cotton house, 7 cochrane street, glasgo - cotton...cw-cottonhouse-retail-brochure-v16.indd 2...
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Cotton House, 7 Cochrane Street, GlasgowCity Centre Government Let Office Investment
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Cotton House, 7 Cochrane Street, GlasgowInvestment Summary
Attractive government let office building.
Wholly occupied by HMRC as a key operational centre for Glasgow.
Core city centre location, close to major public transport connections.
Let to The Secretary of State for Communities & Local Government until 14 December 2028, with tenant break options on 15 December 2020 and 15 December 2025.
Current passing rent of £978,096 per annum (£16.85 per sq ft, exclusive of parking), with 5 yearly, upward only, open market rent reviews.
Well specified office building extending to a total of 52,346 sq ft (4,863.03 sq m) of office accomodation and 41 secure underground car parking spaces, providing an excellent car parking ratio of 1:1,277 sq ft.
Absolute Ownership (Scottish equivalent of English Freehold).
Offers in excess of £11,510,000 (Eleven Million, Five Hundred and Ten Thousand Pounds Sterling), subject to contract and exclusive of VAT are invited for the Absolute Ownership in the property.
A purchase at this level would represent a net initial yield of 8.00%, after allowing for purchaser’s costs based on LBTT and a low capital value of £220 per sq ft.
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Location
The property is situated on the corner of Cochrane Street and
Montrose Street, within the Merchant City area of Glasgow
city centre.
Cochrane Street links the south east corner of George Square
with the Merchant City to the east and leads to St Vincent Place
and St Vincent Street further to the west, which is Glasgow’s
traditional prime office area.
George Square has historically been Glasgow’s civic, cultural and
commercial heart. Its popularity as an office location has been
reinforced with the redevelopment of the 100% prime, Grade A
offices: Connect110ns, Queen Street and G1, George Square.
The close proximity to both main line railway stations, all other
public transport hubs and the numerous retail and leisure facilities
make this location extremely popular amongst occupiers.
City Chambers
Queen Street Station
University of Strathclyde
Network Rail
Buchanan Galleries Shopping Centre
St Enoch Shopping Centre
Buchanan Bus Station
Glasgow Caledonian University
City of Glasgow College
The Italian Centre
EY, Mercer
The Weir Group
Deloitte, Grant Thornton
Candleriggs Quarter Development Site
George Square
Mercure Hotel
Clydesdale Bank
House of Fraser
M&S
Lloyds Banking Group
Argyle St. Station
Royal Exchange Square
Merchant Square
Merchant City AreaPremier Inn
Inovo Building
Cotton House
Argyle Street
Buchanan Street
Sauchiehall Street
M8 Motorway
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Cotton House, 7 Cochrane Street, GlasgowDescription Tenancy
Cotton House was completed in 1998 and is laid out over ground and five upper floors, providing flexible, open plan office accommodation. The building is of reinforced concrete frame construction, with natural blond sandstone cladding.
The subjects are arranged around a central core and provide a flexible “L-shaped” floor plate that can be easily sub-divided.
The property benefits from on-site cycle racks and a secure 41 space car park, giving an excellent city centre car parking ratio of 1:118.61 sq m (1:1,277 sq ft).
The property is let in its entirety to The Secretary of State for Communities & Local Government on a 15 year lease expiring on 14th December 2028 with 5 yearly open market rent reviews, the next review date being 15th December 2018. The current passing rent is £978,096 pa, which reflects £16.85 per sq ft assuming car parking is rentalised at £2,500 per space per annum and reception at half rate.
The lease is subject to a Minute of Variation which entitles the tenant to terminate the lease on two relevant break dates, namely 15th December 2020 and 15th December 2025, subject to 12 months prior written notice.
The Minute of Variation allows for a reduction in the initial annual rent over the term of the lease. The reduction is structured as follows:
• Date of Entry until 14th Dec 2020 = a reduction of £116,440 pa.
• If the tenant does not exercise the break in 2020 they will receive an additional 8 months’ rent free, amortised equally over 5 years.
• If the break is not exercised in 2025, the tenant receives an additional 3 months’ rent free, amortised equally over the remaining 3 year lease term.
Internally, the building benefits from the following office specification:
• Large, open plan floor plates of approximately 9,000 sq ft.
• Suspended ceilings incorporating recessed light fittings.
• Full raised access floors.
• Four pipe fan coil air conditioning with delivery in the
floor voids.
• Two 10 person passenger lifts.
• Male, female and disabled toilet facilities on each floor.
• Shower and gym facilities located on the 2nd floor.
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Accommodation
The subjects have been measured on a net internal area (NIA) basis in accordance with the RICS Code of Measuring Practice (6th Edition) and approximate areas are as follows:
Floor Description NIA sq m NIA sq ft
Fifth Office 662.15 7,127
Fourth Office 873.06 9,398
Third Office 857.42 9,229
Second Office 857.46 9,230
First Office 857.58 9,231
Ground Office 682.73 7,349
Ground Reception 72.63 782
Total 4863.03 52,346
Tenure
Absolute Ownership (Scottish equivalent of English Freehold).
Typical Upper Floor
COCHRANE STREET
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VAT EPC
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).
The property has an EPC rating of D. A full EPC can be provided on request.
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Cotton House, 7 Cochrane Street, GlasgowTenant Information
The building is currently let to The Secretary of State for Communities & Local Government, having been occupied by HMRC since practical completion.
Cotton House is an important operational centre for HMRC. It has historically been the main tax enquiry centre for the public and businesses in the Glasgow area, and is currently utilised for a number of back office operations.
Given the current indications of UK constitutional reform and potential devolution of tax powers to Scotland, it is likely the tenant’s role and importance in Scotland will increase significantly.
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Glasgow is one of the UK’s Big Six office markets. It is Scotland’s largest city, with a population of nearly 600,000 and a wider regional catchment of approximately 2.3 million. The city is well regarded for its skilled workforce, with five higher education institutions based in the city and 40% of the working age population educated to degree level or above.
Although traditionally boasting a strong manufacturing economy, Glasgow has moved towards becoming a service-based economy over the past 25 years. 84% of jobs now fall into the service sector. This includes professional services such as finance, public administration and business services.
Nearly 17,000 companies are now based in Glasgow, and the city contributes approximately £18 billion GVA per annum to the Scottish economy. Glasgow has been recognised for its strategy to attract investment and was named the Best Large City in Europe for its Foreign Direct Investment Strategy in fDi Magazine’s European Cities and Regions of the Future 2014/2015 rankings.
Communications
Cotton House benefits from a core city centre location that affords easy access to Glasgow’s excellent transport network, which allows connectivity across and out of the city.
Glasgow’s transport options include the following:
Rail: Two main line railway stations, Glasgow Central and Glasgow Queen Street, are within walking distance of Cotton House and provide rail connections to all major UK cities. Network Rail have recently submitted an application to Scottish Ministers for the redevelopment of Glasgow Queen Street Station.
Air: Glasgow Airport, Edinburgh International Airport and Prestwick Airport offer routes to over 130 destinations worldwide, with Glasgow Airport accessible within 15 minutes drive time from the city centre, and Edinburgh International Airport and Prestwick Airport within 45 minutes.
Road: The M8 motorway dissects Glasgow city centre and is located within 15 minutes of Cotton House. The motorway provides easy access to Edinburgh and links to the M80 reaching northwards and the M74 reaching southwards.
Bus: 22 bus operators run services across the city, including frequent services to Glasgow International Airport. Buchanan Bus Station is located nearby offering links to other UK cities.
Subway: Three stations are available in the city centre and link to key leisure, business and cultural areas in the west end.
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Cowcaddens Road
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BuchananBus Station
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Map key
Prime retail
Merchant City
Cotton House
Glasgow
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Cotton House, 7 Cochrane Street, GlasgowGlasgow Office Investment Market
Address Date Purchaser Price Net Initial YieldCapital Value Per Sq Ft
Comments
180 West George Street, Glasgow August 2015 Picton £14.25m 7.80% £274 Multi-let with AWULT of 2.40 years.
180 St Vincent Street, Glasgow July 2015 Northwood £11.90m 7.00% £232 Multi-let with AWULT of 3.87 years.
Equinox, Glasgow July 2015 Amundi £33.40m 5.25% £491 Let to ESure with 15.5 years unexpired term.
Elgin House, 20 Haymarket Yards, Edinburgh
April 2015 Kames £14.82m 6.14% £297Let to The Secretary of State for Communities and Local Government until December 2028, with a tenant break option in December 2023.
1-5 Rutland Court, Edinburgh Dec 2014 Private £14.75m 6.50% £381 Let to Anderson Strathern until December 2023.
200 Renfield Street, Glasgow Sep 2014 Kames £13.70m 8.07% £257Let to Newsquest (Herald & Times) Ltd until May 2030 with a tenant break option in May 2020.
30-40 St Vincent Place, Glasgow Apr 2014 Patrizia £10.80m 6.86% £219 Let to Clydesdale Bank Plc until September 2024.
Glasgow is a major UK regional office centre and has attracted long term investors in UK commercial property from UK institutions, overseas funds and high net worth individuals. Recent comparable city centre office investment transactions are highlighted in the table below.
180 West George Street - Glasgow Elgin House - Edinburgh Buchanan Street - Glasgow
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Glasgow Office Occupational Market
• Glasgow is Scotland’s largest office market, with an existing
stock of approximately 27 million sq ft, of which 15.2 million sq
ft is in the city centre.
• 2014 saw Glasgow exceed its 10 year average take-up figure,
and 2015 is set to continue this trend. Take-up has totalled
326,617 sq ft to the end of September 2015, and is being driven
by banking/financial institutions, professional, I.T. and business
service firms.
• There are over 450,000 sq ft of active requirements in the
market currently, including occupiers such as KPMG, Morgan
Stanley and CMS Cameron McKenna.
• Three speculative city centre developments completed in Q2
2015. Over 25% of the available accommodation is already let
(c. 125,000 sq ft), reflecting the strong demand for high quality
space in Glasgow.
• Prior to the completion of these developments, Grade A
availability was at a particularly low level, forcing prime rents
to £29.00 per sq ft. Incentive packages have tightened to
18-24 months per 10 year term. Given the strong market
fundamentals, it is anticipated that prime rents could soon
reach £30.00 per sq ft.
• Continued competition for space is likely to encourage occupiers
to consider good quality, Grade B offices, particularly those
with a more limited budget who require a central location.
Recent key lettings are highlighted in the table below.
Address Date Tenant Area (sq ft)
Granite House Q3 2015 Clydesdale Bank Plc 19,766
1 West Regent Street Q3 2015 FDM Group 13,695
Cuprum Q2 2015 Teleperformance 27,522
2 West Regent Street Q2 2015 FanDuel 8,450
1 West Regent Street Q2 2015 Arup Group 13,681
1 West Regent Street Q4 2014 The Weir Group Plc 25,514
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Proposal
We are instructed to seek offers in excess of £11,510,000 (Eleven Million, Five Hundred and Ten Thousand Pounds Stirling) 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 8.00%, after allowing for purchaser’s costs based on Land & Buildings Transaction Tax and a low capital value of £220 per sq ft.
For further information please contact:
Calum Cowe Tel: 0131 226 8759 Email: [email protected]
Steven Newlands Tel: 0131 226 8756 Email: [email protected]
Natasha Ross Tel: 0131 226 8735 Email: [email protected]
Cushman & Wakefield LLP The Auction House 63A George Street Edinburgh EH2 2JG
MISREPRESENTATION ACT
Cushman & Wakefield LLP (and any joint agent appointed) on their own behalf and for vendors or lessors of this property, whose agents they are, give notice that: 1/ The particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract. 2/ No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. 3/ The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. 4/ Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. 5/ Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. October 2015
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