For Sale Tees Valley Portfolio Stockton-On-Tees Executive Summary
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MIXED USE PORTFOLIO OPPORTUNITY COMPRISING OFFICE AND INDUSTRIAL ASSETS THROUGHOUT THE TEESSIDE AREA WITH EXCELLENT VALUE-ADD POTENTIAL FOR SALE TEES VALLEY PORTFOLIO STOCKTON-ON-TEES EXECUTIVE SUMMARY • 7 office & industrial assets strategically located on the Teesside regions’ most prominent commercial estates. • On-going, clearly identifiable asset management opportunities. • Rental growth potential and improving occupational market. • Strong occupier mix including North Tees PCT, NHS, Arup, G4S, Sulzer Chemtech and Rexel UK with a total rent roll of £959,149 per annum. • WAULT of 4.2 years to expiry (2.4 years to break), providing excellent value add potential through lease restructure. • Offers in excess of £9.14M are sought, reflecting a net initial yield of 9.92% after standard purchaser’s costs at 5.8%. • The opportunity to purchase individual assets from the portfolio may be entertained. TEESTEESDALE VALLEY SOUTH PORTFOLIO BUSINESS PARK STOCKTON-ON-TEESTHORNABY PLACE, STOCKTON ON TEES TS17 6SA WEIGHTING BY INCOME WEIGHTING BY PRICE £40,000 £430,000 £126,534 £1,135,000 £90,000 £970,000 £146,000 £240,750 £1,530,000 £2,145,000 £55,000 £610,000 £260,865 £2,320,000 TOP 5 TENANTS BY INCOME Tenant Property % of income Creditsafe Rating Onyx Group Ltd Onyx House 15.2% Low Risk Sulzer Chemtech Ltd Sulzer House 9.4% Very Low Risk Anderson Barrowcliff LLP Waterloo House 8.7% Very Low Risk G4S Secure Solutions (UK) Ltd Scotswood House 6.1% Very Low Risk Rexel UK Ltd Crofton Road 5.7% Very Low Risk TEESTEESDALE VALLEY SOUTH PORTFOLIO BUSINESS PARK STOCKTON-ON-TEESTHORNABY PLACE, STOCKTON ON TEES TS17 6SA LOCATION Stockton-on-Tees is situated approximately 250 miles north Stockton-on-Tees is an astutely located commercial centre within both the immediate of London, 58 miles north of Leeds and 35 miles south of Scotland urban conurbation and the wider region of the North East of England. It has an urban area Newcastle upon Tyne. The town is an important sub-regional population of circa 85,000 people and a wider district population of approximately 190,000 Glasgow centre and is a major focus for retail and leisure activity in the Edinburgh people, with an estimated 350,000 people living within 6 miles of the town centre. area. The Teesdale Business Park is positioned to the east of the Newcastle Immediate access to the National Rail Network is provided by Thornaby Station, which town centre, within the curve of the River Tees. Sunderland Carlisle Middlesbrough is approximately two to three minutes’ walk from the subject property. Thornaby Station Stockton is positioned at the intersection of the A19 and connects to Darlington and the East Coast Main Line. In turn this provides direct services to A66 Trunk Road, which provide easy access to the A1 (M), Leeds London’s Kings Cross (2 hours travel time) and Edinburgh (2 hours travel time). A1046 approximately 15 miles to the west. Travelling via the A19, it Manchester is possible to connect to Leeds, York, Durham and Newcastle Liverpool A1046 Nottingham within one hour’s drive time. Birmingham A178 ASHINGTON England Riverside Park Rd MORPETH Wales A1027 A1027 Cardiff London Bristol A1(M) A1046 A696 Newcastle Airport A19 A68 A19 TYNEMOUTH North Riverside Park Rd Port of Tyne Snowdon Rd Forty Foot Rd North Rd Durham St A69 NEWCASTLE SOUTH Haverton Hill Rd A178 SHIELDS A19 HEXHAM UPON TYNE Middlesbrough Te e A66 s A68 GATESHEAD 65 A19 SUNDERLAND B rid Hartington Rd g e A A1(M) p 63 A139 p ro ac CHESTER-LE-STREET SEAHAM h Teesway Rd A690 A1046 MIDDLESBROUGH DURHAM 62 A19 A1032 Newport Rd B6541 Borough Rd A167 A181 Marston Rd A689 A690 61 HARTLEPOOL A1046 Teesside A1305 Heywood St University 60 A688 Crofton Rd A689 Teesport B6541 A68 Teesdale South 59STOCKTON A66 Redheugh House A688 B1272 58 DARLINGTON MIDDLESBROUGH A1305 River Tees Waterloo House B1032 A66 A66 A171 Scotswood House 57 Queen’s A66 Stockton Rd 56 Campus Albert Park Durham Tees B6541 Valley Airport West Lane Crofton Road SCOTCH CORNER Hospital A19 Princeton Dr A19 A1(M) South Onyx House Thornaby A66 A1130 B1032 Sulzer House A684 A135 Teesside Shopping Park Haydock House A1130 A19 TEESTEESDALE VALLEY SOUTH PORTFOLIO BUSINESS PARK STOCKTON-ON-TEESTHORNABY PLACE, STOCKTON ON TEES TS17 6SA STOCKTON-ON-TEES REGENERATION There is significant development taking place Additionally, on the northern bank of the On the opposite side of the River Tees on Portrack Lane is already a vibrant and popular in Stockton-on-Tees and the surrounding area. River Tees, Dunelm Homes have planning NorthShore, Muse Developments in conjunction hub for business, with a further 33 acres Directly east of Teesdale Business Park, a consent to develop 60 houses and 114 riverside with Stockton Borough Council are currently identified for expansion of the estate, adjacent scheme is underway to bring 117 new homes apartments, increasing critical mass and adding building a £300M mixed use scheme including to the A19 trunk road. Planning consent for a to the city centre. Working in partnership with further vibrancy to the location. Such types of commercial and residential accommodation. mix of B1, B2/B8 and A3 development totalling the Stockton Borough Council and the Homes development are transforming the town centre GVA are involved in advising Muse and we are 340,000 sq ft has recently been granted. and Community Agency, Tees Valley Housing is with new and exciting places for people to aware that the scheme is targeting rents of engaging with the local community to provide live in the heart of Stockton, whilst expanding £17 - £18 per sq ft for Grade A office space on a skills, employment and education opportunities on the local talent pool for the surrounding pre-let basis. The first office building extending to stimulate the on-going development of a business parks. to an area of 43,000 sq ft, has been pre-sold sustainable and vibrant community in the area. to Thirteen Group Housing Association for a price exceeding £165 per sq ft, with the ‘Fusion Hive’, a new innovation centre, also nearing completion. TEESTEESDALE VALLEY SOUTH PORTFOLIO BUSINESS PARK STOCKTON-ON-TEESTHORNABY PLACE, STOCKTON ON TEES TS17 6SA MARKET COMMENTARY Offices Industrial Comparable evidence – Lettings The regional offices sector is currently The industrial occupier market throughout the We are aware of the following lettings evidence which is comparable to the subject: benefiting from a trio of positive factors; North East is buoyant. Key areas such as the automotive, manufacturing, distribution and Offices - Occupier demand is improving and corporate offshore sectors have seen significant growth. The best comparable evidence for office lettings is within the subject property, though we are aware requirements are once again focussing on of the following from the surrounding area: the North East / Teesside region, due to The A19 corridor in particular, which acts as the low labour costs and sought after skillsets principal north-south route through Teesside to Achieved Property Size Comments (predominantly engineering, IT, sciences and the Scottish borders, is historically strong and Rent (psf) chemical processing). highly competitive, particularly for distribution Tower House, Let to DTA Consulting Engineers for 5 years from and trade uses. A lack of new development 1,546 £11.65 - The recession saw all speculative through the recession has caused an imbalance Teesdale South. July 2015 – no rent free was granted. development curtailed in the Teesside region. in the net supply/demand position and the Progress House, Fully let to Johnson Matthey PLC for a term This has led to a shortage of good quality availability of good quality, mid-sized to larger 14,150 £11.66 Teesdale Business Park. of 10 years from February 2015. accommodation, which is now driving industrial stock is now becoming restricted. rental growth. Construction costs and land Demand, meanwhile, continues to improve Cedar House, Let to Sanlam Life & Pensions UK Ltd on values have continued to rise and therefore 1,500 £13.42 and asking rental levels are rising as tenant Teesdale Business Park. a new 5 year lease. speculative schemes still do not generate incentives decrease. attractive appraisal outcomes, meaning that this shortage is likely to remain for some time. Rents in the region have been driven up by circa 20% over the last 12 months and there Industrial - Permitted Development Rights allowing are currently no pipeline industrial scheme Achieved conversion from B1 offices use to C3 Property Size Comments proposed in the Teesside region to stem this Rent (psf) dwellinghouses has taken a significant supply / demand imbalance. proportion of low grade to good quality Dated industrial unit on Portrack Lane, under offer to leisure operator with competition for the secondary stock out of the market for good, Unit 1, 20,286 £6.00 space. The landlord withdrew prior to letting as Portrack Retail Park. placing further pressure on the already the agreed rent was felt to be too low. 6 months’ dwindling availability. Teesdale business rent free offer by way of incentive park is host to Durham University’s Stockton Campus and Stockton Riverside College, Same estate as the industrial elements of the Unit 2, subject properties. Fully let to Rinus Roofing 7,168 £5.50 making it an ideal ideal location for this North Tees Industrial Estate. Supplies Limited for a new 10 year term with activity and a number of conversion schemes break at year 5. 3 months’ rent free granted. have already completed. Units A/B Axis 19, Pre-let to AIS of spec build unit, 10 year term 28,000 £6.50 Tyne Tunnel Trading Estate. with no breaks. Record rent on estate. Agreement for lease signed, due to complete Unit 3 20,000 £5.75 early June.