MOWBRAY HOUSE CASTLE MEADOW ROAD, NOTTINGHAM, NG2 1AB - HEADQUARTERS OFFICE INVESTMENT OPPORTUNITY - Savills
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MOWBRAY HOUSE CASTLE MEADOW ROAD, NOTTINGHAM, NG2 1AB HEADQUARTERS OFFICE INVESTMENT OPPORTUNITY
MOWBRAY HOUSE MOWBRAY HOUSE
INVESTMENT
SUMMARY
A rare opportunity to acquire a headquarters office building in
Nottingham’s central business district.
The Regional and Commercial capital of the East Midlands,
Nottingham is one of England’s eight core cities and home of
many leading corporate and public sector occupiers.
Occupying a prominent position fronting Wilford Road with
nearby occupiers including the Inland Revenue, Land Registry,
Parexel, Gala Leisure, UPS and GTT.
Comprises a headquarters office building constructed in the mid
1990’s totaling 5,381 sq m (57,925 sq ft).
50 car parking spaces.
Tenure – held freehold (Title Number NT486086).
Let to Browne Jacobson LLP on three co-terminus leases
expiring on 30 November 2021 , subject to a reversionary lease
extension, expiring on 1 December 2026 at a total passing
rental of £868,875 per annum (£15.00 per sq ft). As an incentive
to enter into the reversionary leases, the vendor has granted
reduced rents on the existing leases which will be topped up to
£868,875 per annum until 1 December 2021.
In addition, there is a tenant option to break at the 3rd
anniversary of the reversionary leases on 30 November 2024,
subject to a break penalty of £60,814 plus VAT.
Attractive re-positioning opportunity for residential, student or
PRS conversion (subject to planning permission).
We are instructed to seek offers in excess of £9,450,000, subject
to contract and exclusive of VAT. A purchase at this level will
reflect an initial yield of 8.61%, assuming standard purchaser’s
costs.
A low capital value of £163 per sq ft.
2 3
MOWBRAY HOUSE MOWBRAY HOUSE
NOTTINGHAM
POSITIONED AT THE HEART OF THE UK, NOTTINGHAM IS THE
ECONOMIC POWERHOUSE FOR THE EAST MIDLANDS, BEING THE
PRINCIPAL COMMERCIAL AND ADMINISTRATIVE CENTRE FOR THE
REGION.
The city has a catchment population of over 1.3 The city has recently benefited from a number of
million people and forms the centre of the UK’s major infrastructure projects including the £150
8th largest urban area. It has a catchment of over million upgrading of Nottingham Station to create
3 million people within half an hour’s drive time. the Nottingham Transport Hub. The £570 million
Nottingham is one of eight members of the English extension of the NET Tram system connecting the
Core Cities Group and benefits from a £12.1 billion existing line from the City Centre to Toton at J25
economy. of the M1 Motorway (adjacent to the new HS2
East Midlands Hub) and the dualling of the A453
Nottingham has a working population of over
between the M1 Motorway at J24 and Nottingham
850,000 people, of which over 620,000 are in
City Centre. Combined, this infrastructure spend
full time employment. It is also home to two of
has been one of the largest in any of the regional
the UK’s leading universities; The University of
cities in the UK and has significantly enhanced the
Nottingham and Nottingham Trent University, which
position of Nottingham as a core regional location.
are attended by approximately 60,000 students.
This pool of educated and skilled labour is a major Nottingham is located approximately 125 miles (200
attraction for businesses located in the city. km) north of London, 55 miles (88.5 km) north east
of Birmingham and 83 miles (133 km) south east of
Nottingham continues to attract a number of
Manchester.
international corporations with over 50 Regional
and National headquarters located in the city.
Key occupiers include:
4 5
MOWBRAY HOUSE MOWBRAY HOUSE
CONNECTIVITY
NOTTINGHAM BENEFITS FROM A WORLD CLASS, MULTI-MODAL
INTEGRATED TRANSPORT INFRASTRUCTURE, PROVIDING
EXCEPTIONAL LOCAL, NATIONAL AND INTERNATIONAL
CONNECTIONS.
M180
GRIMSBY
MANCHESTER BARNSLEY
DONCASTER
STOCKPORT
SHEFFIELD Excellent access to the national Motorway network Nottingham Express Transit Tram System
by virtue of a central UK location, directly adjacent
to Junctions 24, 25 and 26 of the M1 Motorway, and The city benefits from the Nottingham Express
also in close proximity to the A42 / M42 link to the Transit (NET) tram system, one of the UK’s most
West Midlands and the A50 link to the North West. successful rapid transport systems. The system is
M1 LINCOLN formed of two lines which connect Phoenix Park and
A1 Significant upgrades to the road network have been
carried out with the dualling of the A453 between Hucknall in the north with Toton and Clifton in the
M6 Junction 24 of the M1 and Nottingham City Centre, south via the City Centre. The southern extension
completed in 2015, and the installation of smart to Toton via Chilwell and Beeston was completed in
motorway from Junctions 23a to 25 of the M1, 2015 at a cost of £570 million.
completed in February 2019
NOTTINGHAM
STOKE-ON-TRENT
Nottingham benefits from extensive intercity Nottingham is served by East Midlands Airport,
M1
M6 DERBY GRANTHAM and regional rail services, with regular services located 12 miles to the south west of the city. East
EAST MIDLANDS to London St Pancras International every 30 Midlands Airport is connected to Nottingham City
minutes, via the Midland main line, with a fastest Centre by the 24 hour Skylink bus service and direct
A1 journey time of 1 hour 31 minutes and connecting rail services to the nearby East Midlands Parkway,
directly with Eurostar services to the continent. with a fastest journey time of 10 minutes. It is the
Other major cities are also served by fast direct 13th busiest airport in the UK in terms of passenger
services including Derby (21 minutes), Leicester traffic and is a major cargo hub, being the 2nd
M54 M42 LEICESTER (26 minutes), Birmingham (1 hour 14 minutes) busiest airport for freight traffic after London
A47 and Manchester (1 hour 49 minutes). Nottingham Heathrow. It provides daily direct flights serving the
A47 Station has recently undergone a £150 million principal European and International destinations.
refurbishment and upgrade project to create a true
PETERBOROUGH transport hub for the East Midlands. A dedicated
M1 HS2 station is planned at Toton to the West of
Nottingham.
BIRMINGHAM A1(M)
M6
COVENTRY KETTERING
A14
6 7
MOWBRAY HOUSE MOWBRAY HOUSE 8 9
MOWBRAY HOUSE MOWBRAY HOUSE
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OA
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SITUATION
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THE PROPERTY OCCUPIES A PROMINENT POSITION ON THE
RO
MAN S
ELL
WEST SIDE OF WILFORD ROAD OPPOSITE THE JUNCTION WITH
SW
CASTLE MEADOW ROAD AND FORMS PART OF THE WIDER
NN’
HMRC SITE, TO THE SOUTH WEST OF THE CITY CENTRE WITHIN
ST A
GLA
NOTTINGHAM’S CENTRAL OFFICE CORE. NEARBY OCCUPIERS NOTTINGHAM
INCLUDE THE INLAND REVENUE, LAND REGISTRY, PAREXEL, GALA
SS
TRENT UNIVERSITY
HO
LEISURE, UPS AND GTT. ON THE EAST SIDE OF WILFORD ROAD
H
US
U
AD
N
INTU
S T REET
WOLLATON
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ARE A NUMBER OF PUBLIC SECTOR BUILDINGS INCLUDING THE
ES
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DER R EET VICTORIA N
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BY R R EET RL
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NOTTINGHAMSHIRE ARCHIVES AND NOTTINGHAM MAGISTRATES OAD CENTRE A
N
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WOO D
ST
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SHER
COURTS. EE
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HOCKLEY
AN
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MARKET
BR
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There are also a number of leisure operators nearby Public transport links are good with Nottingham’s SQUARE
OO
I
D
K ST R E E
off Canal Street including various pubs, restaurants, main railway station, various bus stops and the NET
M
AR
a comedy club and gym. In addition, retail premises tram all within walking distance. In addition there is
IA
lie close by with the Intu Broadmarsh Shopping a NCP multi-storey car park close by.
N
A 60
WA
Centre and the prime retail areas of Nottingham
NOTTINGHAM
T
Y
within a five minute walking distance.
EY
HOCKL
THE PARK
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NOT TINGHAM
CASTLE BROADMARSH
A6
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CA N A L S T R E E T
NOTTINGHAM
MOWBRAY STATION
HOUSE
SHERIFFS WAY
TRAM LINE
WATERWA
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MOWBRAY HOUSE MOWBRAY HOUSE
DESCRIPTION
THE PROPERTY COMPRISES A SELF-CONTAINED HEADQUARTERS INTERNAL
OFFICE BUILDING CONSTRUCTED IN 1994 AND DESIGNED BY The open plan offices have raised access floors
AWARD WINNING ARCHITECT MICHAEL HOPKINS, ARRANGED with carpet tiles, whilst the core areas generally
OVER GROUND, FIRST, SECOND AND THIRD FLOORS. have vinyl floor tiling. A small area to the reception
has ceramic floor tiling. The ceilings to the ground
to second floors comprise wave form fair faced
The accommodation is arranged over ground and EXTERNAL concrete to the open plan and core areas. There
three upper floors and provides regular ‘L’ shaped are a small amount of plastered ceilings and
floor plates served by a central core separating the The building incorporates concrete, steel and suspended ceilings within the ancillary toilet and
east wing from the north wing. Each wing benefits brick structural elements. It is understood that the kitchen areas.
from Ladies & Gentlemen’s WCs, showers, kitchens external walls are formed in factory built storey
height load bearing brick columns with steel lifting The third floor has a sloping plywood ceiling
and lift access. Staircase access is provided within aligned with the underside of the pitched roof.
the central core and at the far end of each wing. rods capped by shaped concrete padstones, which
support pre-cast concrete barrel vaulted floor units. The elevations within the ground to the second
Externally, the property benefits from an attractive The central core and outer stairwell are understood floors comprise brickwork to the open plan offices
self-contained garden and patio area, fronting the to be formed principally from reinforced in situ and painted concrete and plaster surfaces to the
canal. concrete elements. core and ancillary areas. At third floor level the
perimeter walls comprise varnish plywood finishes
The central feature stairwell at the junction of the similar to the ceilings. There are painted reinforced
two wings is steel framed with glass block infills. concrete stud partition walls to central core areas.
Internal floors are understood to have a reinforced
concrete upper surface beneath a raised floor Lighting to the ground to second floors comprises
arrangement with a circa 300 mm deep void. recessed overhead lighting within the concrete
ceilings whilst at third floor overhead fluorescent
The building has excellent natural light with powder strip lighting is provided. We understand the
coated aluminium framed double glazed windows building’s original design incorporated a perimeter
with tilt and slide mechanism. The windows have finned radiator heating within floor grills beneath
powder coated louvered railings and rectangular perimeter windows and a natural ventilation
glass canopies. The third floor elevation has system via stairwells and opening windows to lower
exposed metal painted framing with lead infill floors via windows and opening ridge vents to the
panels to the lower half and powder coated third floor level, supplemented with some ducted
aluminium windows to the upper half. The main roof fresh air supply.
coverings are pitched and finished with lead sheet
with pitched glass ridge. The stairwells have domed We understand that a comfort cooling system was
fabric roofs. installed as part of a refurbishment in 2011, which
was subsequently modified by the current tenant
to suit their fit out. We further understand that
the radiators are supplied from a district heating
system which serves the entire HMRC complex. The
building has two 13 person (1,000 kg) lifts, within
the central core, there are disabled WC facilities/
showers to each floor and 50 dedicated car parking
spaces, 19 of which are adjacent to the building
with a further 31 spaces spread across the campus.
12 13
MOWBRAY HOUSE MOWBRAY HOUSE 14 15
MOWBRAY HOUSE MOWBRAY HOUSE
ACCOMMODATION TENANCY
The property has been measured in accordance with the RICS Code EXISTING LEASES
of Property Measurement (Sixth Edition), on a net internal basis
and has not been measured in accordance with the international Let to Browne Jacobson LLP on three co-terminus leases expiring on 30 November 2021, subject to the recently agreed
property measurements standard (IPMS) 3-office. reversionary leases set out below. The rents have been discounted on the existing leases as an incentive to enter into the
reversionary leases. The table below sets out the timing of the stepped rents payable by Browne Jacobson on each lease, per
quarter and the Vendor top up for each quarter up to Q4 2021. The top up will be adjusted to reflect the date of sale.
Floor Use Sq Ft Sq M
Ground, First & Reception / Meeting FROM/TO
41,288 3,836 Floor
Second Floors Room / Café / Offices 24 June 2020 28 Sep 2020 25 Dec 2020 25 Mar 2021 24 Jun 2021 29 Sep 2021
28 Sep 2020 24 Dec 2020 24 Mar 2021 23 Jun 2021 28 Sep 2021 30 Nov 2021
Third Floor
Offices 8,863 823 Ground First & Second £132,412 £132,412 £249,695 £249,695 £249,695 £249,695
(Eastern)
Third Floor Third Floor Eastern £28,587 £28,587 £53,907 £53,907 £53,907 £53,907
Offices 7,774 722
(Northern)
Third Floor Northern £25,074 £25,074 £47,283 £47,283 £47,283 £47,283
TOTAL 57,925 5,381
Annualised Tenant Rent £186,073 £186,073 £350,885 £350,885 £350,885 £350,885
Quarterly Rent £46,518 £46,518 £87,721 £87,721 £87,721 £63,521
TENURE
Vendor Top up £170,701 £170,701 £129,498 £129,498 £129,498 £93,775
Annualised Buyer Rent £868,875 £868,875 £868,875 £868,875 £868,875 £868,875
Q4 2021 numbers are calculated on 63 days out of 87 for the quarter
The property is held freehold under Title Number NT486086.
REVERSIONARY LEASES THE BREAKDOWN OF THE ANNUAL RENT PER LEASE IS AS FOLLOWS:
Browne Jacobson LLP have entered
Floor Rent P/A
into three 5 year reversionary lease
extensions from 1 December 2021 to Ground, First & Second Floors £619,320
30 November 2026. The aggregate
rent under the reversionary leases is Third Floor (Eastern) £132,945
£868,875 per annum which reflects £15 Third Floor (Northern) £116,610
per sq ft. The full rent is payable from 1
December 2021. TOTAL £868,875
A concession to pay rents monthly has
been granted on the reversionary leases. SERVICE CHARGE & REPAIR
In addition, there is a tenant option The leases are subject to repairing and insuring provisions which are recovered via
to break at the 3rd anniversary of the service charge. The leases are also subject to a Schedule of Condition limiting the
leases, subject to a total break penalty of reinstatement obligations at the end of the term. Further information is available
£60,814 plus VAT. If the tenant does not upon request. The service charge is split into two schedules, a building service charge
exercise the break, then a further rent and an estate service charge.
free period of 4.8 months commencing The total service charge budget for the year ending 31 March 2021 is £377,745 per
from 1 December 2024 will be granted. annum reflecting £6.52 per sq ft. This comprises £263,795 (£4.55 per sq ft) for the
The break can only be exercised across estate service charge and £113,950 (£1.97 per sq ft) for the building service charge.
all three leases simultaneously.
The tenant benefits from an aggregate service charge cap of £7.25 per sq ft per
annum and some exclusions to the service charge scope. There are provisions in the
service charge to deal with items of building works that would exceed the service
charge cap, the works will be funded through the service charge if consented by the
tenant, otherwise the Landlord is not obliged to carry out the works.
16 17
MOWBRAY HOUSE MOWBRAY HOUSE COVENANT Browne Jacobson LLP was founded in Nottingham in 1832 and is a National law firm with offices in Birmingham, Exeter, London, Manchester and Nottingham. It offers services across a number of key sectors including public, health, insurance, brands, retail, technology, education, financial services and international. It has over 930 employees and over 500 Lawyers of which 133 are Partners. The firm works with Regional, National and International clients in the public, private and voluntary sectors. Browne Jacobson LLP have a D&B Rating N2 with an overall business risk of ‘low moderate’. For the year ending 30 April 2019, sales turnover was £76,791,297 up from £73,309,030 for 2017/2018, operating profit was £17,905,848 in 2019. 18 19
MOWBRAY HOUSE MOWBRAY HOUSE
MARKET
COMMENTARY
TAKE-UP
Take-up within the Nottingham City Centre office market was just above 200,000 sq ft, in the six months
to end Q2 2019, recording continued healthy levels of demand. Most notably, a 100,000 sq ft pre-let of the
Crocus Place Scheme, adjacent to Nottingham Train Station was announced at the beginning of the year.
The first half of the year also saw the University of Law agree to nearly 30,000 sq ft in the City Centre and
web hosting company GoDaddy take the 27,000 sq ft Waterfront House in Beeston on a ten year lease.
Previously, 2018 was one of the strongest performing years in Nottingham’s recent history as HMRC pre-let
the 277,000 sq ft Unity Square Development in Q4.
The lack of Grade A stock has facilitated continued refurbishment of existing office buildings, leading to a
sustained period of rental growth. Grade A headline rents have now reached £20.00 per sq ft.
Principal tenant demand is drawn from professional services, followed by Government, education and
manufacturing sector occupiers. Principal take-up is within the 5,000 to 15,000 sq ft range, however there
have been a number of notable large transactions.
SUPPLY
There continues to be a severe shortage of Grade A supply within Nottingham City Centre and whilst new
build schemes are in the pipeline, new stock is not expected to enter the market until 2020 at the earliest,
the majority of which having been pre-let. The shortage of Grade A accommodation is bolstering the Grade
B office market.
SIGNIFICANT TRANSACTIONS
Headline Rent
Date Property Size Tenant Term
(per Sq Ft)
Q1 2019 Equinox Building 7,981 NHS 9 years £16.75
Q1 2019 1 Royal Standard Place 28,914 University of Law 15 years £20.00
Ground Floor, Donington Court, Pegasus
Q4 2018 6,040 Wates Construction Limited 10 years £15.25
Business Park
2nd Floor, Donington Court, Pegasus
Q4 2018 7,369 Air Logistics Limited 10 years £16.00
Business Park
Q4 2018 13 – 19 Derby Road 10,065 Wren Sterling Financial Planning 15 years £20.00
Part 2nd Floor, Donington Court,
Q2 2018 5,904 HSBC Bank plc 10 years £15.25
Pegasus Business Park
Q2 2018 Equinox Building 15,138 NHS 10 years £16.00
Q4 2017 Agora, Cumberland Place 15,096 Department for Education 10 years £17.00
Q4 2016 Water Court, Canal Street 18,867 Eversheds 10 years £18.50
Q2 2016 37 Park Row 6,361 Thompsons LLP 10 years £17.00
20 21MOWBRAY HOUSE MOWBRAY HOUSE PLANNING As with most Regional cities, Nottingham has experienced a significant increase in the level of residential, student and PRS development, mainly under Permitted Development Rights (PDR). This has had an acute impact on the level of office stock within the City Centre and established business parks, with a corresponding inflationary increase in rentals and capital values. New residential developments are performing well and achieving upper quartile blended pricing of approximately £275 to £325 per sq ft. Recent flagship schemes include the former Rushcliffe Borough Council offices fronting the River Trent, The Waterside and Trent Bridge Quays The property is situated within the NG2 1 postcode and abuts NG1 being the City Centre and NG7 1, the Park Estate. This is a well-regarded situation with high demand as it serves the City Centre in a tranquil canal side position. Demand in the area is from owner occupiers and the PRS with growth in the latter in line with the National average. There is a high proportion of students in Nottingham as a result of two highly regarded universities. Given the locational and physical characteristics of the property, we are of the opinion that conversion to residential, student or PRS is potentially viable (subject to required consents). The property currently benefits from Use Class B1(a) – Offices. An initial architects feasibility study exploring this potential is available on request. 22 23
MOWBRAY HOUSE MOWBRAY HOUSE
FURTHER
INFORMATION
CONTACT
VAT
The property has been elected for VAT. It is
anticipated the sale will be treated as a Transfer of a
Going Concern (TOGC).
VIEWING AND FURTHER INFORMATION
ENERGY PERFORMANCE CERTIFICATE Strictly by appointment only with the Sole Agent,
The Energy Performance Certificate is available on Savills.
request. Victor Ktori Christopher Brogan
ANTI-MONEY LAUNDERING (AML) vktori@savills.com cbrogan@savills.com
07870 999 467 07870 555 966
Any offer accepted is subject to completing AML
checks. Tom Subba Row
tsr@savills.com
07976 268 711
PROPOSAL
We are instructed to seek offers in excess of Savills Savills
£9,450,000, subject to contract and exclusive of VAT. Enfield Chambers 33 Margaret Street
A purchase at this level will reflect an initial yield of 18 Low Pavement London
8.61%, assuming standard purchaser’s costs. A low Nottingham W1G 0JD
capital value of £163 per sq ft. NG1 7DG
Important Notice
Savills, their clients and any joint agents give notice that:
1. They are not authorised to make or give any representations or
warranties in relation to the property either here or elsewhere, either on
their own behalf or on behalf of their client or otherwise. They assume no
responsibility for any statement that may be made in these particulars.
These particulars do not form part of any offer or contract and must not
be relied upon as statements or representations of fact.
2. Any areas, measurements or distances are approximate. The text,
photographs and plans are for guidance only and are not necessarily
comprehensive. It should not be assumed that the property has all
necessary planning, building regulation or other consents and Savills have
not tested any services, equipment or facilities. Purchasers must satisfy
themselves by inspection or otherwise.
Designed and Produced by Savills Commercial Marketing:
020 7499 8644
JULY 2020
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