMES' PARK
View from Hadrian House 15OCCUPIER DEMAND BUILDING DESCRIPTION RENT
(£SQ FT) DATE
Second floor office suites extending to 3,930 sq ft
Generator Studios £15.00 Aug 2017
We have set out recent comparable lettings evidence in the table opposite. let to Real Time Claims Ltd.
First floor suite extending to 3,013 sq ft within a
41-51 Grey Street prominent listed building. Gutteridge Haskins & £17.00 Jan 2017
Davey took a ten year lease with break at year five.
Part fourth floor let to Five Three 7 Recruitment for
Hadrian House £13.60 Nov 2016
six years until fifth year rent review. No break
Hays Recruitment took a new three year lease over
Kelburn House £14.00 Jun 2016
3,205 sq ft in this inferior specification building.
Maersk took 3,458 sq ft of eighth floor space in this
The Pearl fully refurbished office unit. A new ten year lease £16.00 Mar 2016
was agreed with break at year five.
Totallab Ltd took 2,037 sq ft on a new five year lease
Dean Court £18.00 Feb 2016
with break at year three.
16INVESTMENT MARKET
We have detailed below recent office and investment transactions
from Newcastle upon Tyne.
CAPITAL
SIZE PRICE / DATE
PROPERTY VALUE COMMENTS
(SQ FT) / YIELD (£SQ FT)
£4M
Bede House, Multi-let 1960's office block situated to the south of the city centre in an
37,929 Sep 2017 £105
All Saints Business Park, Newcastle inferior location.
8.6%
£5.61M
Maybrook House, Retail to the ground floor with offices above c. 10,000 sq ft vacant.
39,945 Jun 2017 £140
Grainger Street, Newcastle Eq yield of 8.7% assuming a 12 month guarantee of £15.00 per sq ft.
6.01%
£1.8M
Metropolitan House, Fully let to Nigel Frank International Ltd until
Feb 2016
Collingwood Street August 2021.
12,003 8.00% £150
£11.9M Part let to Handelsbanken, Costa Coffee and Rathbones with some
Earl Grey House,
Jan 2016 suites in shell condition. WAULT of 13.7 years over let space. Acquired by
Grey Street, Newcastle 58,883 £202
7.60% Schroders with a view to refurbishing unlettable areas.
£1.05M
Dean Court,
Oct 2015 Multi-let to 3 tenants with 3,651 sq ft vacant.
Dean Street, Newcastle 8,323 £126
7.12%
£2.95M
Collingwood House, Let to multiple tenants including Subway, Pearson VUE and Simpson &
19,570 Jul 2015 £151
Collingwood Street, Newcastle upon Tyne Marwick Solicitors, prodcing an annual rent of £268k
8.60%
17ALTERNATIVE USE Student Residential
POTENTIAL & ASSET Newcastle has a thriving student
population with in excess of 50,000
Rents of student residential
accommodation have also seen an
Changes to the Town and Country
Planning General Permitted
MANAGEMENT students in the city, an increase of
approximately 2% from 2016. One in
increase of 4.4% since last year, reaching
an average of £140 per week, and the
Development Order, which came into
effect in 2013, has helped facilitate the
INITIATIVES
every 66 international students in the UK market has proved very attractive to both conversion of office buildings (Class B1)
study at Newcastle University, and in domestic and international investors to student accommodation (Class C3)
total the city hosts over 10,000 who realise the security of the income in the city. An example of this is Urban
international students each year. They and the prospects of further rental Study’s Tyne Bridge development which
generate over £515M in export earnings growth. The benefits to students are also saw Aidan House, a Grade B office block
and support the equivalent of 2,000 full clear including increased standard of located on All Saints Business Park and
time jobs through their annual living, on-site facilities, increased security next door to Cuthbert House, being
expenditure in the North East. and a hassle-free letting approach. converted to 139 units of high quality
student residential accommodation.
The development, which was delivered
NEWCASTLE STUDENT UK PBSA SECTOR in June 2017, has proved a success in
POPULATION GROWTH INVESTOR TYPE the most part due to the convenient
location of the building, which is within
50,000 walking distance to both university
campuses as well as the city’s central
shopping core, transport provisions.
37,500
Location is key for these developments
36% as students demand proximity to a large
25,000
offering of amenities and Hadrian House
64% is in a prime location to benefit from this
12,500 type of conversion.
0
2001/02 2015/16
Student
Student Numbers
Numbers Overseas UK
Overseas UK
18ALTERNATIVE USE POTENTIAL HOTEL ROOMS UNDER CONSTRUCTION
& ASSET MANAGEMENT INITIATIVES
Hotels
The outlook for regional hotels is excellent, with
occupancy levels set for record growth throughout
2017, boosted by weaker sterling. Newcastle upon
Tyne is ideally positioned to capture this growth as Glasgow
362 Edinburgh
a top ten UK city and key destination for tourism
653
and business hotels users building on the excellent
compound annual growth rate for occupancy of
3.1% enjoyed by the city between 2012 and 2016.
Newcastle is home to a number of nationally Newcastle
important events, such as the Great North Run, 362
Rugby World Cup, the Great Exhibition of the
North, A list concerts and Premier League football Leeds
which have boosted the local hotel market, 566
Manchester
although a number of major operators are currently
1,058
unaccounted for in the city centre, including Ibis,
NH, Hyatt, Etap, Novotel and Britannia.
The diagram opposite compares hotel rooms
under construction in Newcastle to other prominent
regional cities, showing the clear opportunities Birmingham Bristol
to capitalise on forthcoming occupancy growth, 362 331
particularly in the ‘brand budget’ sector. We
are aware that of all hotel rooms positioned for
development over the next three to five years, only
26% fall into this category.
19ALTERNATIVE USE POTENTIAL
& ASSET MANAGEMENT INITIATIVES
Private Rental Sector
The Private Rented Sector (PRS) has begun to Elsewhere in the city, Citygrove have achieved
gain traction in Newcastle upon Tyne, presenting planning consent for their 26 storey ‘Hadrian’s Tower’
outstanding opportunities for early adopters to block on St James’ Boulevard, aiming to deliver 162
capitalise on increasing levels of occupational and apartments with a GDV of £40M. Neither of these
investor demand moving forward. developments are considered to be in ‘core’ city
centre locations unlike Hadrian House, which provides
GVA estimate that there is circa £30bn of equity superb access to Central Station, the main retail area
targeting institutional grade PRS investment in the and East Pilgrim Street.
UK, which when combined with other capital equates
to a potential investment pot of circa £90bn. Hadrian House provides the potential to add an
extra 40,000 sq ft through total redevelopment.
Newcastle’s first major development is nearing The property has a centrally located core and very
completion on Forth Banks to the west of the city conveniently located car parking, allowing easy
centre, with Moorfield Group funding and retaining conversion to either traditional apartments or the
the £37M GDV, 280 apartment scheme incorporating PRS model.
complementary retail.
20ASSET
MANAGEMENT
INITIATIVES
Office Refurbishment
Several former office schemes in Newcastle have
been converted into hotels, flats and student
accommodation following the introduction of
new legislation. This has removed office stock
from the market at a time when supply is at
a critical level. Examples of this include Baron
House on Westgate Road which has been turned
into a Hampton by Hilton Hotel The Turk’s
building on Grey Street (formerly occupied by
Barclays Bank) is being converted to a 116-bed
hall of residence, Burgess House on St James’
Boulevard is being turned into a 7.5M student
accommodation building as is the Princes
Building on the Quayside as well as Aidan House
as mentioned previously.
Grade B figures show there to be circa 23 months’
supply remaining, however, the majority of Grade
B office space on the market is poor quality in
nature and falls short of occupier requirements.
Today’s demand is for ‘modern workspace’ that is
open plan and can incorporate flexible meeting
rooms and breakout areas, in city centre locations.
The design of Hadrian House is ideal to provide
this type of workspace, given its large open
plan floorplates and its central location in close
proximity to a wide range of amenities as well as
excellent transport links.
The growing imbalance of supply relative to
demand is providing the necessary ingredients
for meaningful rental growth and hence allows
for an attractive financial argument that supports
office refurbishment. The income profile of
Hadrian House can be further enhanced through
regearing of leases and letting of vacant suites
and car parking.
21REGENERATION
A significant amount of regeneration is ongoing
or planned in the vicinity of Hadrian House which
should have a major positive impact on location and
create a wealth of new opportunities. Immediately
opposite, Kier have completed a 329 bed, state of the
art student block in October 2017 benefiting from
its close position to Northumbria University Campus
situated both to the north and east.
Newcastle City Council have rebuilt the Central
Library, a flagship public building situated close by
on New Bridge Street at a cost of £40M which
opened in June 2013.
Northumbria University are currently underway with
a £52M improvement project of the University’s
Ellison building situated immediately north of the
subject property currently being extended by a
4-storey extension. Wynn Jones building, a 33,000
sq ft older office/lecture building situated 150 yards
to the east is subject to redevelopment proposals for
student or office accommodation.
The east side of Pilgrim Street is subject to significant
redevelopment proposals along its entire length
from its junction with Swan House roundabout to
the south through its junction with Northumberland
Street and Market Street situated approximately 300
yards to the south west of Hadrian House. A large
number of buildings are currently being demolished.
The scheme forms one of the largest redevelopment
sites ever assembled in central Newcastle.
The nearest section of the scheme extending
between Market Street and New Bridge Street has
proposals for full pedestrianisation of this section
of the road and around 64,000 sq mtrs of retail led
mixed use development including potentially a
cinema, leisure, office and car parking. The scheme
also includes plans for “pedestrian priority” with
improved links created between the retail core,
New Bridge Street West and Higham Place and
between Higham Place past Hadrian House to
Northumbria University campus. A major walkway is
currently being removed and substituted with wider
pedestrian priority crossings and cycle routes.
Central Library 22PROPOSAL
Offers are sought in excess of £6,720,000 excl VAT
(Six Million Seven Hundred and Twenty Thousand
Pounds) exclusive of VAT which reflects a net initial
yield of 8% after purchase costs taken at 6.64% with
the benefits of rate and service charge guarantee.
This price reflects a capital value of £110 per sq ft and
an estimated full reversionary yield of 11.95%.
CONTACT
For further information or to arrange an inspection please contact the following:
Simon Beanland Lynsey Underwood
Direct Dial: 0191 269 0512 Direct Dial: 0191 269 0093
Email: simon.beanland@gva.co.uk Email: lynsey.underwood@gva.co.uk gva.co.uk/12452
GVA Grimley Limited Conditions under which Particulars are issued GVA Grimley Limited for themselves, for any joint agents and for the vendors or lessors of this property whose agents they are, give notice that: 1.) The particulars are set out as a general outline only for the guidance of intending purchases or lessors and
do not constitute, nor constitute part of, an offer or contract. 2.) All descriptions, dimensions, references to condition and necessary permission for use and occupation, and other details, are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or
representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them. 3.) No person in the employment of GVA Grimley Limited or any joint agents has any authority to make or give any representation or warranty whatever in relation to this property. 4.) All rentals and prices are quoted
exclusive of VAT. Reproduced by courtesy of the Controller of HMSO. Crown Copyright reserved. Licence No 774359. If applicable, with consent of Chas E Goad, Cartographers, Old Hatfield, Geographers A-Z Map Co Ltd and/or The Automobile Association. For identification purposes only. November 2017
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