PRIME RETAIL & OFFICE INVESTMENT - 31 Stockwell Street Glasgow G1 4RZ - LoopNet
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P R I M E RE TA I L &
O F F I C E I N V E S T M E NT
31 Stockwell Street
Glasgow
G1 4RZ
INVESTMENT SUMMARY
• Rare opportunity to acquire a well located, high quality, seven storey,
Grade B listed building offering office and retail accommodation extending
to 192,945 sq ft (17,925 sq m).
• Granite House offers fully refurbished Grade B office accommodation to a
high specification with large floor plates and at a discount to the competition.
• High profile tenants including; Clydesdale Bank, House of Fraser, Tesco,
Poundland and Specsavers. 73% of the existing rental income provided by
tenants with an Experian credit rating of Very Low risk or Low risk.
• Passing rents are significantly below recent deals in the building with the
rental tone moving from £13.00 sq ft to £15.50 sq ft in the last 18 months.
Current quoting rents remain low at £16.50 sq ft, with further growth
expected.
• Asset management potential including planning permission for an
additional two storey, c50,000 sq ft roof top extension.
• Low capital value of £171 per sq ft.
• All major transport hubs are within a 10 minute walk of the building. This
includes Queen Street, Central and Argyle Street train stations, bus links,
car parking facilities and the subway.
• Total current passing rent of £2,551,091 per annum
• Offers in excess of £33,000,000 (Thirty Three Million Pounds Sterling),
subject to contract and exclusive of VAT are invited for the Absolute
Ownership of the property. A purchase at this level would represent a net
initial yield of 7.27% after allowing for purchasers costs based on LBTT.
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
LOCATION
5
Sau
chie
hall
Stre
et
4 Buchanan Bus Station
Glasgow Central Station 3
t
Stree
a nan Queen Street Station
Buch UNIVERSITY
OF
STRATHCLYDE
2 A C
F E
S St Enoch Subway Station B G CITY OF
GLASGOW
10 COLLEGE
1
9 Ar 8 H
gy
le 7
St I
ST ENOCH re D
et 6
ROOF TOP Argyle Street Station J
CINEMA
DEVELOPMENT
MERCHANT
CITY K
CANDLERIGGS
QUARTER
DEVELOPMENT STRATHCLYDE
SITE UNIVERSITY
TECHNOLOGY &
INNOVATION CENTRE
Tr
on
ga
te
Major Retail & Amenities Neighbouring Occupiers
1 St Enoch Shopping Centre 6 Marks & Spencer A Brodies, Grant D AXA PPP Healthcare Limited H Glasgow City Council
2 Princes Square Shopping Centre 7 River Island Thornton, Deloitte, ACCA E Edrington I Inland Revenue
3 Buchanan Street 8 TK MAXX B Ernst & Young, Maclay F Clydesdale Bank, J Garment Factory
4 Buchanan Galleries 9 Topman Murray & Spens News International K Catapult, University of Glasgow
5 Sauchiehall Street 10 Debenhams C Network Rail G Glasgow City Chambers
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
St Enoch Centre – Rooftop Cinema Development
• The current proposals introduce a new 9 screen
cinema and restaurants in the place of the
current BHS
TRONGATE
DEVELOPMENTS • This will add an exciting leisure destination to 190 Trongate
the area, ensuring it becomes a 24/7 location
The distinctive turreted Grade A listed
• It will attract new brands and the latest building has been a feature of Trongate
concepts, complementing the existing shopping since it was built in 1903 and at one time
centre facilities housed the Royal Bank of Scotland. It has
ST ENOCH ROOF TOP CINEMA DEVELOPMENT recently been redeveloped to include
• Planning permission granted
• 8 serviced apartments
• 1,161 sq ft retail unit at ground
floor level
190 TRONGATE
CANDLERIGGS QUARTER DEVELOPMENT SITE
Candleriggs Quarter Development
This is potentially one of biggest city centre
developments in a generation and involves the
redevelopment of a plot left largely derelict since the
closure of the Goldberg's department store in 1990.
TRONGATE SERVICED APARTMENTS The developer has applied for planning consent.
It involves:
Trongate Serviced Apartments • 132 high quality apartments
• 9 storey building comprising retail • 435 new flats for rental
at ground floor level and 28 one and • 586 rooms of student accommodation
two bedroom apartments
• 123 room hotel
• Planning permission granted
• Over 60,000 sq ft of retail accommodation
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
GLA
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the highest rents in the city. Similarly, 100 Queen Street
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INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
SAUC
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EET
CONNECTIVITY BUCHANAN BUS STATION
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Granite House benefits from a core city centre location that
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affords easy access to Glasgow’s excellent transport network
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and allows connectivity across the country. WEST QUEEN ST
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Glasgow has the biggest suburban rail network outside of London.
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George Strathclyde
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Two mainline railway stations, Glasgow Central and Glasgow Square
GEOR
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J19 WATER COCH REET
LO RANE
ET
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Queen Street, are less than a 10 minute walk from Granite House EET GORDON STR STRE
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STRE
University of
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and provide services to all major UK cities. Glasgow Queen Street
Merchant Strathclyde,
E
INGRA
STRE
UNION STREET
M STRE
STRE
ET Quarter The Technology
CENTRAL
ANAN
& Innovatione
Station is undergoing major renovation works which includes the STATION
STREET
Centre
N
HOPE
MITCHELL
QUEE
P Princes
BUCH
electrification of the Edinburgh Glasgow rail-line Square
FORD
(July 2017), which will reduce journey times to 42 minutes.
S
P
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GLASS
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ET
TR
DLE
P
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Air
Pedes
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St Enoch recinc
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Shopping ARGYLE
Glasgow Airport, Edinburgh Airport and Prestwick Airport offer Centre STREET
ET
TRON
STRE
GATE
flights to over 130 destinations worldwide. Glasgow Airport is BROOMIELAW
P P
Glasgow
approximately 9 miles west of the city and a 15 minute drive from Tradeston
L
Airport CL LO
KWEL
T
Bridge YD
KE
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15 mins
the city centre. Edinburgh International Airport to the east and TR D
P
AR
EE O
T N
STOC
M
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Prestwick Airport to the south west are also approximately a 45
LT
AD
SA
River Clyde
minute drive away. Dundee
Oban
Perth
Road Crieff
St. Andrews
The M8 motorway dissects Glasgow and is easily accessed from A84 A9
Granite House. The motorway provides direct access to Edinburgh M90
to the east, Glasgow Airport to the west and links to A82 Stirling N
Kirkcaldy
the M80 heading north to Aberdeen and Inverness, with the M74 Edinburgh
Glasgow M80 M9 Airport
heading south to Carlisle and England. Airport
A78 Edinburgh A720
Glasgow M8
Bus
M77
22 bus operators run services across the city, including frequent A721 Peebles
A68
services to Glasgow International Airport. Buchanan Bus Station A83
Irvine A72
is within a 15 minute walk and offers links to rest of the UK. Prestwick Kelso
Airport A7
Ayr M74
Subway A76
A1
Three stations are available in the city centre, with the closest A77
being St Enoch station about 5 minutes walk from Granite House.
A696
It provides a link to key leisure, business and cultural areas in the
west end. Services are available up to every four minutes, with a Dumfries
journey time of 10 minutes across the city. A75
Stranraer
Carlisle
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
GLASGOW
Glasgow is the largest city in Scotland, the commercial capital of the
country and the administrative centre for the West of Scotland. It has a
population of over 600,000 and a wider regional catchment of
approximately 2.3 million. It is a truly key regional city and one of the
UK’s ‘Big Six’ office markets.
Glasgow is Scotland’s centre of employment and an economic
powerhouse, generating £18 billion in gross value each year. The city
is home to an impressive list of blue chip companies and major global
organisations across numerous sectors including Clydesdale Bank (a
major occupier of Granite House), Morgan Stanley, Lloyds Banking
Group, RBS, KPMG, Scottish Power, Scottish & Southern Energy and City Deal Education
John Lewis. In total there are nearly 17,000 companies based in Glasgow. Glasgow secured the first city deal from the UK government Greater Glasgow has a superb education base and boasts
Glasgow has been recognised for its strategy to attract investment for £1bn worth of infrastructure investment in 2014. Glasgow 5 universities and 3 super colleges educating some 130,000
and was named second best large city in Europe for its Foreign Direct & Clyde Valley aim to leverage a further £3.3bn of private students from 135 countries, ranking third in the UK in terms
Investment Strategy in fDi Magazine's European Cities and Regions of investment into this infrastructure fund. of number of students. Employers are attracted by the level
the Future 2016/2017 rankings. of qualifications job applicants have achieved, with almost
The Glasgow and The Clyde Valley City Deal is an agreement 40% of Glaswegians having NVQ3 and above. This is higher
It is also: between the UK Government and the eight local authorities than any other comparable city.
across Glasgow and Clyde Valley to invest in the area in order
• UK’s top retail destination outside of London
to stimulate economic growth. This infrastructure will support
• ‘Must See Destination for 2016’ - National Geographic Traveller growth in the life sciences sector, programmes to help the
• The SSE Hydro was the world’s third busiest entertainment unemployed and help small to medium sized enterprises
venue in 2015 grow and develop.
• ‘World’s Friendliest City’ - Rough Guide 2014
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
SPECIFICATION
Granite House is an outstanding Grade B listed property set over seven floors
and a basement level. The building offers mixed use accommodation, with
retail accommodation over ground floor with office space to all upper levels.
The general building specification includes:
• Large floor plates up to 31,250 sq ft, easily sub divided
• Building CCTV and on-site security
• 24 hour access
• Building EPC – D, individual floors EPC – C
• Secure car parking
• Manned reception foyer (8.00am to 6.00pm)
• Equality Act 2010 compliant
• Secure bike storage
• Storage rooms available
• Wi-Fi
• Granite House has chosen to be part of City Fibre project to give Granite
House its own dedicated 1GB Fibre in 2017
There is currently a full refurbishment program in place for the atrium of the
building including the replacement of two lifts, the creation of a café, break
out area, new reception and entrance. These works will further enhance the
buildings offering and improve its prospects for further rental growth.
The newly refurbished office specification is:
• Fully raised access flooring with floor depth in excess 250mm
• New LG7 compliant LED Lighting
• Suspended ceiling system with integral lighting
• VRF HVAC system
• New dedicated male and female toilets with full height tiling, IPS system,
flooring and Equality Act lighting
• Busbar Power system for floor boxes
• Shower provision is available and can be provided with identified
locker locations for suites above 10,000 sq ft
• Provision for kitchen and pop ups within suite
Computer generated image Computer generated image
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
TENANCY SCHEDULE
GRANITE HOUSE - OFFICE ACCOMMODATION
Description Tenant Area (ft²) Current Rent pa Current Rent psf Lease Start Lease Expiry Next RR Comments
Rooftop Suite Connect Property Management Ltd 600 £9,425 £15.71 1-Sep‐16 31‐Aug‐21 Schedule of condition relating to windows. Landlord only developers break
option. S/C cap (£4.00 sq ft) no current shortfall
5th Floor Clydesdale Bank plc 31,237 £406,081 £13.00 29‐Sep‐14 28‐Sep‐24 29‐Sep‐19 Schedule of condition relating to window. S/C cap (£3.09 sq ft - RPI linked)
until August 2019 - current shortfall of £5,575 pa
4th Floor (Academy North) Clydesdale Bank plc 10,046 £137,931 £13.69 26‐Aug‐15 11‐Jul‐17 Schedule of condition relating to windows & floor
S/C cap (£3.50 sq ft - RPI linked) no current shortfall
4th Floor (Suite 2) Clydesdale Bank plc 1,365 £17,745 £13.00 26‐Aug‐15 11‐Jul‐17 Schedule of condition relating to windows & floor
S/C cap (£3.50 sq ft - RPI linked) no current shortfall
4th Floor (Middle Rear) Vacant 2,094 - - Fully refurbished space
4th Floor (Suite 3) Vacant 3,114 - - Fully refurbished space
4th Floor (South) House of Fraser 13,649 £177,437 £13.00 31‐Mar‐16 31‐Mar‐26 31‐Mar‐21 Rent is £94,359 until 30/03/18. Vendor to provide rental top up until this date.
Tenant only break option 31/03/2023. 9 months rent free if not triggered.
Schedule of condition relating to windows. S/C cap (£3.50 sq ft - RPI linked) no
current shortfall
3rd floor (North Suite 2 & 1A/1B) Clydesdale Bank plc 9,985 £154,768 £15.50 16‐Feb‐15 28‐Sep‐24 16‐Feb‐22 Tenant only break option 28/09/2020 & 28/09/2022. Schedule of condition
relating to windows. S/C cap (£3.75 sq ft - RPI linked) no current shortfall
3rd Floor (South) House of Fraser 11,679 £151,827 £13.00 24‐Jul‐15 30‐Mar‐26 31‐Mar‐21 Rent: is £37,956 until 23/07/17 . Vendor to provide rental top up until this date.
Tenant only break option 31/03/2023. 9 months rent free if not triggered.
Schedule of condition relating to windows. S/C cap (£3.50 sq ft - RPI linked)
no current shortfall
3rd Floor (Suite 1) Ingeus UK 9,769 £152,500 £15.61 19‐May‐11 31‐Dec‐18 Rent is £142,500 until 18/05/2017. Vendor to provide rental top up until this
date. Schedule of condition relating to windows. S/C cap (£3.96 sq ft - RPI
linked) no current shortfall
2nd Floor (North & Mid) Clydesdale Bank plc 17,878 £277,109 £15.50 19‐Oct‐15 28‐Sep‐24 19‐Oct‐20 Rent is £259,231 until 19/10/18. Vendor to provide rental top up until this date.
Tenant only break option 19/10/2018, 28/09/2020 & 28/09/2022.
Schedule of condition relating to windows. S/C cap (£3.50 sq ft - RPI linked)
no current shortfall
2nd Floor (South) Vacant 14,000 - - Fully refurbished space
1st Floor (Suite A) Buckingham Wealth Ltd 1,633 £24,500 £15.00 4‐Apr‐16 3‐Apr‐21
1st Floor (177 Trongate) The Glasgow Housing Association (GHA) 3,848 £47,813 £12.43 30‐Nov‐13 29‐Nov‐18
1st Floor (Suite 1) East Kilbride Specsavers Ltd 1,999 £28,028 £14.02 1‐Oct‐08 30‐Sep‐18
1st Floor (South) Utilita Energy 14,000 £217,000 £15.50 23‐Dec‐16 22‐Dec‐26 23-Dec-21 Rent free period until 22/09/2017. Vendor to provide rental top up.
Tenant only break option 22/12/2021. 6 months penalty if triggered
First years S/C capped at £23,940 and so a shortfall of £18,691 year one only.
S/C Cap [£3.50 sq ft – CPI linked) thereafter
1st Floor (Suite 2) Vacant 1,382 - -
Gr Kiosk Caffeine Scene - £1,200 N/A 14‐Dec‐15 18‐Jul‐17 Mutual break option on 3 months notice
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL
TENANCY SCHEDULE (Continued)
GRANITE HOUSE - RETAIL ACCOMMODATION TRONGATE
Description Tenant Area (ft²) Current Rent pa Current Rent psf Lease Start Lease Expiry Next RR Comments
173 Trongate The Glasgow Housing Association 2,564 £105,000 £40.95 18‐Jun‐09 29‐Nov‐18
175 Trongate Tesco Stores Ltd 4,662 £197,477 £41.98 2‐May‐08 1‐May‐23 1‐May‐18 Rent steps to £197,477 in 01/05/2018. Vendor to provide top up.
187a Trongate Poundland Ltd 5,613 £142,500 £25.39 10‐Oct‐03 9‐Oct‐23 10‐Oct‐18
187b Trongate & 17 Stockwell St Specsavers Optical Superstores Ltd 8,680 £105,000 £12.10 30‐Apr‐92 29‐Apr‐27 6 months rent free period from 28/05/2017. Vendor to provide top up. Tenant
only break option 28/08/2021.
GRANITE HOUSE - RETAIL ACCOMMODATION STOCKWELL STREET
Description Tenant Area (ft²) Current Rent pa Current Rent psf Lease Start Lease Expiry Next RR Comments
19 Stockwell Street Imran Abdulah 316 £10,000 £31.65 29‐Aug‐08 28‐Aug‐17 Lease continuing beyond expiry until either party serves at least 1m notice.
21 Stockwell Street Vacant 1,405 - -
25/27 Stockwell Street William Hill Organisation 1,554 £45,750 £29.44 6‐Jan-‐93 5‐Jan‐18
29 Stockwell Street Shakil Ahmad 735 £22,500 £30.61 1‐Jan‐93 31‐Dec‐19
35 Stockwell Street Minster Mcfarlane Ltd 1,059 £26,500 £25.02 1‐Jul‐16 30‐Jun‐26 1-Jul-21 Rent increases as follows: 01/7/2017: £23,500. 01/7/2018: £25,000.
01/7/2020: £26,500. Vendor to provide a top up.S/C shortfall of £889 for 2017.
Tenant only break option 01/07/2021
37/39 Stockwell Street Under offer 1,808 £33,273 £18.40 All three units are under offer to a tenant with a strong covenant. Vendor to
provide 2 year rent, rates and service charge guarantee
41 Stockwell Street Under offer 911 £16,765 £18.40
43 Stockwell Street Under offer 1,628 £29,961 £18.40
GRANITE HOUSE - RETAIL ACCOMMODATION OSBORNE STREET
Description Tenant Area (ft²) Current Rent pa Current Rent psf Lease Start Lease Expiry Next RR Comments
18c Osborne St Alaa Badry 267 £13,000 £48.69 30‐Oct‐02 29‐Oct‐17
118 A & B Osborne St Vacant 2,754 - -
Granite House Area (ft²) Current Rent pa WAULT to Break (years) WAULT to Expiry (years)
TOTAL 182,234 £2,551,091 4.37 6.49
NOTE:
Service Charge Caps:
The current service charge budget equates to £3.27 sq ft for the office accommodation. Service charge caps detailed above range
between £3.50 - £3.75 sq ft, ensuring capacity for future PPM work. There are only three service charge cap shortfalls detailed above.
Utilita’s ends 23/12/2017 and the Clydesdale Bank 5th floor ends in August 2019.
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALTENANT COVENANT
Granite House benefits from a strong tenant line-up with an 73% of the passing
rent secured against tenants with Experian credit rating of low risk or better.
Tesco Stores Ltd
27% Level 1 Tesco is the largest supermarket chain in the UK, with over 3500 stores and 310,000 staff.
Income secured against tenants with Low risk Tesco Stores Ltd (00519500) has an Experian credit rating of 83 which represents a Low risk.
or Very Low risk
Level 2 2014 2015 2016
Income secured against tenants with Below Turnover £42,547,000,000 £42,278,000,000 £39,843,000,000
73% Average risk or poorer
Pre-tax profit £1,696,000,000 -£3,727,000,000 -£231,000,000
Net worth £3,038,000,000 -£98,000,000 £1,077,000,000
Utilita Energy Limited Poundland
Utilita Energy (04849181) is an electricity and gas provider and a market leader Poundland (02495645) is a British variety store chain which was acquired in September 2016
in pay-as-you-go smart meter energy. They have an Experian credit rating of 100 which by Steinhoff Europe AG for £610 million. It has an Experian credit rating of 92 which
represents a Very Low risk. represents a Very Low risk and has a net worth of £20.5 million and a turnover of £1.21
billion, at the financial year to 31 December 2016.
2014 2015 2016
2014 2015 2016
Turnover £75,753,761 £144,048,359 £253,582,000
Turnover £997,803,000 £1,111,526,000 £1,214,818,000
Pre-tax profit £1,795,563 £10,543,917 £24,362,000
Pre-tax profit £41,017,000 £45,922,000 £34,653,000
Net worth - £1,887,541 £3,524,646 £16,244,000
Net worth £96,235,000 £93,866,000 £20,520,000
Clydesdale Bank
Clydesdale Bank plc (SC001111) is a commercial bank in Scotland founded
Specsavers
in Glasgow in 1838. It was divested from National Australia Bank in early 2016 and its holding
company (CYBG plc) trades on the London and Sydney stock exchanges. It has an Experian Specsavers Optical Superstores Ltd (01721624) is a global optical retail chain. The
credit rating of 100 which represents a Very Low risk. partnership has an Experian credit rating of 100 which represents a Very Low risk.
2014 2015 2016 2014 2015 2016
Turnover - - - Turnover £392,606,000 £433,826,000 £673,564,000
Pre-tax profit -£216,000,000 -£308,000,000 -£352,000,000 Pre-tax profit £18,533,000 £20,398,000 £28,776,000
Net worth £2,505,000,000 £3,193,000,000 £2,965,000,000 Net worth £73,847,000 £54,568,000 £53,648,000
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALACCOMMODATION
The floor areas set out below have been provided by the
vendor and are based upon the RICS Code of Measuring
Practice (Sixth Edition).
Level Use NIA Area
(Sq ft) (sq m)
6 Office 1,311 121.79
5 Office 31,237 2,901.99
4 Office 30,268 2,811.97
3 Office 31,433 2,920.20
2 Office 31,878 2,961.54
1 Office 22,862 2,123.93
G Retail 33,956 3,154.59
Basement 10,000 929.02
Total 192,945 17,925.03
However, the property will be measured by Plowman Craven
to confirm these areas and to also provide areas in line with
the International Property Measurement Standards (IPMS 3).
These areas will be provided during marketing and a reliance
upon them can be provided to the purchaser.
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALFLOOR PLANS
GROUND FLOOR SECOND FLOOR
VACANT
VACANT
UNDER
OFFER
VACANT
CLYDESDALE BANK VACANT
UNDER OFFER VACANT
GHA TESCO POUNDLAND SPECSAVERS PHONE SHOP WILLIAM HILL NEWS SMART MINSTER HAIRDRESSING ALLY’S BARBERS
FIRST FLOOR THIRD FLOOR
BUCKINGHAM
WEALTH
GHA
UTILITA
VACANT
GHA SPECSAVERS BUCKINGHAM WEALTH UTILITA POUNDLAND VACANT CLYDESDALE BANK INGEUS HOUSE OF FRASER
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALFLOOR PLANS
FOURTH FLOOR SIXTH FLOOR
VACANT
VACANT
CLYDESDALE BANK VACANT HOUSE OF FRASER
CONNECT PROPERTY MANAGEMENT
FIFTH FLOOR
Note:
Floor plans have been provided for identification purposes only and are not
to be relied upon as a true reflection of the existing floor plates.
CLYDESDALE BANK
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALOCCUPATIONAL MARKET
Glasgow’s office market has performed well over the last 12 months, despite external
market challenges. Overall take up levels have exceeded the long term averages, with
the occupational market being underpinned by a number of significant transactions.
Take up in 2016 was strong, both within Glasgow city centre and out of town markets.
Within the city centre in 2016 take-up totalled 655,807 sq ft, the best performing year
since 2007. The largest completed deal was the pre-let of 154,814 sq ft pre-let to
Morgan Stanley at Bothwell Exchange, 122 Waterloo Street.
The strong occupier market and the lack of city centre office development means Grade A
office availability at the end January 2016 was 180,985 sq ft, the lowest level since Q1
2015. In addition there is no speculative office development capable of being completed
before the end of 2019 meaning prime rents could soon exceed £30.00 per sq ft.
Address Date Tenant Area Rent (psf)
(sq ft)
St Vincent Plaza Mar 2017 Wood Group 17,249 c£25.00
St Vincent Plaza Feb 2017 Mott MacDonald 34,515 £25.00
100 Queen Street Sep 2016 Edrington Group 29,900 £28.50
Cuprum Jun 2016 AXA 52,000 £20.00
Tay House Apr 2016 Regus 29,000 Undisclosed
Bothwell Exchange Mar 2016 Morgan Stanley 154,750 Undisclosed
110 Queen Street Mar 2016 ACCA 55,750 £29.00
9 George Square Jan 2016 Expedia 7,200 £24.50
St Vincent Plaza Jan 2016 Registers of Scotland 17,249 £24.00
Occupier confidence remains strong, and requirements led by lease events have been
largely unaffected by Brexit. There are occupier requirements in the market looking for
good quality, Grade B offices, particularly those who require a central location and
larger floor plates.
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSAL2-4 BLYTHSWOOD SQUARE 1 ATLANTIC QUAY & 1/3 ATLANTIC QUAY
Granite House leads the competition
Quoting Quoting
£20-£25.00 £25.00
sq ft sq ft
Quoting 9 GEORGE SQUARE
180 WEST GEORGE STREET
£16.50
sq ft
Quoting
Quoting £21-£23.00
£28.00 sq ft
sq ft
THE GARMENT FACTORY
100 QUEEN STREET
Granite House offers good quality Grade B office accommodation but at a
considerable discount to its competitors. It is further enhanced by the low business
rates payable (c£3.50 sq ft) and a very competitive service charge (£3.27 sq ft).
Quoting Quoting
£27.50 £22.00
sq ft sq ft
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALINVESTMENT MARKET
Transactional volumes, returns & yields
The UK saw a total of £48.9bn invested in UK commercial property in 2016, which was 27% below the
previous year, but still 10% above the 10 year average. This UK’s decision to vote to leave the European
Union of course influenced this, but the market enters 2017 with growing momentum. This has been
highlighted in the £16bn of transactions recorded in Q4 2016, an increase of 83% when compared with
the same period in 2015.
Average office yields in the UK contracted to 6.24% in 2016 and pricing is expected to be robust as
occupational markets remain under supplied, buildings are lost to alternative uses (particularly
residential) and the returns that can be derived from alternative investment asset classes remain benign.
The regions, particularly the cities of Glasgow and Edinburgh remain highly attractive to a host of
domestic and international investors, as evidenced by a number of key regional transactions. Prime
office yields in the UK’s most popular regional towns are currently circa 5%, with capital prices now
exceeding £550 sq ft, most notably in Manchester and Birmingham.
The table below sets out a list of relevant local and regional office transactions demonstrating the
strength of the UK’s office investment markets and the modest yield and capital price by which Granite
House is being offered to market.
Address Date Purchaser Price N.I.Y Capital WAULT
Value sq ft
Toronto Square, Exchanged JP Morgan £22.20m 5.67%* £252 2.93
Leeds
Zenith Building, Manchester Feb 2017 AM Alpha £22.95m 7.07% £309 2.40
2 & 3 Exchange Place, Jan 2017 HSBC Private £36m 5.86% £399 7.83
Edinburgh Client
201 Deansgate, Jan 2016 Aviva £29.15m 5.20%** £348 4.10
Manchester
No 1 Capital Quarter, Cardiff Oct 2016 Private Investor £20.85m 6.69% £267 6.02
No 1 The Square, Sep 2016 Canal and Rivers £15.40m 6.30% £314 4.30
Bristol Trust
The Grosvenor Building, Jun 2016 UBS Asset £17.85m 6.90% £316 6.37
Glasgow Management
1 East Parade & 8 St Pauls U/O Schroders £13.85m 6.31% £204 2.80
Street, Leeds
*circa 33,198 sq ft vacant **circa 15,000 sq ft vacant
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALGRANITE HOUSE: AN OUTSTANDING INVESTMENT OPPORTUNITY
The property provides an opportunity to acquire a high quality mixed use
investment in one of the UK’s ‘Big 6’ office markets. Why invest in Granite House?
• An asset located in the heart of Glasgow city centre.
• A very modest capital value, both in relation to the Glasgow and wider regional
office markets.
• Category B listed ensuring no vacant rates are payable.
• A diverse income stream, secured against a strong tenant line up at an
average passing office rent of £14.08 sq ft, considerably lower than its
competition and 53% below prime rents within Glasgow city centre.
• An opportunity to re-gear leases and drive rental growth through rent reviews.
• Generation of immediate rental reversion through the letting of the fully
refurbished vacant office accommodation.
• Rents have increased from £13.00 sq ft to £15.50 sq ft in the last 18 months
and currently quoting £16.50 sq ft, with further growth expected.
• Planning permission for a 2 storey c50,000 sq ft rooftop extension of Grade A
office space.
Computer Generated Image Computer Generated Image Computer Generated Image
INVESTMENT SUMMARY LOCATION SPECIFICATION TENANCY SCHEDULE ACCOMMODATION
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALForeign investment will continue to gather pace
INVESTMENT RATIONALE Investors continue to target UK commercial real estate and as such the UK
Offices have significantly outperformed the IPD all property index accounted for 22% of all European commercial property investment in 2016.
Despite a revival in the final quarter of the year, foreign investment into the UK
actually fell in 2016. However, this needs to be set against continued growth for
UK commercial real estate: a consistently performing asset class seven consecutive years where the UK has dominated European cross border
investment.
The UK commercial property investment market continues to be viewed as a safe
haven for investment, particularly in light of continuing global political and CROSS BORDER INVESTMENT VOLUMES BY COUNTRY
economic instabilities. UK commercial real estate has continued to perform
strongly and consistently when compared with other asset classes.
50,000,000,000
By way of example, over the last five years IPD has outperformed the FTSE 100
45,000,000,000
and Bloomberg Commodity Index. The office sector has also significantly
Investment volumes (£)
outperformed the wider IPD all property index. 40,000,000,000
35,000,000,000
FIVE YEAR TOTAL RETURNS BY ASSET CLASS 25,000,000,000
90%
12,500,000,000
86%
Total return (5 years)
0
45%
UK Germany France Poland Other
23%
2014 2015 2016 2017 to date
0%
-23% Whilst investment fell in 2016 across the UK, Scotland bucked this national
trend, with foreign investment into the region actually increasing by 50% year on
-45% year. Looking ahead, we anticipate the inflow of foreign capital will continue to
IPD All Property IPD All Offices FTSE 100 Bloomberg Commodity Index gather pace as investors look to target the drop in Sterling post Brexit.
Commercial real estate returns: yield margin vs bonds & gilts
Whilst we have seen limited and recent inflationary pressure, interest rates
remain at historically low levels. As such corporate bond and gilt rates are
following suit, meaning real estate returns and associated income yields
continue to look exceptionally attractive to investors, which we believe will
continue for UK commercial real estate throughout 2017.
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALSERVICE CHARGE
The service charge Budget for 2016 was £520,000 and the end of year
reconciliation is being finalised, however the annual spend was less than
the budget for the year. The service charge budget for 2017 totals
£537,813, This equates to £2.65 - £3.27 sq ft for the office accommodation
and £2.41 sq ft for the retail.
Granite House currently has a service charge shortfall of £101,867.
£25,463 pa of this is due to three service charge caps:
- Utilita 1st floor suite. This was part of the incentive package, this
expires on 22/09/2017 upon which there will be no shortfall. Total
Shortfall for 2017 is £18,691
- Clydesdale Bank 5th floor (until 01/08/2019) - £5,883 for 2017
- Minster Mcfarlane - £889.39 for 2017
The remainder of the shortfall is due to vacancy.
Full details can be provided on request.
BUILDING SURVEY
Full details can be provided on request.
VAT
The property has been elected for VAT and therefore VAT will be
chargeable on the purchase price. However it is anticipated the
sale will be dealt with as a Transfer of a Going Concern (TOGC).
EPC
The property has an EPC rating of D with individual floor rating of C.
Full EPCs can be provided upon request.
TENURE
The property is held Absolute Ownership (Scottish equivalent of
English Freehold).
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALPROPOSAL
We are instructed to seek offers in excess of £33,000,000 (Thirty
Three Million Pounds Sterling) subject to contract and exclusive
of VAT for the Absolute Ownership in the property. A purchase at
this level would represent a net initial yield of 7.27%, after
allowing for standard purchaser’s costs based on Land &
Buildings Transaction Tax.
CONTACT AND FURTHER INFORMATION
For further information and to arrange an
inspection please contact Cushman & Wakefield.
The vendor has set up a data room to which
access can be arranged.
Jason Winfield
Tel: +44(0) 207 152 5920
Email: jason.winfield@cushwake.com
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David Davidson
Tel: +44 (0) 141 223 8767
Email: david.davidson@cushwake.com
Richard Wadham
Tel: +44(0) 207 152 5923
Email: richard.wadham@cushwake.com
Stuart Low
MISREPRESENTATION ACT: Cushman & Wakefield gives notice that: These particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute
Tel: +44 (0) 141 223 8797 any part of an offer or contract. Details are given without any responsibility, and any intending purchasers, lessees or third parties 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. No person in the employment of Cushman & Wakefield as any authority to make any representation or
warranty whatever in relation to this property. Purchase prices, rents or other prices quoted are correct at the date of publication and, unless otherwise stated, exclusive of VAT. Intending purchasers
Email: stuart.low@cushwake.com
and lessees must satisfy themselves independently as to the incidence of VAT in respect of any transaction relating to this property. Date of publication March 2017.
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OCCUPATIONAL MARKET INVESTMENT MARKET OPPORTUNITY FURTHER INFORMATION PROPOSALYou can also read
