QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
PR IME MULT I - LET C ITY CENTRE OFF ICE AND RETAI L INVESTMENT
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
BRIGHTON STATION
QUEENSBERRY HOUSE1 0 4 - 1 0 9 Q U E E N S R O A D | B R I G H T O N
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
INVESTMENT SUMMARY
Fully let prime city centre office and retail investment
Comprehensively refurbished in 2009
Energy efficient office accommodation (EPC B rating)
Total floor area of 35,622 sq ft - 25,957 sq ft of office and 9,665 sq ft of retail accommodation
Multi-let to eight substantial tenants providing a diverse income stream
Annual rent of £808,327 pa
35% of income reviewed to RPI
Ideally placed to benefit from rental growth due to constrained office supply in Brighton
WAULT of 4.8 years to breaks, and 6.59 years to lease expiries
Freehold
PROPOSAL
Offers in excess of £11,750,000
Net initial yield of 6.5%
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
CLOCK TOWER
SOVEREIGN HOUSETHE GRAND HOTEL
ROYAL PAVIL ION
BRIGHTON PIER
CITYVIEW
CHURCHILL SQUARE SHOPPING CENTRE
TRAFALGAR PLACE
NEW ENGLAND QUARTER
CIRCUS STREET
AMERICAN EXPRESS
BRIGHTON STATION
A259A259
QUEENSBERRY HOUSE1 0 4 - 1 0 9 Q U E E N S R O A D | B R I G H T O N
THE LANES
VICTORIA GARDENS
BRIGHTON UNIVERSITY GRAND PARADE CAMPUS
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
KINGS ROAD GRAND JCT RD.
MARINE PARADE MARINE DRIVE
WILSO
N AVEN
UE MARIN A
WH
ITEH
AWK
WAY
SWAN
BORO
UGH
DRIVE
ARUN
DEL R
D.
ROEDEAN ROAD
ST. JAMES'S STREET
OLD
S TEINE
OLD
STE
INE
WESTERN ROAD NORTH STREET
MO
NTP
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R RO
AD
D
ENM
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TER.
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DAVIGDOR ROAD CHAT
HAM PL.
BUCKINGHAM PL. TERMIN
US RD. DYKE ROA
D
CHURCH STREET
WES
T ST
REET
QUE
ENS
ROA
D
TRAFALGAR STREET
OLD SHOREHAM ROAD NEW ENGLAND RD.
GLO
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PRESTON ROAD LON
DON
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D PL
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LEW
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VIADUCT RD. U PPER LEW
ES RD
BEACO
NSFIELD RD.
EDWARD STREET
THE STRAND
ELM GROVE
W
ARREN ROAD
WARREN ROAD
DROVE ROAD
BEAR ROAD
TEN
ANTR
Y DO
WN
RO
AD
FRES
HFIE
LD R
OAD
MANOR HILL
MADEIRA DRIVE
West Pier
BrightonStation
London RoadStation
Palace Pier
Volks Electric Railway
STA
STA
STA
Churchill SquareShopping Centre
BrightonMarina
The Lanes
A23
A270
A23
A259
A259
GLOUCESTER ROAD
NORTH ROAD
BR IGHTON
Brighton is the cultural and creative capital of the UK’s South Coast, with significant art, advertising and music industries, together with a burgeoning alternative culture.
Brighton is a major retail and visitor destination city. Its 5.4 mile length of shingle beach and location less than one hour from Central London has made it one of the UK’s most popular ‘day trip’ destinations, attracting over 8.5 million visitors annually.
Brighton’s history as a seaside resort dates from the Georgian era, when members of the Royal Family frequented the town, and much of the town’s architecture is in Regency style.
Brighton, located approximately 54 miles from Central London, benefits from excellent transport links, with Gatwick Airport situated approximately 28 miles to the north, and a regular fast train service to both London Bridge and London Victoria, with a fastest journey time of 54 minutes. The city also benefits from being on the Thameslink line, providing direct access to London Blackfriars, London St Pancras, and Luton Airport Parkway.
The town is easily accessible by car, with the A27 providing access across the South Coast, to Worthing, Chichester and Portsmouth to the west, and to Eastbourne and Hastings to the east, whilst the A23 runs north, becoming the M23, leading to the M25.
A339
A272
M25
M25
M25M40
M20
M20M1
M4
M3
M23
M27
A23A24
A24
A27A27
A26
A21
A22
A3
A3
A31A34
A34
BRIGHTON
London
Portsmouth
Isle of Wight
Eastbourne
WorthingBognor Regis
Gatwick
HorshamCrawley
Petersfield
Southampton
Basingstoke
Guildford
Reading
Maidenhead
Heathrow
Lewes
Tonbridge
Croydon S ITUAT ION
Queensberry House is positioned in Brighton’s best business location. It is prominently located on Queens Road, the arterial route between the train station and the seafront, and the Brighton’s prime retail facilities comprising The Lanes and Churchill Square Shopping Centre.
The property is located approximately 250m from the train station, and approximately 700m from the seafront.
The city’s retail heart is within a short walk, with The Lanes, Brighton’s famous shopping streets approximately 500m to the south east and Churchill Square the same distance to the south west.
QUEENSBERRY HOUSE1 0 4 - 1 0 9 Q U E E N S R O A D | B R I G H T O N
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
“DEMOGRAPHICS AND BUS INESS/EMPLOYMENT
Brighton has a significant services sector and a population with high level service and communication skills. Alongside its retail, tourist, arts, entertainment and recreation assets, Brighton also has significant education, financial services, business/professional services and health sectors.
Brighton’s population is approximately 273,000. There are now over 120,000 people working in the city, including 8,000 entrepreneurs, many in the professional, scientific and creative industries. Between 1998 and 2008 employment in Brighton grew by 20,000 and the value of Brighton’s economy doubled compared to a 70% increase nationally.
Centre for Cities is an independent think tank that produces an annual report that profiles economic and labour market conditions across 64 major urban areas in the UK. Its 2015 Cities Outlook Report provides the following statistics relating to Brighton:
4th (of 64 cities) highest growth in net jobs between 2004 and 2014
9th highest employment rate in 2014 of 75.5%
6th highest qualified population (44.1% to NVQ4 +)
2nd highest digital connectivity (super fast broadband) of 89.3% of postcodes
7th lowest CO2 emissions per capita
Traditional businesses with a major presence in Brighton include American Express, Domestic & General, Lloyds Banking Group and Legal General. Other large private sector employers include Kimberley Clark, BUPA, Kineo, Riot Games and iCrossing. These last three are indicative of Brighton’s popularity with Creative, Digital and IT (CDIT) businesses with 16,000 people now working for creative businesses in the city and CDIT employment having grown by over 25% between 2010 and 2013, a 10% faster rate than the national average.
In 2011 HSBC Business described Brighton as “an alternative economy super-city and a dynamic centre for innovative companies forging novel ways of doing business”
An alternative economy super-city and a dynamic centre for innovative companies forging novel ways of doing business
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
DESCRIPT ION
Queensberry House is a purpose-built office building, constructed in the 1960s and comprehensively refurbished and extended in 2009. The building also provides retail accommodation at ground and basement levels.
As part of the refurbishment, a penthouse office suite was added, which benefits from an extensive rooftop terrace and panoramic coastal views.
The property is arranged over basement, ground and six upper floors, with an office reception at ground floor.
The property benefits from nine car parking spaces at the rear accessed off Frederick Street. Further parking is available nearby at the 162 space NCP North Street, and the 587 NCP Brighton Theatre on Church Street.
Following the full refurbishment in 2009, at a cost of approximately £115 per sq ft, the property provides Grade A office accommodation with amenities including:
New heating and cooling to the offices via VRV systems New raised access floors New windows comprising double glazed aluminium units New metal suspended ceilings with LG7 compliant lighting Two new 8-person DDA compliant lifts serving basement to 5th floors New electrical supplies, meters and switchgear New water and gas supplies and drainage New fire alarm system New roof and elevations painted
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
QUE
EN'S
ROAD
FRED
ERIC
KST
REET
15
58
102Shelter
107
101100
16to
20
5
111
58
23
6 57
103to
105
12
21
63
57a
62
56
1 to 12
The OceanBuilding
Queensberry House
43to
46
5354
55
40to
42
5148
52
4947
50TENURE
Freehold. The site area total approximately 0.28 acres (0.11 hectares).
Right of way for car park accessFreehold Demise
F LOOR PLANS
Typical upper floor plan:
Not to scale - for identification only
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
TENANCIES
The property is let on effective full repairing and insuring terms, in accordance with the tenancy schedule below:
Tenant Floor/Unit Sq ft Rent pa Rent psf Lease Start Lease Expiry Break Date Review Date Comments
Tesco Stores Limited 104/105 4,827 84,177 17.44 25/06/2009 24/06/2024 – 25/06/2019 Rent is reviewed to RPI (uncapped)Arranged over ground and basement
Parks Residential Limited 107 1,524 30,000 19.69 25/12/2008 24/12/2023 – 25/12/2018 Arranged over ground and basement
McClelland Music Limited 108 1,524 32,500 21.33 23/04/2014 22/04/2024 22/04/2019 23/04/2019 Rent is reviewed to RPI (uncapped Arranged over ground and basement
Subway Realty Limited 109 1,790 37,500 20.95 25/03/2014 24/03/202924/03/2019
24/03/202425/03/2019
Rent is reviewed to RPI (uncapped)Sublet to Rajeev Sharma t/a SubwayArranged over ground and basement
Dyn Limited First 4,998 131,328 26.28 31/03/2015 31/03/2025
31/03/18Rolling break thereafter on 6m notice
31/03/2020
Lease is reviewed to higher of RPI or OMV + 10%6 month rent depositLease guaranteed by Dynamic Network Services Inc
Lockton Companies International Limited
Second (part) 3,638 90,950 25.00 01/02/2011 31/01/2021 – 01/02/2016
Optical Express Limited Second (part) 1,454 29,000 19.94 12/12/2012 11/12/2017 –
Brighton Business Centre Limited (t/a Regus)
Third 5,001
372,872 23.50 06/05/2010 05/05/2020 – 06/05/2015
Rent payable by tenant is based on a combination of guaranteed and turnover rent. Further details below.Tenant has a contractual right to renew lease for a further 5 years.
Fourth 4,950Fifth 4,998Sixth 918
Total 35,622 808,327
REGUS OCCUPATIONAL HISTORY:
Regus took occupation in 2010 and following a 6 month fit out traded up over an 18 month period. Following an initial emphasis toward larger spaces and occupiers, the accommodation has recently been reconfigured to provide more smaller spaces, increasing the capacity from 150 desks to 260 desks.
Recent trading figures, since the works completed in June 2015, demonstrate a strong uptick in revenue, with average desk rents now at £280 per month, and occupancy levels forecast at 90-95%. At these trading levels there is strong potential for a landlord to enjoy profit rent in the region of £12,000 - £25,000 per annum.
REGUS RENT CALCULATION MECHANISM:
Rent payable by Regus is calculated as follows:
Guaranteed Rent – 50% of quarterly market rent, reviewed 5-yearly and currently £93,218 per quarter (£372,872 per annum).
Basic Rent – 50% of quarterly turnover, capped at 50% of quarterly market rent (current cap of £46,609 per quarter). To achieve a rent that equates to the market rent, quarterly revenue must be a minimum of £186,436.
Profit Rent – When 50% of quarterly revenue exceeds 50% of quarterly market rent, a profit rent is payable, calculated as follows:
(Quarterly revenue – (quarterly market rent * 2)) * 30%. This is capped at 20% of quarterly market rent.
At current market rent, a quarterly revenue of £186,436 is required to generate a Profit Rent. The most recent quarterly revenue exceeds this. Further information available on request.
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
TENANT INFORMATION
Tenant Turnover from latest account Profit Net worth D&B rating
Tesco Stores Limited, Company no. 519500 £42,547,000,000 £1,696,000,000 £3,038,000,000 5A1
Parks Residential Limited, Company no. 02984119 Not disclosed Not disclosed £200,322 B2
McClelland Music Limited, Company no. 04295879 Not disclosed Not disclosed £368,757 A2
Subway Realty Limited, Company no. 04174473 £28,613,501 £1,946,179 £655,859 A3
Dyn Limited, Company no. 07938282 Not disclosed Not disclosed £255,784 B2
Dynamic Network Services Inc Not disclosed Not disclosed Not disclosed 1R3
Lockton Companies International Limited, Company no. 01211673 Not disclosed £2,647,031 £25,558,493 4A1
Optical Express Limited, Company no. SC161469 £79,479,693 -£3,589,047 -£1,830,278 N1
Brighton Business Centre Limited (t/a Regus), Company no. 7226401 £876,000 -£184,000 -£759,000 N2
Tesco Stores Ltd is a subsidiary of Tesco PLC, one of the world’s largest grocers, with over 500,000 staff in 12 countries. In the UK, Tesco have over 3,500 stores.
Parks Residential Letting Agency is a leading Brighton and Hove lettings and property management company, established in 1992.
McClelland Music trade as Hobgoblin Music, established in 1976, selling music instruments, with a particular focus on the folk market. They currently have nine branches across the UK.
A franchised sandwich shop, operating in the UK since 1996 with1,400 stores in the UK.
Founded in 2001, Dyn is an internet performance company. Queensberry House is the company’s European headquarters.
The world’s largest privately owned insurance brokerage firm, founded in 1966
One of the UK’s leading eyecare providers.
Subsidiary of Regus PLC, established in 1989 and now one of the global leaders in serviced offices.
SERVICE CHARGE:
The 2015 service charge budget is £5.53 per sq ft for the office accommodation and £1.21 per sq ft for the retail units. Each tenant also pays into a sinking fund which will be transferred on sale and currently amounts to circa £160,000, subject to confirmation.
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
Brighton and Hove established itself as a major office centre in the 1970s, when several predominantly financial institutions relocated from London, to join public sector occupiers led by Brighton & Hove City Council.
Alongside these financial occupiers, the Brighton market has been characterised in recent years by an influx of media and technology companies attracted by the culturally diverse lifestyle available to employees in the city. These companies now account for circa 50% of total office take up.
However, Brighton’s office stock has hardly changed since the mid 1980’s with an estimated 85% of Brighton’s 4 million sq ft of stock built before 1987. The only major schemes within the city centre in the past 25 years have been Trafalgar Place (250,000 sq ft) and Amex’s 220,000 sq ft new HQ building at 1 John Street which replaced its previous HQ fronting Edward Street comprising circa 300,000 sq ft.
It is estimated that circa 750,000 sq ft of city centre offices have been removed from Brighton’s office stock in the past decade as demand for housing and student housing made change of use away from offices profitable for owners of ‘tired’ office buildings. This has further accentuated the effects of a long term lack of office development and led to a supply shortage.
Two new office schemes are now being promoted into this relative vacuum of which McAleer & Rushe’s speculative CityView, located north of the train station, will provide 32,000 sq ft of office accommodation and is under construction with completion due at the end of 2015. Agents are not formally quoting a rent, however prospective tenants are being issued with leasing terms based on a rent of £28 per sq ft which will conceivably rise to £30 per sq ft at completion. This scheme is likely to appeal to financial and mature tech companies.
The second potential scheme is Cathedral Group’s Circus Street scheme where a 30,000 sq ft building is likely as part of a £100M mixed use development and will be targeted towards smaller and fast growing tech companies. The site is currently being cleared and development is planned to commence towards the end of 2015.
A lack of supply is helping to drive rental growth with top headline rents currently over £25 per sq ft, as evidenced by the recent letting to Dyn in Queensberry House at £26.28 per sq ft. Elsewhere in the city, Sovereign House has regularly achieved rents of £23-£23.50 per sq ft and £25 per sq ft at Trafalgar Place.
In similar sized South East office centres, such as Maidenhead, Woking and Staines, headline rents are now £35 per sq ft, £30 per sq ft and £33 per sq ft respectively. In this context, Brighton’s headline rents are very sustainable and offer strong potential for rental growth in the short term.
BR IGHTON OFF ICE MARKET
KEY RECENT INVESTMENT TRANSACTIONS IN THE SOUTH EAST AND SOUTH COAST MARKET INCLUDE:
Date Sold Address Tenants WAULTSize
(sq ft)Rent
(per sq ft)Sale Price NIY Purchaser
Aug -15 The Atrium, Uxbridge Multi Let 4.3 years 156,529 £24.95 £55,900,000 5.68% Blackrock
May -15 Argentum, Hammersmith Regus 5.2 years 25,424 £30.78 £16,226,000 4.10% Royal London
May -15 Apex Plaza, Reading Multi Let 3.2 years 221,231 £26.13 £90,000,000 5.63% Legal & General
Apr -15 One City Park, Hove Legal & General 11.8 years 78,121 £18.83 £23,170,000 6.00% Kames
Dec -14 Chiswick Gate, Chiswick Multi Let 2.1 years 13,339 £26.67 £6,510,000 5.50% Private
Oct -14 Newplan House, Epsom Multi Let 4.3 years 23,100 £19.73 £6,900,000 6.25% Cornerstone
Sep -14 Goldvale House, Woking Multi Let 4.1 years 20,556 £21.64 £6,450,000 6.50% LaSalle
Aug -14 80 Moorbridge Road, Maidenhead Multi Let 5 years 18,894 £21.88 £6,840,000 5.66% Legal & General
Dec -13 Two City Park, Hove Legal & General 10 years 67,296 £18.90 £18,080,000 6.65% M&G
Nov -13 One Gloucester Place, Brighton Multi Let 3.8 years 37,721 £20.60 £11,025,000 6.66% Royal London
QUEENSBERRY HOUSE104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
CONTACT
Richard Talbot-Williams0207 338 [email protected]
Hugh Yates0207 338 [email protected]
Misrepresentation Act 1967: BNP Paribas Real Estate Advisory & Property Management UK Limited for themselves and for the vendor(s) or lessor(s) of this property whose agents they are, give notice that: 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact. 3. Any intending purchaser or lessee must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor(s) or lessor(s) do not make or give and neither BNP Paribas Real Estate Advisory & Property Management UK Limited nor any person in their employment has any authority to make or give, any representation or warranty whatever in relation to this property. Finance Act 2013: Unless otherwise stated all prices and rents are quote exclusive of VAT. The Business Protection from Misleading Marketing Regulations 2008: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. September 2015
EPC
The office accommodation benefits from an excellent EPC rating of B 39.
The retail units benefit from the following EPCs: 104/105 – C 68 107 – C 75 109 – D 78 108 – C 58
PROPOSAL
We are instructed to seek offers in excess of £11,750,000 (Eleven Million Seven Hundred and Fifty Thousand Pounds) reflecting an initial yield of 6.5%, net of the usual purchaser’s costs of 5.8%.
View from Queensberry House roof
04589 / 020 7355 2500 / taylerreid.co.uk| |
CAP ITAL ALLOWANCES
The vendor has not claimed CAs during its ownership. Owing mainly to the 2009 full refurbishment of the building there is an estimated pool of £1.75m -£2.2m of qualifying expenditure, which assuming Corporation Tax of 20% would result in a tax saving of circa £350,000-£440,000. Capital allowances are available to the purchaser by separate negotiation.