Commercial Property Round-Up – August 2019

 

Murray Capital Group strikes deal to sell major Edinburgh office development

Murray Capital Group, the family investment vehicle chaired by former Rangers Football Club owner Sir David Murray, is set to sell a prestigious Edinburgh office building for close to £54 million, according to reports.

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Shelborn Investments buys 124 St Vincent Street

Shelborn Investments Limited has bought the 124 St Vincent Street office building located in the heart of Glasgow’s Central Business District. 

The landmark building is situated in a prime location on St Vincent Street between the junctions of Hope Street and Renfield Street. 

Extending to 38,750 sq ft over ground and seven storeys, the property also includes 16 secure car parking spaces.

Global real estate agency CBRE advised Shelborn Investments Limited on the acquisition.

Boutique property advisors DougraySmith represented the vendor.

 

Aberdeen office market sees improvement following healthier second quarter

Office take-up in Aberdeen showed significant improvement in the second quarter, with a rise to 106,579 sq ft from 36,898 sq ft in Q1 2019, according to CBRE research.

There was a total of 19 transactions, bringing the total take-up for H1 2019 to 143,477 sq ft – 20 per cent short of the 179,421 sq ft transacted for the same period in 2018.

The average letting size was 5,609 sq ft, the largest letting being Citibase taking 17,159 sq ft at H1, Hill of Rubislaw, showing further growth in the serviced office sector.

CBRE Surveyor Amy Tyler said: “The Q2 figures are encouraging and a clear sign of stronger market sentiment which we expect to continue improving. Despite a slow start in Q1, there are several deals in the pipeline, and we anticipate a strong H2 performance. Some of these deals that we expect to complete are larger lettings and we anticipate the annual take-up for 2019 will reach, if not surpass, the level achieved over the past couple of years.

“There is also a lot of activity in the oil and gas sector at the moment, with a number of mergers and acquisitions taking place. We expect this will create a number of new property requirements going forward which will lead to further activity in the Aberdeen office market.”

 

Investment in Edinburgh offices surges in 2019

Investment in Edinburgh offices during the first half of 2019 has outstripped 2018’s annual total after a flurry of significant deals in the second quarter, according to analysis from Knight Frank.

The independent commercial property consultancy found that nearly £310 million had been invested in the city’s offices between January and June 2019, well ahead of the previous 12 months’ total of £284 million.

Between April and June alone, more than £290 million was spent by investors.

The six-month figure was buoyed by two recent deals. In May, one of Germany’s largest pension funds purchased 4-8 St Andrew Square, home to Standard Life Aberdeen, for £120 million.

This was followed in June by the £100 million purchase of the Leonardo Innovation Hub at Crewe Toll by an unnamed Korean investor.

Earlier in the year, a £55 million property at Gyle Square was also acquired by Korean investors. Korean funds have now made four major purchases in Scotland since their first transaction in 2017, including the £48 million deal for Glasgow’s 110 St Vincent Street in June this year.

 

Wheels in motion for Buccleuch Property as it purchases Edinburgh car showroom

Buccleuch Property continues to strengthen its commercial property portfolio with the purchase of 22 Seafield Road in Edinburgh for £2.1 million reflecting a net initial yield of circa 7.15 per cent.

Situated along the well-established motor mile of Seafield Road on the east side of Edinburgh, the modern car showroom comprises 20,000 sq ft of showroom and repair workshop with parking for approximately 100 vehicles across the 1.15 acre site.

The property is let to Vertu Motors who operate a Hyundai franchise from the premises under their Macklin Motors brand.

The lease has a further 4.5 years and the annual rent is £160,000 per annum.

Buccleuch Property was advised by Alan Herriot of Ryden on the purchase.

MWM Property Consultants acted on behalf of the vendor.

 

Cameron Toll sold

Edinburgh’s Cameron Toll shopping centre has been sold in £38 million deal backed by funding from Royal Bank of Scotland.

The transaction sees Franklin Templeton Investments acquire the site which has spaces taken up by Aldi, Argos, Boots and Sainsbury’s.

RBS provided a debt facility to facilitate the deal, according to trade publication React News.

The Edinburgh-based bank said in a statement: “We are delighted to be able to support Franklin Real Assets Advisors, on behalf of their value-add clients, and Hunter REIM Limited, in relation to the recent acquisition of Cameron Toll Edinburgh.

 

HMRC to move into new UK Government Hub in Edinburgh from April 2020

HM Revenue and Customs (HMRC) will be the largest department based at the flagship UK Government Hub in Edinburgh, now dubbed “Queen Elizabeth House”, when the first teams start to move in from April 2020.

Scottish Secretary David Mundell today announced the name of the new building, a seven-storey, 190,000 square feet office space located near Edinburgh’s Waverley Station which was officially handed over last month.

It will bring together nearly 3,000 UK Government civil servants from a range of UK Government departments from next spring.

 

Gamma radiates success at 2 West Regent Street
 
Acting on behalf of Warburg-HiH Invest Real Estate UK Ltd, Avison Young and LSH have now let the 4th and 9th floors at 2 West Regent Street to technology firm Gamma. The deal, which is the largest of Q1 2019, will see Gamma take two floors at a total of 15,744. sq. ft.
 
The move by Gamma, a leading provider of cloud telephony and UCaaS telecommunications services to the business market, signals the continued expansion and growth of the technology sector of the city. 

 

Buccleuch Property acquires prime Newcastle city centre office and leisure investment

Buccleuch Property has expanded its commercial property portfolio with the purchase of Lloyds Court & 52-60 Grey Street, Newcastle upon Tyne for £12.45m, reflecting a net initial yield of circa 6.4 per cent.

Lloyds Court & 52-60 Grey Street is situated in a prime location in the heart of the city centre.

A combined 47,000 sq ft of office and leisure accommodation is let to a range of good quality tenants including Northern Electric, Sir John Fitzgerald and Las Iguanas.   

The property had previously been comprehensively redeveloped behind the Grade II* listed façade and offers modern office and leisure accommodation. As well as a core of secure income the building also has a range of asset management opportunities to improve and enhance returns. 

 

Office demand and overseas investment dominate in Scotland over Q2

Glasgow and Edinburgh, along with other regional office markets, have boasted on trend take-up over Q2, with activity skewed towards larger deals and city centre markets, according to the latest Big Nine update from Avison Young.

The key office letting deal in Glasgow city centre during Q2 was to hotel chain Hilton taking 41,665 sq ft of offices at the recently refurbished 191 West George Street. There were also two c.20,000 sq. ft transactions to artificial intelligence company ARM and JP Morgan Chase.

Clydesdale Bank, which took a pre-let of 110,000 sq ft at 177 Bothwell Street last year, has taken a further 13,000 sq. ft at Granite House, 31 Stockwell Street.

There is 1,054,000 sq ft under construction in Glasgow, including Atlantic Quay, Buchanan Wharf and 177 Bothwell Street. Of this, 767,000 sq ft is pre-committed (Barclays, Clydesdale and GPA) and 287,000 sq. ft is available, although discussions are already taking place with occupiers for this space.

Headline rents have remained at £32.50 per sq ft, although the current scarcity of grade A availability means that secondary/ grade B headline rents have also increased, and combined with reducing rent free periods, net rental growth in this sector continues to accelerate.

 

2 Semple Street confirms international law firm as first tenant

International law firm Womble Bond Dickinson LLP is to be the first occupier at GSS Development’s 2 Semple Street Grade A office in Edinburgh’s Exchange District.
 
WBD has agreed to take the entire first floor (7357 sq ft) of the 39,347 sq ft building as it ramps up its presence in the capital.
 
The letting follows on from a series of high level hires in Edinburgh, as WBD continues to expand its presence in Scotland following the opening of its first Edinburgh office in 2017.

 

Retail continues negative trend in commercial property market

The retail sector of the UK’s commercial property market continues to decline in the face of increased online spending, while solid demand is still reported across the industrial sector, according to the latest RICS UK Commercial Property Market Survey.

As Brexit looms, respondents across the UK are still seeing evidence of firms looking to relocate at least some part of their business as a result.

In Q2, 32 per cent stated they had seen evidence of this which, although unchanged from Q1, is up from 23 per cent six months ago. Going forward, 52 per cent of respondents nationally do expect relocations, depending on how the Brexit process unfolds.

Occupier demand in Scotland remained in negative territory for the fifth quarter in succession.

However, retail is responsible for pulling the all sector figure down below zero, with a net balance reading of -53 per cent respondents reporting a decline in occupier demand. Figures remained steady in the office and industrial sectors, with 18 per cent and 27 per cent of respondents reporting an increase in demand throughout the last quarter.

Given this, the availability of vacant industrial space fell back once more during Q2, and availability of office remained flat up. Unsurprisingly, the retail sector posted the most significant rise in availability, with a net balance of 41 per cent of survey participants reporting an increase. As a result, both retail and office landlords raised the value of incentive packages on offer to tenants, with the increase most pronounced for the former.

 

Law firm Anderson Strathern hires corporate specialist

Law firm Anderson Strathern has hired corporate specialist Euan Tripp from Brodies, with Mr Tripp being brought in as a partner in a move that strengthens the firm’s corporate and commercial offering.

Mr Tripp brings extensive M&A and corporate finance experience including from the property and hotels sectors, in Scotland and across the UK. Recognised as a “recommended individual” in the Legal 500 in 2018, he graduated from the University of Aberdeen before starting his career in law at Biggart Baillie (now DWF).

 

Indian millionaire opens first country hotel in the Highlands following significant investment

A new country hotel has opened in the Highlands following more than £12m of investment in three properties by the Black Sheep Hotel group, under the ownership of Indian millionaire Sanjay Narang.

Rokeby Manor, located on the outskirts of Invergarry, opened last month following a major refurbishment programme and is soon to be followed by The Cluanie Inn and The Whispering Pine Lodge.

Indian businessman Sanjay Narang (image attached) and his sister Rachna travelled to the Highlands last year for a hiking holiday. However, despite having a less than favourable stay they loved the area and from that established the Black Sheep Hotel group. Mr Narang has also subsequently relocated from India to Glengarry.

Formerly called Craigard Guest House, Rokeby Manor is a Victorian country house built in 1840 and retains many of its original features. The 13-ensuite bedroom property has been fully refurbished and includes the restaurant ‘Emily’s Byre’, which serves authentic Indian cuisine.  allowing travellers to experience truly affordable luxury in the Highlands.

The Black Sheep Hotel Group which includes, Rokeby Manor, The Whispering Pine Lodge (formerly the Letterfinlay Lodge) at Spean Bridge and The Cluanie Inn at Glenmoriston, cost the siblings £3m and they have invested another £9m into the refurbishment programme, with Rachna heading up on the design side. 

Under the ownership of Mars Enterprise and Hospitality, Black Sheep Hotels is the company’s first venture in Scotland, taking their expertise in hospitality from their hotels and restaurants in Mumbai.

 

Ryden secures new tenants at two refurbished townhouses in Edinburgh city centre

Acting on behalf of City and Pacific Ltd, Ryden has successfully let two whole townhouses to single tenants located in Edinburgh City Centre, following a comprehensive refurbishment of both properties.

45 Charlotte Square has been let to BennBridge, while Gilson Gray LLP has taken over 6 Rutland Square.

45 Charlotte Square comprises a refurbished Category A listed townhouse part of the Charlotte Square design by Robert Adam in 1791 and completed in 1820.

Multi-boutique investment firm BennBridge has taken the 4,716 sq ft premises on FRI terms with a 10 year lease at a rental of £150,000 per annum.
BennBridge, with offices in London and New York, strategically partners with specialist fund managers to provide investment solutions to a variety of investors. It is a 100%-owned subsidiary of the Bennelong Funds Management Group with approximately £6bn of assets under management.

The 3,641 sq ft townhouse at 6 Rutland Square has been let to award-winning law firm Gilson Gray LLP at a rent of £90,000 per annum on a 15 year lease with five yearly breaks.

The property is a traditional Category A listed sandstone tenement building arranged over five storeys which was also extensively refurbished.