Commercial property review of the year

During the year we have seen a number of notable office related transactions. In the Spring, two 1960’s office buildings in Victoria Road were sold to an owner occupier for redevelopment. In July Hodgson House, a late 1980’s office building situated in a prominent location on the corner of Rainsford Road and Parkway and let to KPMG plc was sold to Pigeon Investment Limited for £2.1M to show an net initial yield of over 12.5%. The Lease to KPMG LLP expires in 2015 when there will be scope for refurbishment and an uplift in the rental income.

Last month, Fenn Wright acted for client’s in the acquisition of Aquila House, a good quality office investment with parking located in the City centre and let to Bird Luckin, Chartered Accountants, to August 2021 at a rent of £295,000 per annum (£18.12 per sq. ft.) to show close to 9.5% net initial yield.

Small industrial rents have risen on the back of further reduction in supply with rents of £10.00-£11.00 per sq. ft. being achieved on units up to 1,500 sq. ft. There remains a considerable shortage of freehold industrial space but as yet, secondhand values have remained relatively stable. The shortage in industrial land supply may give rise to a rise in values over the course of the next 12 months depending on the performance of the economy as a whole.

As well as being involved in some larger investment transactions, the Chelmsford Office have had the pleasure of dealing with a number of more unusual commercial/development properties such as a 7 acre commercial Nursery near North Weald sold on behalf of Receivers in July 2012 for around £385,000; the sale of Moulsham Lodge and Barn, the former NFU HQ office sold to a residential owner-occupier following the grant of planning permission for change of use and conversion etc. for a total of £892,000; a former Methodist Chapel at High Easter sold with planning permission for £263,000 and a 2.0 acre block of accommodation land in Vange, nr Basildon sold for just over £55,000 to a private investor; all of which shows our flexibility and that if the price is right there is money available for any unusual or attractive property.

We have recently advised Local Authority clients on the acquisition of a major new 26,000 sq. ft. research and development facility situated on a 2 acre site on Chelmsford Business Park with some 150 car parking spaces. The building is prelet to Visteon Corporation, who already occupy some 32,000 sq ft of high quality HQ offices on the Park. The building is being developed by Churchmanor Estates and should be ready for occupation later in 2013.

Visteon’s decision to relocate to Chelmsford is a major boost for the City and alongside other pre-lets to high quality occupiers such as Battelle UK Ltd, cements Chelmsford Business Park’s reputation as one of the prime office locations in Essex. The Park is nearing completion and it is to be hoped that the City Council will identify further employment led development sites in the next review of the Site Allocations DPD.

Roger Hayward, Managing Partner (Chelmsford commercial team)
December 2012