mowbray house · 2020. 11. 20. · mowbray house 4 mowbray house 5 nottingham positioned at the...

MOWBRAY HOUSECASTLE MEADOW ROAD, NOTTINGHAM, NG2 1AB

HEADQUARTERS OFFICE INVESTMENT OPPORTUNITY

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� 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.

INVESTMENT SUMMARY

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NOTTINGHAMPOSITIONED 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 million people and forms the centre of the UK’s 8th largest urban area. It has a catchment of over 3 million people within half an hour’s drive time. Nottingham is one of eight members of the English Core Cities Group and benefits from a £12.1 billion economy.

Nottingham has a working population of over 850,000 people, of which over 620,000 are in full time employment. It is also home to two of the UK’s leading universities; The University of Nottingham and Nottingham Trent University, which are attended by approximately 60,000 students. This pool of educated and skilled labour is a major attraction for businesses located in the city.

Nottingham continues to attract a number of international corporations with over 50 Regional and National headquarters located in the city.

The city has recently benefited from a number of major infrastructure projects including the £150 million upgrading of Nottingham Station to create the Nottingham Transport Hub. The £570 million extension of the NET Tram system connecting the existing line from the City Centre to Toton at J25 of the M1 Motorway (adjacent to the new HS2 East Midlands Hub) and the dualling of the A453 between the M1 Motorway at J24 and Nottingham City Centre. Combined, this infrastructure spend has been one of the largest in any of the regional cities in the UK and has significantly enhanced the position of Nottingham as a core regional location.

Nottingham is located approximately 125 miles (200 km) north of London, 55 miles (88.5 km) north east of Birmingham and 83 miles (133 km) south east of Manchester.

Key occupiers include:

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CONNECTIVITYNOTTINGHAM BENEFITS FROM A WORLD CLASS, MULTI-MODAL INTEGRATED TRANSPORT INFRASTRUCTURE, PROVIDING EXCEPTIONAL LOCAL, NATIONAL AND INTERNATIONAL CONNECTIONS.

Excellent access to the national Motorway network by virtue of a central UK location, directly adjacent to Junctions 24, 25 and 26 of the M1 Motorway, and also in close proximity to the A42 / M42 link to the West Midlands and the A50 link to the North West. Significant upgrades to the road network have been carried out with the dualling of the A453 between Junction 24 of the M1 and Nottingham City Centre, completed in 2015, and the installation of smart motorway from Junctions 23a to 25 of the M1, completed in February 2019

Nottingham benefits from extensive intercity and regional rail services, with regular services to London St Pancras International every 30 minutes, via the Midland main line, with a fastest journey time of 1 hour 31 minutes and connecting directly with Eurostar services to the continent. Other major cities are also served by fast direct services including Derby (21 minutes), Leicester (26 minutes), Birmingham (1 hour 14 minutes) and Manchester (1 hour 49 minutes). Nottingham Station has recently undergone a £150 million refurbishment and upgrade project to create a true transport hub for the East Midlands. A dedicated HS2 station is planned at Toton to the West of Nottingham.

Nottingham Express Transit Tram System

The city benefits from the Nottingham Express Transit (NET) tram system, one of the UK’s most successful rapid transport systems. The system is formed of two lines which connect Phoenix Park and Hucknall in the north with Toton and Clifton in the south via the City Centre. The southern extension to Toton via Chilwell and Beeston was completed in 2015 at a cost of £570 million.

Nottingham is served by East Midlands Airport, located 12 miles to the south west of the city. East Midlands Airport is connected to Nottingham City Centre by the 24 hour Skylink bus service and direct rail services to the nearby East Midlands Parkway, with a fastest journey time of 10 minutes. It is the 13th busiest airport in the UK in terms of passenger traffic and is a major cargo hub, being the 2nd busiest airport for freight traffic after London Heathrow. It provides daily direct flights serving the principal European and International destinations.

A47

A14

A1

A1

A47

PETERBOROUGH

KETTERING

LEICESTER

EAST MIDLANDS

BIRMINGHAM

COVENTRY

STOKE-ON-TRENTNOTTINGHAM

MANCHESTER

SHEFFIELD

DONCASTER

GRIMSBYBARNSLEY

LINCOLN

GRANTHAMDERBY

STOCKPORT

M42

A1(M)

M180

M54

M1

M1

M1

M6

M6

M6

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SITUATIONTHE PROPERTY OCCUPIES A PROMINENT POSITION ON THE WEST SIDE OF WILFORD ROAD OPPOSITE THE JUNCTION WITH CASTLE MEADOW ROAD AND FORMS PART OF THE WIDER HMRC SITE, TO THE SOUTH WEST OF THE CITY CENTRE WITHIN NOTTINGHAM’S CENTRAL OFFICE CORE. NEARBY OCCUPIERS INCLUDE THE INLAND REVENUE, LAND REGISTRY, PAREXEL, GALA LEISURE, UPS AND GTT. ON THE EAST SIDE OF WILFORD ROAD ARE A NUMBER OF PUBLIC SECTOR BUILDINGS INCLUDING THE NOTTINGHAMSHIRE ARCHIVES AND NOTTINGHAM MAGISTRATES COURTS.

There are also a number of leisure operators nearby off Canal Street including various pubs, restaurants, a comedy club and gym. In addition, retail premises lie close by with the Intu Broadmarsh Shopping Centre and the prime retail areas of Nottingham within a five minute walking distance.

Public transport links are good with Nottingham’s main railway station, various bus stops and the NET tram all within walking distance. In addition there is a NCP multi-storey car park close by.

TRAM LINE

NOTTINGHAM

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NOTTINGHAM TRENT UNIVERSITY

MARKET SQUARE

INTU VICTORIA CENTRE

INTU BROADMARSH

NOTTINGHAM CASTLE

THE PARK

HOCKLEY

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WILFORD R

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WOLLATON STREETDERBY ROAD

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CARLTON ROAD

HUNTINGTON STREET A6

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CANAL ST R EET

HOCKLEY

NOTTINGHAMSTATION

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DESCRIPTIONTHE PROPERTY COMPRISES A SELF-CONTAINED HEADQUARTERS OFFICE BUILDING CONSTRUCTED IN 1994 AND DESIGNED BY AWARD WINNING ARCHITECT MICHAEL HOPKINS, ARRANGED OVER GROUND, FIRST, SECOND AND THIRD FLOORS.

The accommodation is arranged over ground and three upper floors and provides regular ‘L’ shaped floor plates served by a central core separating the east wing from the north wing. Each wing benefits from Ladies & Gentlemen’s WCs, showers, kitchens and lift access. Staircase access is provided within the central core and at the far end of each wing.

Externally, the property benefits from an attractive self-contained garden and patio area, fronting the canal.

EXTERNAL

The building incorporates concrete, steel and brick structural elements. It is understood that the external walls are formed in factory built storey height load bearing brick columns with steel lifting rods capped by shaped concrete padstones, which support pre-cast concrete barrel vaulted floor units. The central core and outer stairwell are understood to be formed principally from reinforced in situ concrete elements.

The central feature stairwell at the junction of the two wings is steel framed with glass block infills. Internal floors are understood to have a reinforced concrete upper surface beneath a raised floor arrangement with a circa 300 mm deep void.

The building has excellent natural light with powder coated aluminium framed double glazed windows with tilt and slide mechanism. The windows have powder coated louvered railings and rectangular glass canopies. The third floor elevation has exposed metal painted framing with lead infill panels to the lower half and powder coated aluminium windows to the upper half. The main roof coverings are pitched and finished with lead sheet with pitched glass ridge. The stairwells have domed fabric roofs.

INTERNAL

The open plan offices have raised access floors with carpet tiles, whilst the core areas generally 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 concrete to the open plan and core areas. There are a small amount of plastered ceilings and suspended ceilings within the ancillary toilet and kitchen areas.

The third floor has a sloping plywood ceiling aligned with the underside of the pitched roof. The elevations within the ground to the second floors comprise brickwork to the open plan offices and painted concrete and plaster surfaces to the core and ancillary areas. At third floor level the perimeter walls comprise varnish plywood finishes similar to the ceilings. There are painted reinforced concrete stud partition walls to central core areas.

Lighting to the ground to second floors comprises recessed overhead lighting within the concrete ceilings whilst at third floor overhead fluorescent strip lighting is provided. We understand the building’s original design incorporated a perimeter finned radiator heating within floor grills beneath perimeter windows and a natural ventilation system via stairwells and opening windows to lower floors via windows and opening ridge vents to the third floor level, supplemented with some ducted fresh air supply.

We understand that a comfort cooling system was 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.

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EXISTING LEASES

Let to Browne Jacobson LLP on three co-terminus leases expiring on 30 November 2021, subject to the recently agreed 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

FROM/TO

24 June 2020 28 Sep 2020

28 Sep 2020 24 Dec 2020

25 Dec 2020 24 Mar 2021

25 Mar 2021 23 Jun 2021

24 Jun 2021 28 Sep 2021

29 Sep 2021 30 Nov 2021

Ground First & Second £132,412 £132,412 £249,695 £249,695 £249,695 £249,695

Third Floor Eastern £28,587 £28,587 £53,907 £53,907 £53,907 £53,907

Third Floor Northern £25,074 £25,074 £47,283 £47,283 £47,283 £47,283

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

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

REVERSIONARY LEASES

Browne Jacobson LLP have entered into three 5 year reversionary lease extensions from 1 December 2021 to 30 November 2026. The aggregate rent under the reversionary leases is £868,875 per annum which reflects £15 per sq ft. The full rent is payable from 1 December 2021.

A concession to pay rents monthly has been granted on the reversionary leases.

In addition, there is a tenant option to break at the 3rd anniversary of the leases, subject to a total break penalty of £60,814 plus VAT. If the tenant does not exercise the break, then a further rent free period of 4.8 months commencing from 1 December 2024 will be granted. The break can only be exercised across all three leases simultaneously.

SERVICE CHARGE & REPAIR

The leases are subject to repairing and insuring provisions which are recovered via service charge. The leases are also subject to a Schedule of Condition limiting the reinstatement obligations at the end of the term. Further information is available upon request. The service charge is split into two schedules, a building service charge and an estate service charge.

The total service charge budget for the year ending 31 March 2021 is £377,745 per annum reflecting £6.52 per sq ft. This comprises £263,795 (£4.55 per sq ft) for the estate service charge and £113,950 (£1.97 per sq ft) for the building service charge.

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.

ACCOMMODATION TENANCYThe property has been measured in accordance with the RICS Code of Property Measurement (Sixth Edition), on a net internal basis and has not been measured in accordance with the international property measurements standard (IPMS) 3-office.

Floor Use Sq Ft Sq M

Ground, First & Second Floors

Reception / Meeting Room / Café / Offices

41,288 3,836

Third Floor (Eastern)

Offices 8,863 823

Third Floor (Northern)

Offices 7,774 722

TOTAL 57,925 5,381

TENUREThe property is held freehold under Title Number NT486086.

THE BREAKDOWN OF THE ANNUAL RENT PER LEASE IS AS FOLLOWS:

Floor Rent P/A

Ground, First & Second Floors £619,320

Third Floor (Eastern) £132,945

Third Floor (Northern) £116,610

TOTAL £868,875

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COVENANTBrowne 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.

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MARKET COMMENTARYTAKE-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

Date Property Size Tenant Term Headline Rent (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

Q4 2018Ground Floor, Donington Court, Pegasus Business Park

6,040 Wates Construction Limited 10 years £15.25

Q4 20182nd Floor, Donington Court, Pegasus Business Park

7,369 Air Logistics Limited 10 years £16.00

Q4 2018 13 – 19 Derby Road 10,065 Wren Sterling Financial Planning 15 years £20.00

Q2 2018Part 2nd Floor, Donington Court, Pegasus Business Park

5,904 HSBC Bank plc 10 years £15.25

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

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PLANNINGAs 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.

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VAT

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

ENERGY PERFORMANCE CERTIFICATE

The Energy Performance Certificate is available on request.

ANTI-MONEY LAUNDERING (AML)

Any offer accepted is subject to completing AML checks.

PROPOSALWe 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.

FURTHER INFORMATION

CONTACTVIEWING AND FURTHER INFORMATION

Strictly by appointment only with the Sole Agent, Savills.

Victor Ktori [email protected] 07870 999 467

Christopher Brogan [email protected] 07870 555 966

Savills Enfield Chambers 18 Low Pavement Nottingham NG1 7DG

Savills 33 Margaret Street London W1G 0JD

Tom Subba Row [email protected] 07976 268 711

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

mowbray house · 2020. 11. 20. · mowbray house 4 mowbray house 5 nottingham positioned at the...

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