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FOR SALE100% PRIME RETAIL INVESTMENTOFFERS OVER £9,250,000(4.25% Net Initial Yield & 4.83% Reversionary Yield)
BUCHANAN STREET.GLASGOW G1 2JW122
128
INVESTMENT SUMMARY
• Glasgow is Scotland’s largest city with the Greater Glasgow population totalling 2.3 million people
• Corner block on the east side of Buchanan Street, in the 100% prime pitch
• Let to Swatch Group UK Limited and Scribbler Holdings Limited
• Dun & Bradstreet covenants of 4A1 and 2A1
• Passing rent of £417,500 per annum and an ERV of £476,000 per annum (w.e.f. September 2021)
• 122-124 (Scribbler) lease expiry in July 2027 (over 9 years unexpired)
• 126-128 (Swatch) lease expiry in September 2026 (over 8 years unexpired)
• Our clients are seeking offers in excess of £9,250,000 (NINE MILLION TWO HUNDRED AND FIFTY THOUSAND POUNDS STERLING) exclusive of VAT which reflects an attractive net initial yield of 4.25%, reversionary yield of 4.83% and equivalent yield of 4.74% assuming purchasers’ costs of 6.3%
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Glasgow’s employment rate has improved significantly, reaching its highest ever rate in 2016 of 67.3%. The city is home to an impressive list of blue chip companies and major global organisations including Barclays Wealth, Santander, HSBC, Morgan Stanley, Direct Line, The Student Loans Company, Ministry of Defence, O2, Atos, Tesco Bank, Dell and J.P Morgan.
Glasgow is home to 5 Higher Education institutions including the University of Glasgow, The University of Strathclyde and Glasgow Caledonian University as well as the world-renowned Glasgow School of Art and The Royal Conservatoire of Scotland. The student population is the highest in Scotland with more than 130,000 students from 135 different countries across the world. Over 3,000 retail businesses are present in Glasgow contributing 12.5% to Scottish GVA. More than 90 million shoppers come to Glasgow per year and Buchanan Street is the busiest prime high street in the UK, after Oxford Street in London, with 6,600 people passing through every hour.
Glasgow City has undertaken a number of development projects in its objective to provide a sustainable future for both businesses and its residents. The development which took place in preparation for the 2014 Commonwealth Games and the substantial infrastructure investment, including The SSE Hydro Arena, demonstrates the city’s commitment to sustained regeneration. Indeed, the Hydro Arena is now recognised as the second busiest live music venue in the world.
The Glasgow city region also benefits from the second largest City Deal in the UK. Awarded in 2014, it promises over £1bn to fund major infrastructure projects, improve public transport and connectivity, drive business innovation and growth and generate billions of pounds of private sector investment. £115 million of this funding will be directed into the city centre and enhancing the overall retail and leisure experience of both those residing and visiting Glasgow.
The greater Glasgow conurbation according to the 2011 Census, totalled around 2.3 million, accounting for more than 40% of Scotland’s entire population. Over 70% of the population is of working age demonstrating a relatively young demographic compared to the rest of the UK.
It is the powerhouse of the Scottish economy contributing approximately £19.62 billion, GVA annually, more than a third of the UK average. 19,000 companies make their home in Glasgow, generating an annual turnover of £38 billion and it is currently within the top 20 of Europe’s best performing financial centres and is ranked 61st worldwide (Global Financial Services Index 2016).
GLASGOW LOCATION
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CONNECTIVITYGlasgow is extremely well connected by a number of different transport modes including road, bus, rail, subway and air. In addition, Glasgow is continually investing in its transport infrastructure, with many projects ongoing which will improve and modernise various major transport systems.
ROADGlasgow city centre is located at the heart of the motorway network with the M8, Scotland’s main motorway connecting Glasgow to Edinburgh. The M8 also provides direct access to the north, south, east and west of Scotland through its connections with the M74, M73, M77 and M80. Major improvement works to upgrade the core of Scotland’s motorway network have recently completed. Works include the completion of the M8 between Baillieston and Newhouse, improvements to the Raith Interchange on the M74 and upgrading of the existing M8, M73 and M74.
BUSThere are a number of operators running over 170 daily services across over 100 routes in and out of Glasgow to various surrounding locations. There are frequent bus services to and from Glasgow Airport, taking only 15 minutes.
RAILGlasgow has the UK’s largest suburban rail network outside London, benefitting from two city centre train stations. Glasgow Central, Glasgow’s biggest train station has connections to all major English cities and London can be reached in around 4 hours. Glasgow Queen Street station connects Glasgow to the east and north of Scotland to destinations including Edinburgh, Perth, Dundee, Aberdeen and Inverness.
In recent years there have been many rail line improvements and extensions and Queen Street Station has begun a major multi million pound redevelopment and expansion.
SUBWAYGlasgow’s underground rail system has an inner and outer circle serving key locations across Glasgow through its 15 stations. Trains run every 4 minutes at peak times and are able to travel across the city centre in 10 minutes. The Glasgow Subway is currently undergoing a full scale upgrade and modernisation including the introduction of new trains, automated signalling and associated system improvements.
AIRGlasgow is within an hour’s drive of three international airports, with Glasgow International Airport just 15 minutes from the city centre. Glasgow Prestwick Airport and Edinburgh Airport are also easily accessible being around a 60 minute journey time. Glasgow Airport hosts approximately 200 flights daily and is home to 30 airlines which fly to 120 destinations worldwide. There are 438 flights to London per week with a circa 1 hour 20 minute flight time. The airport terminal has recently been expanded and improved as part of a 10 year £200 million investment programme.
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RETAIL IN GLASGOW
Glasgow city centre has an established reputation as a leading fashion centre with a broad range of fashion multiples from mass market to upmarket, specialist retailers. The city centre has 2.9 million sqft of retail floor space with the prime retailing locations being Buchanan Street, Argyle Street and Sauchiehall Street forming the retailing ‘Golden Z’. The offer on these thoroughfares is supplemented by the 660,000 sq ft Buchanan Galleries, the 540,000 sq ft St Enoch Centre and speciality shopping centre, Princes Square.
Buchanan Street which is firmly established as the 100% prime location for high end fashion retailer, has seen a sustained period of significant rental growth with prime rents now in the order of £330/sq ft ITZA.
Demand for the prime retail pitch continues to grow and Glasgow recently welcomed global brands Massimo Dutti, (their first store outside London), Michael Kors and Kiko.
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DESCRIPTIONThe subject property comprise two adjacent prime retail units arranged over ground and basement floors, part of a larger building with the upper floor offices under separate ownership.
ACCOMMODATION We have measured the subject premises in accordance with the RICS Code of Measuring Practice 2007 (Sixth Edition) and would estimate that the subjects extend to the following areas Net Internal Areas:
122 - 124 Buchanan Street, Glasgow
126 - 128 Buchanan Street, Glasgow
DESCRIPTION NIA REDUCTION FACTOR ITZA
Zone A 509 1 509
Zone A1 21.5 1-10% 20
Zone B 25 ½ 13
Zone B1 9 ½ - 10% 4
GF NIA 565 sq ft
Basement 234 1/10 24
TOTAL NIA 799 sq ft
Total Reduced Area 570 sqft
DESCRIPTION NIA REDUCTION FACTOR ITZA
Zone A 750 1 750
Return frontage allowance
75
Basement 779 1/10 78
TOTAL NIA 1529 sq ft
Total Reduced Area 903 sq ft
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INVESTMENT EVIDENCEThe most comparable evidence is attached below.
RENTAL EVIDENCEADDRESS TENANT LEASE DATE RENT PA
NET EFFECTIVE ZA
COMMENT
38 Buchanan St Levi OML 2018 £420,000 £321.60 10/5 FRI (no breaks).
60-62 Buchanan St Nespresso OML 2017 £385,000 £285.00
10/5 FRI Lease. 3 months rent free. Deal took a long time to
agree so by the time it was agreed the tone pushed passed
the agreed rent.
87/89 Buchanan St O2 2017 Ongoing £427,500 £305.00 10 year lease, 3 months rent free.
131 Buchanan St T2 OML 2017 £230,000 £317.00Previous tenant Hawes & Curtis
paid £260 sq ft on an OML in March 2015.
42 Buchanan St Hotel Chocolat OML 01/04/17 £320,000 £306.00 10/5 FRI Lease.
As you can see, the tone for the street is established at a minimum of £320 / sq ft, with letting to Scribbler (£329 / sq ft Zone A) and Levi (£321.60 / sq ft Zone A) in excess of this figure. Applying £320 / sq ft to the Swatch area produces an ERV of £289,000 per annum.
TENANCY
122-124 Buchanan Street, Glasgow is let to Scribbler Holdings Limited on a 10 year FRI Lease from 10 July 2017 to 9 July 2027 at a current passing rent of £187,500 per annum (£329/sqft Zone A). The property is subject to a rent review on 10 July 2022.
126-128 Buchanan Street, Glasgow is let to Swatch Group (UK) Limited on a 10 year FRI Lease from 13 September 2016 expiring 12 September 2026 at a current passing rent of £230,000 per annum (£255/sqft Zone A). The property is subject to a rent review on 13 September 2021. There is a Schedule of Condition attached to the Swatch lease.
TENUREThe property is held on a heritable title (Scottish equivalent of English freehold).
COVENANTScribbler Holdings Limited has a Dun & Bradstreet rating of 2A1. For the year ending 31 August 2016 the company reported a Sales Turnover in excess of £13.45 million, Profit in excess of £663,000 and a Tangible Net Worth in excess of £2.2 million.
Swatch Group UK Limited has a Dun & Bradstreet rating of 4A1. For the year ending 31 December 2016, the company reported Sales Turnover in excess of £81 million, Profit in excess of £5 million and Tangible Net Worth in excess of £34.9 million.
EPCWe are advised that the Energy Performance Rating of the properties are as follows:
Scribbler, 122 - 124 Buchanan Street, Glasgow Rating G
Swatch, 126 - 128 Buchanan Street, Glasgow Rating F
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7 122128 ADDRESS PURCHASER TENANT PRICE DATE NIY
20-26 Buchanan St Redevco Nike £29.3 million Mar 2017 4.29%
55-59 Buchanan St Private investor Russell & Bromley /
Molton Brown / Kiko£22.15 million Feb 2017 4%
235-249 Buchanan St Hines - £38 million Q3 2017 3.24%
16a Buchanan Street Private investor Clarks £4 million Mar 2017 4.48%
147 Buchanan St /47-72 St Vincent St
Pontegadea Apple / All Bar One / Skipton / Lloyds /
offices £47.8 million Sep 2017
Apple 4%All Bar One 5%Bank inc 5.5%Offices 6.5%
BUCHANAN STREET.GLASGOW G1 2JW
122128
VIEWING& FURTHERINFORMATIONPlease contact the sole selling agents:
Sheridan Property Consultants37 One37 George Street Edinburgh EH2 2HN
Tel 0131 300 0296
Stewart Sheridan Cathal Keane07740 940898 07808 [email protected] [email protected]
Graeme Millar07523 [email protected]
PROPOSALWe are instructed to seek offers in excess of £9,250,000 (NINE MILLION TWO HUNDRED AND FIFTY THOUSAND POUNDS STERLING) exclusive of VAT for our client's heritable interest subject to and with the benefit of the existing leases.
A purchase at this level would show an attractive Net Initial Yield of 4.25%, reversionary yield of 4.83% and equivalent yield of 4.74% assuming purchasers’ costs of 6.3%.
VAT
Our clients have elected to waive exemption for VAT and accordingly VAT will be payable on the purchase price, although we anticipate the sale will be dealt with by way of a Transfer of Going Concern (TOGC).
LEGALEach party will be responsible for their own legal costs incurred in connection with the transaction.
Sheridan Property Consultants 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 outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, reference to condition and necessary permission for use and occupation, and other details are given without responsibility 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 and are advised to do so; (iii) no person in the employment of Sheridan Property Consultants has any authority to give representation or warranty whatever in relation to this property; (iv) all prices, rents and premiums quoted are exclusive of VAT at current rate.
APRIL 2018
