Prime high street retail investment Shoreditch E2
Investment Considerations Prime retail and residential property in s thriving cultural hub,, Shoreditch. is amongst the most sought after address in East. A well configured retail unit with four residential flats above. Freehold. Excellent retail and residential rental growth prospects. Current income 211,772 per annum and a reversionary income of 282,714 per annum. A significant uplift to open market rent from 125 ZA- 226 ZA psf on the T2 retail unit (on settlement of the February 2019 rent review). Potential reconfiguration of the upper floors to create additional residential units. Offers in excess of 6,500,000 (Six million, five hundred thousand pounds), subject to contract and exclusive of VAT. A purchase at this level will provide a net initial yield of 3.06% and A reversionary of 4.07% assuming purchaser costs at 6.64%. 2
Location Shoreditch, in the Borough of Hackney, has become one of s fastest growing districts. It is a thriving hub of and is often compared to New York s Meatpacking district. Liverpool Street Shoreditch High Street Old Street Shoreditch has a strong underlying arts heritage and is host to a variety of boutique high-end retailers, galleries, restaurants, bars and clubs. forms a key link running east from Shoreditch High Street, immediately north of the iconic Tea Building is Bethnal Green Road where it meets the famous Brick Lane. The street is located in a prominent place to attract daily footfall from the City & Old Street. Spitalfield Markets Moorgate Brick Lane is situated to the east of the subject property and meets Spitalfields Market at its southern end. This forms a Circular route from Liverpool Street and encompasses Shoreditch s leading fashion brands and restaurants. Boxpark Tea Building Redchurch Street Shoreditch E2 3
HOXTON HACKNEY ROAD CAMBRIDGE HEATH CITY ROAD KINGSLAND RD Connectivity GOSWELL ROAD OLD STREET OLD STREET BARBICAN BARBICAN MOORGATE ST PAUL S MOORGATE SHOREDITCH LONDON WALL LIVERPOOL STREET Shoreditch Village GREAT EASTERN STREET principal place BISHOPSGATE 2 4 B122 3 SOHO B122 OLD SPITALFIELDS MARKET Redchurch Street 1 SHOREDITCH HIGH STREET The Goodsyard COMMERCIAL ST ALGATE EAST Huntingdon Estate BRICK LANE CHESHIRE ST BRICK LANE MARKET WHITECHAPEL RD BETHNAL GREEN RD WHITECHAPEL WEAVERS FIELD BETHNAL GREEN BETHNAL GREEN WHITECHAPEL THE ROYAL LONDON HOSPITAL Shoreditch is well connected by transport hubs providing quick services to the city, west end and wider. is closely located to Liverpool Street Station, one of s busiest transport stations, served by the Central, Circle, Hammersmith & City and Metropolitan underground lines, along with National Rail services. Other stations in close proximity include Old Street which benefits from the Northern line and National rail services, Shoreditch High Street, Bethnal green, Hoxton and Moorgate. With the opening of the crossrail in December 2019, journey times from Liverpool Street are anticipated to decrease significantly. Thus, Shoreditch will be more accessible than ever and consequently, footfall is expected to rise. ALGATE Key Journey Times Current Journey Times Crossrail Journey Times When the route fully opens in December 2019, a train every two and a half minutes at peak time will allow passengers to travel all the way through to Paddington, Heathrow or Reading in the West and Shenfield or Abbey Wood in the East. Liverpool Street Canary Wharf 22 min 6 min Paddington 23 min 10 min Abbey Wood 42 min 18 min 4
Key Developments 1 3 2 1. Huntingdon Estate and Newcastle and UK & European have submitted a proposal for a high end mixed use development. The Huntingdon estate will become a 15-storey residentialled mixed use scheme on a former industrial site bordering and Bethnal Green Road. The development will provide a mix of retail, café s, restaurants, offices, art gallery exhibition space and leisure with approximately 80 residential apartments and a penthouse above. 2. Principal Place Developed by Brookfield, the site is immediately north of Bishopsgate Tower between Worship Street and Hearn Street. The 600,000 sq ft, 15 storey Office Building, will be home to Amazon from 2017, who have pre-let 430,000 sq ft. The development will also provide 20,000 sq ft of restaurants, shops and a Boutique Gym. In addition, the mixed-use development also includes a 50 storey residential building, due for completion in 2019. 3. The Goodsyard Hammerson and Ballymore have submitted plans for the development of Bishopsgate Goodsyard, the former rail depot has remained empty and derelict for the past 50 years. A mixed use project of up to 1,360 new homes, new offices, shops and public space, including a raised public garden. Goodsyard will cater for growing Tech City media & technology demands, independent business, start-ups and local people. 4. Shoreditch Village A two phase re-development of Shoreditch village. The first phase is now completed and the second phase has been acquired by Brockton Capital. The site is bound by Shoreditch High Street, Holywell Lane & New Inn Yard. 4 A proposal has been submitted for a 150,000 sq ft mixed-use and public realm scheme providing a vibrant mix of public, retail, café, restaurant, residential and commercial space. 5
Demographics benefits from the busy community of Hackney, the 3rd most densely populated borough in. It has a population of 269,009 people, with a large proportion of the population being in the age category of 20-24 years old and 15-19 years old. Over the past decade, Hackney has experienced a rapid increase in economic growth. In 2016, the borough was host to 18,070 firms a 68% increase since 2004. This growth is 23% higher than as a whole. Additionally, has recorded the fastest growth of all 50 Central pitches, tracked at 73% Y-O-Y. Situation The building is situated on the prime pitch of, between Club Monaco and Murdock. The street hosts some of the trendiest international brands including APC, Aesop, Browns, Nudie Jeans and Sunspel. It is also home to Shoreditch House, Albion Cafe, the Electric Cinema and Allpress. Description The subject property comprises a well configured retail unit over ground and basement with four independently accessible maisonettes above, 3 of which are let on AST s and the 4th sold off on a long lease expiring 2636. These proposals will enhance the value of the upper floors. The vendor has drawn up plans for a reconfiguration/ refurbishment of the existing residential units (plans on request). This provides further scope for additional residential units. 6
Retailing in has been referred to as the hip Soho of East, with high end retailers flocking to the area; it has quickly become the forefront of the fashion world. Recent years have seen an escalation in retailer requirements as the popularity and prestige of the street has soared. is home to hip fashion brands such as APC, Aesop, Browns, Nudie Jeans and Sunspel. It is also home to Shoreditch House, Albion Cafe, the Electric Cinema and Allpress. has benefited from strong rental growth over the past 3-4 years. This is largely due to the increase in demand from the topend brands. The latest open market evidence suggest there is a significant uplift on the subject property at the 24/02/2019 rent review. is amongst the most sought after address in East REDCHURCH STREET RENTAL COMPARABLES Unit Tenant Type Date Rent Zone A 25/27 Kite Eyewear Open Market Letting May 2017 213,691 226 21/23 Kit & Ace Open Market Letting June 2015 250,000 257 7
Residential in Shoreditch Property prices within the area have surged over the past decade, more specifically, over the last year property prices have increased 13%, according to Savills. The vast amount of international interest within the area has been a main driver for the rapid growth in residential values. Prices within the area vary, from ex-local authority homes selling between 700-800 per sq ft, maisonettes for around 900-1000 per sq ft and newly built homes between 1000-1550. There are numerous new build projects occurring around the area. Recently, a flat on the 20th floor of the nearby Avant-Garde Tower- which was completed in 2014 sold for 1,550 per sq ft. Other new developments within the area, including The Stage and Principal Tower, are achieving in excess of these rates. Rental demand in the area remains extremely strong from a diverse audience. We are of the opinion that the flats in the subject property are currently let at below market value and there is immediate capacity to increase the rent. 8
KIT & ACE NEW SOHO HOUSE HOTEL BROWNS 50 metres Copyright and confidentiality Experian, 2017. Crown copyright and database rights 2017. OS 100019885 Experian Goad Plan Created: 27/02/2017 Created By: Kitchen LaFrenais Morgan For more information on our products and services: www.experian.co.uk/goad goad.sales@uk.experian.com 0845 601 6011 9
Accommodation & Tenancies Unit Tenant Use Area (sq ft) Lease Start Lease Expiry Break Next Review Rent (pa) Zone A ERV ERV Zone A Comments Ground Retail 1 st Floor Flat 2 nd Floor Flat 3 rd Floor Flat 4 th Floor Flat T2 Retail ITZA 662 Basement 383 Ground 1,041 Ground anc 55 Total 1,479 24/02/2014 23/02/2024 24/02/2019 24/02/2019 82,500 125 153,442 226 3 Bedrooms Residential 1,389 14/05/2017 13/05/2018 40,560 40,560 AST. Tenant Mr Romain Casella. 4 Bedrooms Residential 1,402 15/03/2017 14/03/2018 44,212 44,212 3 Bedrooms Residential 1,393 01/10/2016 30/10/2017 44,200 44,200 Penthouse Residential - 30/09/2642 300 300 Residential Sub Total 4,184 129,272 129,272 Total 211,772 282,714 AST. Tenants R Freemantle, S Clark, F Tregeagle,A Liubinas. AST. Tenants Holding Over. Tenants Mr T Abraham, Mr T Desai & Mr I Valodzin Ground rent doubles every 25 years of the term with effect from 1 July 2036. 10
Tenure This property is held Freehold. Covenants T2 Tea (UK) Limited started in Melbourne, Australia 1996, surety from Unilever UK Holdings Limited. This Australian brand offers an incredible selection of loose-leaf teas, herbal artisan and tea ware from around the world. Experimenting with new ideas and inspiring exotic flavours. In 2014, T2 branched out of Australia into the UK and other destinations within Europe. T2 now have 17 stores across the UK. EPC Energy performance Certificates are available upon request. 11
VAT VAT will be payable on the purchase price. The sale will be dealt with as a transfer of a going concern. Proposals Further Information We are instructed to invite offers for this prime freehold exclusive of VAT, in excess of 6,500,000 subject to contract, at which after allowance for standard costs a purchaser would see a net initial yield of 3.06%, and a reversionary yield of 4.07% assuming purchaser costs at 6.64%. For further information or to arrange an inspection of the property, please contact: Mark Bennett +44 (0)20 7317 3711 mbennett@klmretail.com Mostafa Sbitri +44 (0)20 7317 3720 msbitri@klmretail.com Alice Grindrod +44 (0)207 317 3719 agrindrod@klmretail.com Langham House 302-308 Regent Street W1B 3AT MISREPRESENTATION ACT: KLM Retail, for themselves and for the vendors of this property, whose agents they are, give notice that (i) the particulars and any further information communicated by any means to potential purchasers of the property described in the particulars, or their advisers, in connection with the possible sale of the property are provided solely for the purpose of assisting potential purchasers in deciding whether they wish to proceed with further investigation of the property and do not constitute either the whole or any part of an invitation, offer or contract for sale of the property; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation and other details are given in good faith and are believed to be correct as at the date of the particulars (or the date of the relevant information if earlier). However, potential purchasers are not entitled to rely on them as statements or representations of fact but should satisfy themselves by searches, enquiries, surveys and inspections or otherwise with regard to the accuracy of such details. No responsibility or liability is or will be accepted by KLM Retail, the vendor(s) of the property or any of their respective subsidiaries, affiliates, directors, officers, representatives, employees, advisors, or agents for any loss or damage suffered by any party, resulting from reliance on the particulars or any other information communicated by any means to that party, or its advisers, in connection with the possible sale of the property. No person in the employment of KLM Retail or the vendor(s) has authority to make or give any representation or warranty, express or implied, in relation to the property. References to KLM Retail include any joint agents acting with KLM Retail. Designed by BRAND+OUTLINES Ltd. 2017