Interest in trio of prestigious office buildings proves Glasgow remains an attractive market, says Bob Serafini
UK and overseas funds are among investors expected to compete for a big chunk of Glasgow's waterfront office market, when bidding goes to a closing date today.
It's a rare opportunity to acquire three substantial office buildings, totalling 280,714 sq ft, at 1, 2, and 3 Atlantic Quay in the city's International Financial Services District.
Savills are seeking offers in excess of £62.5m for the prestigious properties, fully let to corporate occupiers including BAE Systems, Lloyds Bank, Axa Insurance, Mott MacDonald and Scottish Ministers.
Investment director Mark Fleming said the buildings, which produce total rental income of more than £5.5m, had attracted strong interest, which was good news for Glasgow.
A deal at that pricing level would reflect an attractive net initial yield of 8.3 per cent, and comes at a time when strong occupier demand and limited new Grade A accommodation is driving performance in the market.
The award-winning Atlantic Quay space was built in the early 1990s by Bellhouse in partnership with Kumagai Gumi. With average weighted unexpired lease terms of 4.36 years, and a low passing rent of around £18.50 per sq ft, there is lots of opportunity to develop the asset in the future.
The buildings of 122,943, 77,273, and 80,498 sq ft have floor plates of up to 24,000 sq ft and are arranged around a central landscaped courtyard area, flexible enough to be single or multi-let. There are also 141 car spaces at basement level.
The immediate area is set to improve further in the near future, with the planned development of Atlantic Square, where BAM and Taylor Clark have plans to jointly deliver two commercial buildings of 180,000 and 80,000 sq ft, along with retail and residential elements.
Savills say office investment in the UK's top six regional cities has more than doubled year on year to reach a seven year high of £2.6bn last year.
Scottish investment deals in the past six months include M&G's £72.6m purchase of Aurora on Bothwell Street (6.18 per cent), Aberdeen Asset Management buying 151-155 St Vincent Street for £27.8m (6.38 per cent), Knight Frank Investment Management paying £24.52m for EHQ2 at Fountainbridge (6.88 per cent) and the largest, HSBC Alternative Investments' purchase of Port Hamilton, Edinburgh for £105.5m (5.1 per cent).
DTZ is forecasting increasing yield compression in the months ahead. Ben Clarke, head of research, said: "We continue to see strong investor interest in UK commercial property, particularly outside London. We expect this to push property yields down and predict returns on UK property will be in double digits for 2015."
LANDMARK BAR IS ON THE MARKET
AN independently-owned pub which has become something of a landmark has been put up for sale in Glasgow.
Former president of the Scottish Licensed Trade Association Alistair Don is selling his freehold interest in The Doublet Bar as a result of retirement.
The hostelry was first bought by his father in 1962, with the addition of the lounge bar in 1971, and Alistair took over in 1974.
The Park Road venue, pictured right, on a West End licensed circuit near Kelvinbridge underground station, is therefore on the market for the first time in more than half a century.
"An opportunity like this doesn't come along that often, especially on the open market, and we expect interest from both private single unit purchasers and multiple operators looking to add onto their existing portfolio," said Graeme Smith, director of advisers Smith & Clough. Offers are invited.
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