6-10 MARKET ROAD ISLINGTON, LONDON N7 FREEHOLD DEVELOPMENT / REFURBISHMENT OPPORTUNITY FOR SALE SUBJECT TO SHORT-TERM LEASEBACK

Transcription

1 6-10 MARKET ROAD ISLINGTON, LONDON N7 FREEHOLD DEVELOPMENT / REFURBISHMENT OPPORTUNITY FOR SALE SUBJECT TO SHORT-TERM LEASEBACK

2 6-10 MARKET ROAD, ISLINGTON, LONDON N7 INVESTMENT SUMMARY F reehold 4 4,824 sq ft office building arranged over lower ground, ground and two upper floors L ocated in Zone 2, minutes from Caledonian Road Underground and Caledonian & Barnsbury Overground station K ing s Cross St Pancras is less than a mile south, a 26 acre redevelopment serving as the biggest interchange station on the London Underground Network 12 month sale and leaseback of the whole building to Scope at a nominal rent, with guaranteed vacant possession at lease expiry P otential for refurbishment, redevelopment or change of use, including two additional floors, subject to the usual consents Strong building fundamentals; large open floorplates, excellent natural light and generous floor to ceiling heights Existing building, south facing elevation

3 6-10 MARKET ROAD, ISLINGTON, LONDON N7 RATIONALE FOR PURCHASE Close proximity to King s Cross St Pancras the largest urban regeneration project in Europe where prime rents have reached 70 psf plus Short term sale and leaseback provides the purchaser with a 12 month period to secure planning and explore options for the building Vendor willing to consider a longer term leaseback of part (c. 15,000 sq ft) post redevelopment, on lower and part ground floors Property offers flexibility to provide single or multi-let Grade A offices, serviced offices and is suitable for owner occupiers Proposed scheme designed by award winning architects BuckleyGrayYeoman to provide 60,900 sq ft of Grade A office accommodation including two new floors Potential to become an HQ office building in a market starved of high quality accommodation OUR CLIENT IS SEEKING OFFERS IN EXCESS OF 15,000,000 (FIFTEEN MILLION POUNDS) WHICH REFLECTS A LOW CAPITAL VALUE OF 335 PER SQ FT ON EXISTING ACCOMMODATION. Proposed scheme, south facing elevation

4 6-10 MARKET ROAD, ISLINGTON, LONDON N7 LOCATION 6-10 Market Road occupies a prominent, well connected location in London s Zone 2, just a few minutes walk north of King s Cross Central. The property is situated on the north side of Market Road, close to its junction with Caledonian Road. Market Road benefits from a vibrant mix of uses including residential, student housing, office and retail. Market Road Gardens and Caledonian Park are both on the doorstep, offering plentiful green outdoor spaces to local occupiers. The micro location is set to dramatically improve by the London Square regeneration opposite, which will include 252 new homes, a new community use building, new employment space, and a substantial commercial offering. After 150 years of industrial use, the area north of King s Cross and St Pancras stations has been transformed by the largest urban regeneration project in Europe. When complete the 26 acre development will provide 3.4 million sq ft of new workspace, 500,000 sq ft of retail and restaurant space, 2,000 new homes, a new campus for University of the Arts London and various leisure and cultural uses. Local regeneration at Tileyard Studios is attracting a strong mix of creative, collaborative industries and Aviva s 400 Caledonian Road development will provide further creative studio space alongside 25 new homes.

5 LOCAL OCCUPIERS 1 The Beans Group 2 Softwire 3 Mumsnet 4 Spring Studios 5 MVF Global 6 Viacom 7 ASOS 8 Google 9 LVMH 10 Universal 11 New Look 12 The Office Group 13 Havas Media 14 The Guardian 15 Sarah Wigglesworth Architects 16 Peddar & Scampton Architects 17 Foundation Architecture 18 ExchangeHub 19 AL_A 20 Rapha 21 Tileyard Studios Independent Label Reliance MusicGurus Music Managers Forum Escape Artists Le Third Floor 22 Screenworks 23 Wowcher 24 Ticketmaster 25 Cancer Research 26 Expedia GOSPEL OAK MALDEN RD KENTISH TOWN WEST PRINCE OF WALES RD CHALK FARM RD A CAMDEN TOWN ALBANY ST HIGHGATE RD 2 3 KENTISH TOWN A400 MORNINGTON CRESCENT 7 KENTISH TOWN RD CAMDEN RD A5200 CAMDEN HIGH ST EVERSHOLT ST ROBERT ST FORTESS RD CAMDEN ST HAMPSTEAD RD A503 CAMDEN RD A503 CAMDEN RD A5202 LONDON EUSTON ST PANCRAS WAY PANCRAS RD YORK WAY A5200 A5200 ST PANCRAS INTERNATIONAL KING S CROSS A501 EUSTON RD NORTH RD MARKET RD YORK WAY KING S CROSS ST PANCRAS A503 CAMDEN RD HILLMARTON RD A5203 CALEDONIAN RD A5203 CALEDONIAN RD 15 HOLLOWAY RD A1 A1 HOLLOWAY RD HOLLOWAY RD CALEDONIAN RD MACKENZIE RD CALEDONIAN RD & BARNSBURY A5203 A501 PENTONVILLE RD DRAYTON PARK LIVERPOOL RD 6-10 MARKET ROAD ISLINGTON, LONDON N7 24 ANGEL HIGHBURY & ISLINGTON LIVERPOOL RD LIVERPOOL RD ST JOHN ST 23 A1 UPPER ST A1 A1 UPPER ST A1200 A1201 ESSEX RD ISLINGTON GREEN A1201 HIGHBURY GROVE A CANONBURY RD A501 CITY RD A501 CANONBURY A1199 ST PAUL S RD A104 ESSEX RD NEW N RD A104

6 CONNECTED Transport links are excellent, with Caledonian Road Station located 180 metres to the north east of the property, providing access to Piccadilly Circus in approximately 12 minutes via the Piccadilly line. COCKFOSTERS 6-10 Market Road Piccadilly Line Victoria Line Central Line National Rail Crossrail Access to the London Overground is provided by Caledonian Road & Barnsbury Station, located less than 500 metres to the south east, providing services to Richmond, Clapham Junction and Stratford MARKET ROAD ISLINGTON, LONDON N7 HS1 Eurostar WALTHAMSTOW CENTRAL EPPING King s Cross St Pancras is less than 1 mile away, providing both national and international rail services and serving as the biggest interchange station on the London Underground network. WILLESDEN JUNCTION CALEDONIAN ROAD FINSBURY PARK HIGHBURY & ISLINGTON RICHMOND PADDINGTON ST PANCRAS INTERNATIONAL/ KING S CROSS EUSTON CALEDONIAN ROAD & BARNSBURY FARRINGDON STRATFORD WEST RUISLIP HEATHROW AIRPORT PICCADILLY CIRCUS LIVERPOOL STREET CANARY WHARF LONDON CITY AIRPORT VICTORIA WOOLWICH / ABBEY WOOD BRIXTON ASHFORD PARIS / BRUSSELS CLAPHAM JUNCTION

7 THE BUILDING The property comprises a 44,824 sq ft office building arranged over lower ground, ground and two upper floors. The existing office space is of a Grade B specification, offering excellent natural light and generous floor to ceiling heights throughout, as well as large, open-plan floorplates allowing flexible use. The building benefits from roof terraces on both the first and second floors. Converted from a printworks in 1980, the property is of steel frame construction with cavity brick elevations beneath an asphalt flat roof, with aluminium framed doubleglazed windows. The office accommodation benefits from one passenger lift serving all floors and a separate goods lift. The office core includes an unused lift shaft, which we believe can be reinstated. To the west of the main office entrance an undercroft car park is provided (6 spaces). There are no major structural concerns, however key areas requiring attention include the roof covering, curtain walling, roof lights and windows. The majority of the building services are original and at the end of their design and economic life expectancy, with replacement now required. There is a loading bay on the east side of the building with a loading platform and a DDA compliant lift between levels.

8 AREA PLAN 6 MARKET ROAD 6-10 MARKET ROAD, ISLINGTON, LONDON N7 LONDON, N7 Lower Ground Floor Net Internal Area OFFICE sq m sq ft STORAGE 6.5 sq m 70 sq ft TOTAL NIA: sq m sq ft The following has been INCLUDED in the TOTAL NIA: Tenant Showers 36.2 sq m 390 sq ft Tenant Toilet 6.3 sq m 68 sq ft EXISTING LOWER GROUND FLOOR PLAN FLOOR TO FALSE CEILING HEIGHT (METRES) F ALG Dwg No. A February 2016 Issue Scaled for presentation purposes Regulated by RICS +44(0) N Tenant Shower Stairs Terrace F2.70 Market Road M A R K E T R O A D SCHEDULE OF EXISTING FLOOR AREAS Stairs Tenant Showers Tenant Toilet Plant Floor NIA (Sq m) NIA (Sq ft) Revisions: A - Original Issue (February 2016) Notes: This drawing complies with the 6th edition of the RICS code and indicates the extent of the areas quoted, produced to an accuracy commensurate with standard presentation scales. It is held in a scaled digital CAD format. Dashed line denotes assumed wall line. Wall line inaccessible at the time of survey. Condition of Site: Occupied Vacant Heavy Fit-Out Shell & Core Under Construction Cat A Fit-Out EXISTING GROUND FLOOR PLAN Market Road AREA PLAN 6 MARKET ROAD LONDON, N7 First Floor Net Internal Area Stairs OFFICE sq m sq ft TOTAL NIA: sq m sq ft The following has been INCLUDED in the TOTAL NIA: Notional Lift Lobby 20.2 sq m 217 sq ft Tenant Shower 10.7 sq m 115 sq ft Tenant Toilet 10.5 sq m 113 sq ft EXISTING FIRST FLOOR PLAN Balcony Notional Lift Lobby F2.70 M A R K E T R O A D Tenant Shower Market Road Stairs Tenant Toilet Balcony FLOOR TO FALSE CEILING HEIGHT (METRES) F0.00 Dwg No A1 Issue A February 2016 Scaled for presentation purposes AREA PLAN 6 MARKET ROAD Condition of Site: Notes: Revisions: LONDON, N7 Occupied This drawing complies with the 6th edition of the RICS code and indicates the extent of the areas quoted, produced to an accuracy commensurate with standard presentation scales. A - Original Issue (February 2016) Vacant It is held in a scaled digital CAD format. Heavy Fit-Out Regulated by RICS Second Floor Shell & Core Dashed line denotes assumed wall line. Wall line inaccessible at the time of survey. Under Construction +44(0) Cat A Fit-Out Stairs Net Internal Area OFFICE sq m sq ft TOTAL NIA: sq m sq ft The following has been INCLUDED in the TOTAL NIA: Notional Lift Lobby 19.5 sq m 210 sq ft EXISTING SECOND FLOOR PLAN Balcony Notional Lift Lobby F2.66 Stairs Terrace FLOOR TO FALSE CEILING HEIGHT (METRES) F0.00 Dwg No A2 Issue A February 2016 Scaled for presentation purposes Notes: Revisions: This drawing complies with the 6th edition of the RICS code and indicates the extent of the areas quoted, produced to an accuracy commensurate with standard presentation scales. A - Original Issue (February 2016) It is held in a scaled digital CAD format. Regulated by RICS Dashed line denotes assumed wall line. Wall line inaccessible at the time of survey. +44(0) Second 1, ,134 First 1, ,217 Market Road M A R K E T R O A D Condition of Site: Occupied Vacant Heavy Fit-Out Shell & Core Under Construction Ground ,376 Lower Ground (Office) 1, ,027 Lower Ground (Storage) TOTAL 4, ,824

9 TENURE Freehold. The property is owned and occupied by Scope. SALE AND LEASEBACK The property will be sold subject to a leaseback to Scope, for a period of 12 months from the date of sale at a nominal rent, outside the security of tenure of the 1954 L&T Act. Our client will have no repairing obligations or dilapidations / reinstatement liability on expiry but will be responsible for Business Rates and building insurance. Scope are looking to downsize and will use the 12 month leaseback to consolidate their occupational strategy, either within the property or externally. A copy of the draft lease is available in the Data Room. TENANT Scope is a registered disability charity, working with disabled people and their families in England and Wales. The charity exists to drive change and provide information, advice and support so that disabled people have the same opportunities as everyone else. The charity employs 3,000 staff and has an annual turnover of approximately 100 million. For more information please visit Scope s website:

10 PLANNING 6-10 Market Road is located within the London Borough of Islington, and benefits from Class B1 office use throughout. The property is not listed and does not lie within a conservation area. Whilst the site is not specifically designated, it sits adjacent to or close to a number of policy designations, including Local Shopping Areas, a Locally Significant Industrial Site, SINC Borough Grade 1, Cycle Routes and Local Views. The area has an Article 4 Direction in place, exempting it from office to residential Permitted Development Rights indicating the London Borough of Islington s preference for the building to remain in office use. As such, any loss of Class B employment space on the site is likely to be resisted, and proposals seeking to refurbish the existing premises are likely to be supported. The article 4 boundary divides the property which may provide the opportunity for residential development. It is unlikely that there would be support for hotel use, student accommodation or retail, however there may be scope for a small amount of retail as part of a mixed use redevelopment. The preferred land use, should the policy presumption against the loss of offices be overcome, is residential. A full planning report is available in the Data Room. REFURBISHMENT OPPORTUNITY At the expiry of the leaseback the property will be offered with full vacant possession. The building offers many options including the opportunity to implement a full refurbishment of the property to provide Grade A office accommodation. Award winning architects BuckleyGrayYeoman have undertaken a feasibility study exploring increasing the massing of the property to provide an additional 18,250 sq ft of office accommodation. Their proposals recommend a comprehensive refurbishment and recladding of the existing building, including the following: Conversion of the car parking at ground floor to office space Conversion of the ground floor loading bay to a service entrance The addition of two new floors at third and fourth level, set back at the perimeter to accommodate rights-of-light considerations Inclusion of a void at the front of the building at ground floor level, to allow natural light to the lower ground Reconfiguration of the existing floorplates to provide an open plan, flexible workspace Proposed plans and a full rights of light survey is available in the Data Room.

11 PROPOSED LOWER GROUND FLOOR PLAN N PROPOSED SCHEME PROPOSED GROUND FLOOR PLAN The proposed scheme would provide an approximate total NIA of 60,900 sq ft of Grade A office accommodation, creating an uplift of circa 26.4% on the existing floorspace, arranged as follows: PROPOSED SCHEDULE Floor NIA (Sq m) NIA (Sq ft) Fourth ,600 Third ,650 Second 1, ,850 First 1, ,850 Ground 1, ,350 Lower Ground (Office) TOTAL 5, ,900 Market Road PROPOSED FIRST FLOOR PLAN Market Road PROPOSED NEW UPPER FLOOR PLAN Market Road Market Road

12 6-10 MARKET ROAD, ISLINGTON, LONDON N7 Internal layout with exposed services

13 Indicative cut back at ground level Structure 710mm 2640mm 3500mm Structural slab to Raised Floor 150mm Structure Cross section of proposed scheme Cross section showing exposed services

14 Below we set out details of recent comparable Central London lettings: MARKET COMMENTARY Office Occupational Rising rents in the core West End markets have continued to push occupiers to fringe sub-markets as firms seek larger floor plates at more affordable rents. Following extensive redevelopment, the area to the north of King s Cross and St Pancras Stations offers high specification office accommodation at a discount, relative to other Central London office markets, with excellent transport connections. The area boasts an impressive tenant line-up, with notable occupiers including leading academic, education and research institutions such as UCL and Central St Martin s and The Francis Crick Institute, cutting-edge names in music, media and fashion like Universal Music and Louis Vuitton, and a wealth of technology companies, notably Google who have chosen King s Cross for their new UK headquarters. As a result the area has witnessed strong rental growth with prime rents in King s Cross Central now in excess of per sq ft plus. Address Tenant Area (sq ft) Date Rent psf Lease term Garden House, White City Road, W12 Royal College of Art 38,860 Mar 2017 MediaWorks, Wood Lane, W12 Huckletree 22,795 Dec (asking) (asking) Undisclosed 10 years Ariel, W12 Net-A-Porter 5,920 Dec years Grand Union Studios, 332 Ladbroke Grove, W10 Drayson Technologies 6,088 Dec years Chiswick High Road, W4 Undisclosed 21,190 Nov Porchester Road, W2 Undisclosed 7,172 Oct Chiswick High Road, W4 HCA International Ltd Screenworks, Highbury Grove, N5 Undisclosed 30,939 Jul 2016 The Aircraft Factory, 100 Cambridge Grove, W6 Vista Entertainment (asking) 10 years 4 months Undisclosed 26,793 Sep years (asking) Undisclosed 5,785 Jun years R7, Handyside, King s Cross New Look Ltd 123,189 Mar years St Pancras Square

15 Occupational costs north of King s Cross compared with other Central London Sub-markets In comparison with Central London, the market north of King s Cross remains competitive. Full occupational costs to tenants including business rates and service charge, make this area a very attractive option for tenants considering each of the Central London markets, particularly those seeking large high-quality floor plates with excellent transport links. NORTH OF KING S CROSS ZONE 2 AR 50 BR NOHO EUSTON & KING S CROSS ZONE 1 AR 75 BR AR Av. Grade A Rent psf BR Business Rates psf SC Service Charge psf ZONE 1 PADDINGTON ZONE 1 AR 85 BR 30 AR 70 BR MAYFAIR & ST JAMES S ZONE SOHO & COVENT GARDEN ZONE 1 KENSINGTON AR 110 BR 45 AR 85 BR 40 SOUTH BANK ZONE 1 HAMMERSMITH ZONE 2 AR 60 BR 20 ZONE 1 AR BR VICTORIA ZONE 1 AR 80 BR 33 AR 65 BR

16 OFFICE INVESTMENT Following Britain s decision to leave the European Union, the Central London investment market remains one of the most liquid and secure real estate markets in the world. London continues to be a key investment target for domestic and overseas capital. Yield premiums on commercial property versus UK Gilt yields combined with historically low sterling exchange rates, remains a key attraction of Central London real estate helping to maintain investor focus. Fringe sub-markets continue to experience considerable demand with buyers attracted by robust investment credentials, underpinned by a severe lack of supply, good rental growth prospects and proximity to major transport hubs like King s Cross. Below we set out details of recent comparable Central London Investment transactions: Address Date Sale Price NIY CV psf Tenure Vendor Purchaser WAULT Comments The Aircraft Factory, W6 On market Quoting 73.50m 5.5% 948 Freehold Westbrook Europe LLP n/a 4.25 years - On market Cambridge Heath Road, E2 Jan m VP 630 Long Leasehold Tower Hamlets Telford Homes VP - Vacant Possession 233 Commercial Road, E1 Dec m VP 428 Long Leasehold Tower Hamlets 123 Pentonville Road, N1 Dec m 5.6% 932 Long Leasehold The Translation Building, Imperial West, White City, W12 Stage 6, Television Centre, 101 Wood Lane, White City, W12 Monteagle Barlow Trust Sheen Lane Developments Undisclosed May m 3.37% 814 Long Leasehold Imperial College Aviva Investors VP 11 years 25 years from practical completion Apr m 3.74% 713 Long Leasehold Stanhope Aviva Investors 25 years - Vacant possession - Comprehensively refurbished in Forward funding opportunity - Long leasehold tenure: 150 year term remaining at a peppercorn - Annual RPI uplifts between 0% and 4% per annum - Long leasehold tenure: 996 years remaining / head rent of 10 per annum. - Comprehensively refurbished - Quasi UK Government income - Annual uncapped RPI uplifts

17 EPC The property has an EPC rating of D89. VAT The property is not elected for VAT. DATA ROOM For access to the Data Room please contact a member of the sales team. PROPOSAL UNCONDITIONAL OFFERS FOR THE FREEHOLD INTEREST ARE INVITED IN EXCESS OF 15,000,000 (FIFTEEN MILLION POUNDS), REFLECTING A LOW CAPITAL VALUE OF 335 PER SQ FT. SUBJECT TO CONTRACT AND EXCLUSIVE OF VAT. CONTACT MARKETING WEBSITE Please access the marketing website to download key documents including: Title Sales Brochure Existing Floorplans and proposed floorplans Draft Lease For further information, or to arrange a viewing, please contact: James McAdden Rob Skioldebrand Central London Capital Markets Central London Agency and Development T +44 (0) T +44 (0) M +44 (0) M +44 (0) James.mcadden@montagu-evans.co.uk Robert.skioldebrand@montagu-evans.co.uk Emily Dawson Angus Marlow-Thomas Central London Capital Markets Central London Agency T +44 (0) T +44 (0) M +44 (0) M +44 (0) Emily.dawson@montagu-evans.co.uk Angus.marlow-thomas@montagu-evans.co.uk MISREPRESENTATION ACT 1967 Montagu Evans LLP for themselves and for the vendors or lessors of this property whose agents they are, give notice that: (i) The particulars are set out as a general guideline only for the guidance of intending purchasers or lessees and do not constitute the whole or any part of an offer or contract. (ii) All descriptions, dimensions, references to condition and necessary permissions of the use and occupation, and other details are given in good faith without responsibility whatsoever and any intending purchasers or tenants 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. (iii) Neither Montagu Evans LLP nor their employees has any authority to make or give any representation or warranties whatsoever in relation to the property. (iv) Unless otherwise stated, all prices and rents are quoted exclusive of VAT and intending purchasers or lessees must satisfy themselves independently as to the applicable VAT position. (v) All the plans and maps provided within the particulars are for identification purposes only. April 2017.