CLEVELAND BUSINESS CENTRE 1 OAK STREET, TS1 2RQ

FOR SALE HIGH YIELDING, ESTABLISHED SERVICED OFFICE CENTRE IN A CORE REGIONAL LOCATION Investment Considerations

n High yielding serviced office investment located in the heart of n Excellent occupier market dynamics with significant growth projected Middlesbrough town centre, directly adjacent to the Law Courts. for the sector.

n A modern three storey office building providing fully refurbished n Situated in an area benefiting from high profile regeneration initiatives accommodation and extending to 2,943 sq m (31,682 sq ft). including both commercial and leisure developments.

n Multi-let on 28 leases and license agreements with a total rental income n Seeking offers over £2.95M (Two Million, Nine Hundred and Fifty of £456,704* per annum including car parking and a triple net income Thousand pounds) which equates to a ‘triple net’ initial yield of 10.68% after all outgoings of £335,383 per annum. after costs of 6.44%.

CLEVELAND BUSINESS CENTRE TS1 2RQ Location

Middlesbrough is a sub-regional centre and the time to London Kings Cross of approximately 2.5 hours. Middlesbrough A1046 who together contribute over £10Bn

principal industrial and service town within the The town benefits from good air links with the Teesside to the national economy each year.

conurbation, situated approximately 10 miles east of Airport situated approximately 10 miles to the south

Major employers in Middlesbrough include Charles Darlington, 60 miles east of Leeds and 40 miles south of west of the centre, providing both domestic and

Cliquard who recently invested P £3M into a purpose built Newcastle. The town has a resident population of 174,700 international flights. OR 40,000 sq ft town centre HQ, as wellT as AV Dawson who (Census 2011) and a population in excess of 626,000 CL The Teesside economy is based predominantly on have invested £10M into a state-of-the-artAR rail terminal DURHAM ST within a 20 mile radius of the town centre (Focus). E NC manufacturing, chemical production and shipping with that provides a direct link onto the East CoastE Mainline.

R D Middlesbrough has good road and rail communications, Teesport providing major employment opportunities Other major employers include University Teesside, St

with the A66 dual carriageway linking to the region’s for the town. More recently, the town has developedD a Lukes Hospital, the Port Harbour & Dock Authorities,

R principal north/south arterial routes, the A19 and the niche in the digital/creative marketing and technology Middlesbrough DCT, PASF plc, Gazette Media Co Ltd L

L A1 (M). Middlesbrough has direct rail links to Darlington, based sectors. There are over 13,550 smallI to medium and Petroplus. H situated on the east coast mainline, which has a journey enterprises and over 80 large companiesN based in O T R E V A H

ASHINGTON MORPETH

A1046 NORTH RD A1(M) A178 A696 Newcastle Middlesbrough Airport A19 A66 Cinema A68 Nando’s A19 TYNEMOUTH HARTINGTON RD Fitness Gym A66 Jurys Inn Scotland Port of Tyne T Hillstreet E CORP. R A69 SOUTH E Centre D NECASTLE S SHIELDS B HEXHAM UON TNE R Glasgow ID G Town A68 A19 SUNDERLAND E Hall Edinburgh GATESHEAD 65 AP ELM ST McDonalds PR ALBERT RD American Golf OA A1(M) CH Subway 63 RD Pizza Hut NEWPORT RD BRIGHT ST Newcastle A19 Sunderland CHESTERLESTREET SEAHAM B6541 A690 North A1032 BOROUGH RD Carlisle Middlesrouh DURHAM 62 CLEVELAND HEYWOOD ST A167 A181 A19 BUSINESS CENTRE A172 A689 RD Leeds A690 61 HARTLEPOOL Teesside Manchester 60 University Liverpool A688 A689 Teesport B6541 Nottingham A68 A66 Birmingham 59 STOCKTON A688 MIDDLESBROUGH 58 DARLINGTON MIDDLESBROUH ales A66 A66 A171 A1032 Albert Park MARTON RD STOCKTON RD Cardiff 57 London A66 Bristol 56 Durham Tees Valley Airport Hospital Middlesbrough Institute SCOTCH CORNER A19 A19 of Modern Art A1(M) South

A684

CLEVELAND BUSINESS CENTRE TS1 2RQ

A19 Situation

The subject property is centrally located on Oak Street, accessed via Corporation Road and adjacent to the Law Courts. Middlesbrough Town Hall, Middlesbrough Borough Council and Middlesbrough Institute of Modern Art are all located within 400 yards of the property. Pedestrian and vehicle access is excellent, with the property benefitting from close proximity to the A66, the region’s major trunk route, as well as direct passage to the main retail core via a pedestrianised thoroughfare to the west.

The immediate proximity to Cleveland Business Centre is characterised by modern retail and leisure uses, with Middlesbrough Leisure park located circa 50m to the east and providing a Cineworld cinema, alongside Nando’s, McDonalds and Pizza Hut outlets among others. To the west, public use buildings including the Middlesbrough Institute of Modern Art, the Town Hall and Council offices are located around landscaped gardens leading to the Cleveland Shopping Centre, Middlesbrough’s main flexible and innovative learning space and shopping mall. all-year-round outdoor space for use by the students, staff and local community. Other The campus is located exciting developments include the £6M approximately 0.5 miles south of the subject refurbishment to the science and engineering property and extends to over 30 buildings, facilities, a soon-to-be completed £2.5M accommodating 24,000 students and 2,400 extension to the health and fitness facilities, facility members. The campus has benefitted as well as a £1.1M refurbishment of the multi- from a £250M investment in recent years, award winning Students Union. The University with developments including a £20M flagship contributes a total of £124M GVA to teaching building providing 16,000 sq ft of the economy.

Middlesbrough Institute of Modern Art Albert Park Cleveland Centre Shopping Teesside University

CLEVELAND BUSINESS CENTRE TS1 2RQ Situation: Surrounding Area

A66

Linthorpe Road (Prime Retail Pitch) Gurney Street Triangle Middlesbrough Leisure Park

Town Hall and Council Chamber Teesside Combined Court

The Cleveland Centre

Holiday Inn

Middlesbrough Institute of Modern Art New 200,000 sq ft Grade A Pavilion Office Development

Proposed 566 bed student Baker Street & Bedford Street accommodation development Character Area

Teesside University Campus

CLEVELAND BUSINESS CENTRE TS1 2RQ Regeneration

Middlesbrough has benefitted from a large comes amid the on-going regeneration of amount of regeneration initiatives in recent Middlehaven including a £30M snow centre years. Projects include an £8M refurbishment development. The Snow Centre, which will of the Town Hall which is currently underway cover a site of 7 acres, will be a major tourist and will see previously inaccessible parts of attraction for Middlesbrough and will include the building being opened up and made into a main ski slope, nursery slope as well as heritage attractions in their own right. The associated retail and leisure uses. Among the project will maximise the potential of additional leisure uses are facilities for Middlesbrough Town Hall as both a venue and sledging, tubing, ice wall climbing, an ice bar, an arts centre and reinforce the Town Hall’s a trampoline park, indoor skydive centre and status as a cultural venue of regional climbing walls. significance. Approximately 300 yards north-west of the The £0.5M independent retail and leisure subject property planning permission has development at Baker Street and Bedford been secured for an 80-room Premier In at Street include public realms works, street Wilson Street. The hotel forms part of the landscaping and new shop frontages and has wider £30M ‘Gurney Street Triangle’ led to the influx of high quality independent development which features proposals for retailers with the street now benefitting from a luxury hotel, casino, restaurants and near full-occupation. Phase 3 of the multi-storey car park. regeneration works in this area has seen the creation of a monthly artisan street food Significantly, 4.4 acres of Central Square, a market featuring 25 independent food park approximately 200 yards south of the vendors as well as arts, culture and Cleveland Business Centre, is earmarked for entertainment. The market is a one of its redevelopment to provide 200,000 sq ft kind in the region, attracting locals and state-of-the-art office accommodation to rival Gurney Street Triangle visitors alike. neighbouring commercial hubs Newcastle and Leeds with the goal of attracting more white- A multi-million pound Holiday Inn has recently collar investors to the town. The proposed been developed on Albert Road, located a developer is Ashall Projects who have short walk from the subject property. The developed the likes of Cobalt Business Park in 138-room hotel opened in August 2015 and is North Tyneside and the project aims to create 80% aimed at business clientele. The upwards of 1,500 jobs. Businesses have development has created job opportunities for already expressed interest in the project and it the local community, provided a boost to the is expected the ground floor will be allocated local economy and supported the needs of to retail and leisure use. This development will local businesses as well as the university. place Cleveland Business Centre at the heart of Middlesbrough’s prime business hub. Further developments in Middlesbrough include a £9M ‘lifting’ road bridge planned for Middlehaven Dock. The bridge will provide access to north of the , home to Middlesbrough F.C, and the project Middlesbrough Snow Centre

CLEVELAND BUSINESS CENTRE TS1 2RQ Description

The Cleveland Business Centre has providing excellent natural light and recently undergone a £1M refurbishment fit out to a high standard with high program and comprises a substantial quality fixtures and fittings. The office three storey office building of steel frame suites provide modern, open plan construction with traditional red brick accommodation with a passenger lift infill and decorative aluminium cladding, serving all floors, stairs to both ends surmounted by a pitched roof with tile of the building as well as at the main covering. A café facility is located to the entrance and a dedicated car park to the northern elevation. rear of the building. There is a communal gym and changing rooms on the second Internally, the ground floor element of floor as well as an additional meeting the property provides a double height room. WCs and communal kitchens are reception area with large windows provided on all floors.

CLEVELAND BUSINESS CENTRE TS1 2RQ General specification consists of suspended ceilings with integrated modern lighting, perimeter trunking for data and power circulation and glazed internal partitioning. The Business Centre has a permanently staffed reception during office hours alongside 24 hour secure access and monitor CCTV.

Fully integrated IT and telecoms alongside up to 100mbps high speed broadband is available to tenants. www.clevelandbusinesscentre.co.uk

CLEVELAND BUSINESS CENTRE TS1 2RQ Accommodation

FLOOR SUITE AREA (SQ M) AREA (SQ FT)

Room 001 71.39 768 Room 002 94.15 1,013 Room 003A 39.18 422 Room 003B 39.01 420 Room 003C 46.69 503 Ground Floor Room 004 248.44 2,674 Room 005 123.79 1,332 Room 006 108.25 1,165 Room 007 146.31 1,575 Café 40.08 431 Managers Office 19.07 205

Room 101 and 103 118.19 1,272 (Gym and changing rooms) Room 104A 15.34 165 Room 104B 18.53 199 Room 105 46.44 500 Room 106 46.44 500 Room 107 46.44 500 Room 108 46.44 500 Room 109 46.44 500 First Floor Room 110 46.53 501 Room 112 72.03 775 Room 113 72.05 776 Room 114 46.44 500 Room 115 46.48 500 Room 116 54.14 583 Room 117 54.14 583 Room 118 75.69 815 Room 120 101.04 1,088 Meeting Room 18.27 197

Room 201A 110.60 1,190 Room 201B 54.21 584 Second Floor Room 202 256.29 2,759 Room 206 361.23 3,888 Room 209 213.70 2,300 Total 2,943.46 31,683 CLEVELAND BUSINESS CENTRE TS1 2RQ Tenure

The property is held long leasehold for a term of 125 years from November 2016 at an annual ground rent of £20,226 per annum.

Reviews are 5 yearly upwards and downwards to the higher of 18% of the net rental income received by the landlord or £17,500 per annum.

The freeholder is .

CLEVELAND BUSINESS CENTRE TS1 2RQ Tenancies The property is let on flexible terms to a number of tenants in line with the ongoing business centre operation. A summary of the basic lease terms for each tenant is provided below: SUITE TENANT START EXPIRY RENT BREAK COMMENTS

Masons NJ Mason 18/12/11 17/12/16 £10,696 New lease agreed

Manager’s JLM Services 31/05/15 30/05/16 £3,200 Ongoing lease renewal negotiations

001 Darlington Assoc on Disability 01/07/16 31/05/17 £10,000 Any time 3 months’ notice Mutual

002 James Hill QC 08/08/13 07/08/18 £10,657.50 Any time 3 months’ notice Occupier for over 20 years

003A Kyles Legal Practice 01/07/16 30/06/17 £7,800 Any time 3 months’ notice Mutual

003B Lawrence Stroud 06/04/15 05/04/20 £4,200 06/04/2018 w 6 months’ notice

003C Irwin Mitchell LLP 01/03/16 28/02/17 £12,000 Any time 3 months’ notice Mutual Regional law firm

004 Afsol Limited 01/11/14 31/10/17 £36,885 Occupier for over 26 years

005 James Hill QC 08/08/13 07/08/18 £16,012.50 Any time 3 months’ notice Occupier for over 20 years

006 Provident Financial 21/10/16 20/10/17 £15,000 Any time 3 months’ notice Tenant only

007 Pearson Driving Assessments Ltd 01/10/14 30/09/19 £22,965 30/06/2017 with 6 months’ notice Driving test provider in occupation over 10 years

101-103 Gym

104A Hainton Recruitment 30/05/16 29/05/17 £5,200 Education & Services for People with Autism (ESPA) 104B & 105 ESPA 30/11/17 29/11/17 £12,000 Any time mutual 3 months’ notice are a registered charity 106 & 107 Vacant

108 Mark James Law 01/02/17 31/01/18 £7,200 Any time 3 months’ notice Mutual

109 Vacant

110 & 112 Taylor Law 23/01/17 22/04/18 £25,300

113 Sports Management International 04/07/16 03/07/17 £7,800 Any time 3 months’ notice Mutual

114 Teesside Law Ltd 01/03/16 28/02/17 £10,200 Any time 3 months’ notice Mutual Football agency

115 Matrix Neurological 25/04/16 24/04/17 £4,583 Any time 1 months’ notice Mutual National recruitment firm

116 Linthorpe Developments 01/09/16 30/08/20 £11,000

117 Protocol Education 04/04/16 03/04/17 £10,000 Tenant 4 weeks’ notice

118 RTS Wind Recruitment 23/06/14 02/08/15 £13,200 New lease agreed at £13,200 per annum Recently expanded into adjacent unit. 119 Iris Law LLP 01/06/16 11/09/17 £16,590 Any time 3 months’ notice Mutual Occupier for over 10 years 201A Jo Hand Recruitment 14/08/16 13/05/20 £19,200

201B Teaching Archive 01/03/17 28/02/18 £9,000

202 Learning Concepts Ltd 03/11/14 02/11/17 £27,510 Occupier for over 7.5 years

206 THAP Ltd 13/07/16 12/07/19 £57,500 Dubai-based IT firm. Fit out costs over £100k

209 Nexxlink UK 01/09/16 31/08/17 £48,000 Any time 6 months’ notice Mutual US-based call centre with clients including BBC & Virgin Total £456,704*

*The property operates as a serviced office centre, and the total rental income includes income generated from car parking and high speed internet provisions. Deductions have been made for non-recoverable costs where suites are let on inclusive terms. The ‘triple net’ annual income generated by the centre after all outgoings is £335,786 per annum. CLEVELAND BUSINESS CENTRE TS1 2RQ Market Commentary

The serviced office market has seen significant expansion over recent years, driven by a move toward agile, flexible working and an emerging shared resources ethic aimed at reducing the occupational cost base. The UK is the most established serviced office market globally, accounting for 36% of the international market. The majority of space requirements are from SMEs and high growth start-ups, particularly in the digital sector (of which Middlesbrough is a leading hub), though corporate occupiers are now seeing the benefit of flexible solutions and larger operators such as 12, BE Offices, Regus and WeWork have witnessed exceptional growth as a result.

Occupier demand is currently outstripping supply in most areas, resulting in a national increase of 11.4% in workstation rates in 2015. Yorkshire & the Humber posted an increase in rates of 10.5% in this period. Overall, the serviced office market has grown by 31% since 2008 and is projected to accelerate significantly by 2025, with sector valuation predictions of up to £126Bn by this date.

There are sound economic and behavioural reasons why the sector will continue to witness impressive growth over the next decade, as improving technology and communication networks enable businesses to shift their focus from costs to people and harness expertise from a more footloose, globalised workforce.

Cleveland Business Centre sits at the forefront of the serviced office market in Middlesbrough, providing high specification, agile workspace solutions in a core town centre location.

CLEVELAND BUSINESS CENTRE TS1 2RQ Investment Rationale n Newly-refurbished serviced office centre in the heart of Middlesbrough, a fast growing digital economy n Flexible, agile workspace provision which meets current and future market needs n Immediately adjacent to Teesside combined court, generating high occupational demand from the legal profession n A proven business model with exceptional net income profile and strong growth potential. The available suites have seen high demand with viewings ongoing n Opportunity to add value by stabilising legacy rents, letting vacant space and rentalising meeting rooms/shared facilities, as is common for serviced office products n Excellent market dynamics with sector growth set to accelerate over the forthcoming decade

CLEVELAND BUSINESS CENTRE TS1 2RQ VAT EPC’s

The property has been elected for VAT and it EPC certificates can be provided on request. is envisaged that the transaction will be treated as a ToGC.

PROPOSAL FURTHER INFORMATION We have been instructed to seek offers over £2,950,000 (Two Million, Nine Hundred and Fifty Thousand Pounds) for our client’s freehold interest, subject to contract and exclusive of VAT. A Luke Symonds purchase at this level reflects a net initial Direct Dial: 0191 269 0095 yield of 10.68% after deductions of Email: [email protected] Lynsey Underwood standard purchaser’s costs of 6.44%. Direct Dial: 0191 269 0093 Email: [email protected]

Steven Jones Direct Dial: 0113 205 3148 GVA Grimley Limited Conditions under which Particulars are issued GVA Grimley Limited for themselves, for any joint agents and for the vendors or lessors of this property Email: [email protected] whose agents they are, give notice that: 1.) The particulars are set out as a general outline only for the guidance of intending purchases or lessors and do not constitute, nor constitute part of, an offer or contract. 2.) All descriptions, dimensions, references to condition and necessary permission for use and occupation, and other details, are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them. 3.) No person in the employment of GVA Grimley Limited or any joint agents has any authority to make or give any representation or warranty whatever in relation to this property. 4.) All rentals and prices are quoted exclusive of VAT. Reproduced by courtesy of the Controller of HMSO. Crown Copyright reserved. Licence No 774359. If applicable, with consent of Chas E Goad, Cartographers, Old Hatfield, Geographers A-Z Map Co Ltd and/or The Automobile gva.co.uk/10338 Association. For identification purposes only. January 2017.

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