Cambridge | Exciting Shopping Centre Investment Opportunity
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CAMBRIDGE | EXCITING SHOPPING CENTRE INVESTMENT OPPORTUNITY INVESTMENT CONSIDERATIONS • Cambridge is considered one of the most desirable cities in the UK within which to own commercial property investments. • The city’s core strengths: its large, affluent and rapidly expanding catchment, its world renowned university and its huge tourist industry make Cambridge one of the strongest regional economies in the UK. • The city is considered Britain’s pre-eminent research and development centre and has an established reputation as one of the world’s leading high technology business clusters. • Over 17 million tourists visit the city every year, boosting the already affluent and rapidly growing catchment population. • Each of these strengths combine to give Cambridge one of the highest employment rates in the UK and the city continues to deliver exceptional growth across all of the property sectors. • The Grafton Centre is a key retailing location in its own right, conveniently situated on the east side of the city centre. • The Centre is located in an area known as The Kite, a key area designated for further retail development within the local plan. • The Centre comprises nearly 500,000 sq ft of retailing accommodation in 84 units with 1,150 car parking spaces. • Anchored by Debenhams, the centre houses key retailers such as Next, H&M, TopShop and New Look in addition to an 8 screen Vue cinema. • The centre benefits from an existing planning consent for a substantial refurbishment and re-modelling project. A purchaser will have the opportunity to initiate exciting plans to re-invigorate Grafton to once again become the favoured shopping destination for the wealthy local population. • The property currently produces a total gross passing rent of £7,002,463 per annum with a net passing rent of £6,137,760 per annum. 92% of income is secured against national multiple retailers with 76% of the income expiring in excess of 5 years. The Weighted Average Unexpired Lease Term until lease expiry is just over nine years (or to six years excluding the anchor tenants). • We are instructed to seek offers in the region of £92,500,000, which adopting our opinion of ERV and taking purchaser’s costs at 5.80% reflects the following approximate yield profile: Net initial yield: 6.25 % Nominal equivalent yield: 7.30% True equivalent yield: 7.64% CAMBRIDGE | EXCITING SHOPPING CENTRE INVESTMENT OPPORTUNITY LOCATION The world famous city of Cambridge is rich in history and EDINBURGH boasts one of the most vibrant economies in the UK. The city is renowned for having one of the world’s leading institutions NEWCASTLE UPON TYNE for education. The city is also Britain’s pre-eminent research and development centre and is widely recognised as one of the world’s leading high technology business clusters. The dynamic and charismatic city of Cambridge is the administrative centre for the county and is located approximately MANCHESTER 65 miles north of London, 58 miles south west of Norwich and 43 miles south east of Peterborough. PETERBOROUGH NORWICH BIRMINGHAM CAMBRIDGE CARDIFF LONDON CATCHMENT AND DEMOGRAPHICS Cambridge has a large, loyal and affluent primary catchment population of 557,000 people, ranking it 28th of the 200 Promis retail centres in the UK. Between 2001 and 2011 Cambridge was ranked the 4th fastest growing city in the UK and it is expected to see population growth significantly above the national average over the next few years. This population growth will be supported by the East of England’s plan, which requires a further 14,700 new houses to be built in Cambridge by 2021. There is currently exceptionally strong demand for housing in the city. The 2015 Centre for Cities report states that Cambridge is one of only 3 UK Cities where house price growth between 2013 and 2014 increased by in excess of 10%. Cambridge Acorn Profile 25% Wealthy Achievers Urban Prosperity Comfortably Off Moderate Means Hard-Pressed 20% 15% 10% 5% The Cambridge catchment population is one of the most affluent in the country, ranked 16th of the 200 Promis centres on this measure. CACI data shows that the Cambridge shoppers 0% are overrepresented in the following social categories: wealthy executives, flourishing families, prosperous professionals and secure families. In 2014 Cambridge had the 10th Starting Out highest earnings of all UK cities (Centre for Cities, Cities Outlook, 2015). Affluent Greys Aspiring Singles Secure Families Settled Suburbia Blue Collar Roots Burdened Singles Wealthy Executives Flourishing Families Educated Urbanites Prudent PensionersAsian Communities Struggling Families High Rise HardshipInner City Adversity Post Industrial Families Prosperous Professionals Cambridge East of England UK Cambridge contains a particularly high proportion of young adults aged 15-24. The high proportion of young adults reflects the large student population with around 15,500 full time students at the University of Cambridge. Incorporating students from the Anglia Ruskin University and many independent learning institutions, the student population would account for 27% of the total population of Cambridge. Students are of a significant benefit to Cambridge’s economy as they have significant spending power and they benefit Cambridge has a large, loyal and from more leisure time and money than any other sector in the youth market. affluent primary catchment population... LOCAL ECONOMY Over the last 30 years the Cambridge economy has experienced dramatic growth. It is at the heart of one of the most dynamic sub regions within the UK and is widely recognised as a leading location in the world for research and development (R&D). The 2014 Centre for Cities Report states that Cambridge saw the largest increase in jobs between 2004 and 2013. This is often attributed to the presence of the University of Cambridge, which ranked 2nd internationally in the 2012 QS World University Rankings behind only Massachusetts Institute of Technology and ahead of Harvard University and University College London. Cambridge is situated within a government identified area for sustainable economic growth and is the fastest growing region in the UK outside of London as a result of the world-leading high technology business cluster and business opportunities from the University’s transfer of technology. Major employers in the R&D sector include ARM Holdings, which employ over 1,700 people, and Cambridge Antibody Technology, which employs around 570 people. The main activity focuses on the Cambridge Science Park, located two miles north of the city centre, where there are around 90 companies employing over 5,000 people. Astra Zeneca have announced that it will be moving its global headquarters to Cambridge in a new £330 million facility creating 2,000 new jobs. Cambridge is also home to a number of high profile medical research institutes, including Cancer Research UK, The Wellcome Trust Sanger Institute with over 800 staff and the Babraham Institute which employs over 300 staff, all taking advantage of the research expertise available in the city. In addition to R&D there is a high proportion of people employed within the finance and business services sector, which is partly due to a large number of firms providing professional expertise or technical support to the many start-up companies that characterise Cambridge’s economy. Major employers include Deloitte, PwC, Grant Thornton, Brossard De Bayle and Throgmorton Private Capital. The University of Cambridge has been established for over 800 years and is the city’s single largest employer. There are 32 Colleges and over 150 departments incorporated within the University campus. The University, Colleges, Cambridge University Press and Cambridge Assessment collectively employ over 11,700 people directly and indirectly support more than 77,000 jobs in the region. Cambridge University is very well funded and the generosity of benefactors has enabled the University to create a new science and technology campus to the west of the city centre. The University is now looking to expand to the north west of Cambridge. The city has a number of other higher education establishments and several hospitals, including Cambridge University Hospitals, which employs over 7,000 people. ...at the heart of one of the most dynamic sub regions within the UK Cambridge’s economy benefits from having an innovative workforce. In the UK, the city has more patents per 100,000 residents approved (94.5%) than the next ten most innovative cities combined, including Edinburgh, Oxford, Aberdeen and Milton Keynes (Centre for Cities, Cities Outlook, 2015). The Cambridge economy is boosted further by a huge tourist industry. It is estimated that approximately 17.2 million people visit the city each year generating £1.594 billion for the local economy. The tourist sector is also a major employer with over 6,500 jobs sustained by tourism in Cambridge and the surrounding area. With a strong local economy and employment base, the recession has had less of an impact on employment levels within Cambridge than across the UK generally and consequently unemployment in Cambridge is significantly below average. Cambridge experienced the second highest employment rate in the whole of the UK between July 2013 and June 2014 and had the lowest JSA claimant count at 0.7% compared to the UK average of 3.8% (Centre for Cities Report 2015). The buoyant economy will continue to grow, enhanced by three key developments within Cambridge. To the south of Cambridge, close to Addenbrookes Hospital, an additional 4,000 new homes have planning permission. To the north west of Cambridge, towards Madingley, around 83 hectares of land owned by the University of Cambridge is being developed to provide 3,000 new homes and other key services such as a library and a medical centre. To the north east of Cambridge, in Chesterton, there is to be significant development of office space, light industrial units and a new £26m railway station.