The sale of a prominent office building on Newcastle’s Quayside has set a new record yield for the city this property cycle.
On behalf of Aviva Investors, Cushman & Wakefield has sold Keel Row House, a 23,794 sq ft 4 storey office on Newcastle’s Quayside for £8.855m. The property is let to leading law firm, Ward Hadaway for a further 13.5 years with five yearly Retail Price Index linked rent reviews.
The purchase price reflected 5.57% NIY, the lowest non annuity office yield achieved in the last 10 years.
The deal has set a new benchmark yield for the city with the next lowest yield being 5.88% achieved on the adjacent Sandgate House, also occupied by Ward Hadaway, which sold for £10.75 million in December 2016.
Peter Atkinson, Partner in Cushman & Wakefield’s Newcastle based investment team commented: “This deal represents a great result for our clients who were selling following completion of their asset management programme which added significant value to the asset. The sale received a depth of interest and the price attained demonstrates the strong investor demand for the region.”
Cushman & Wakefield represented the vendors Aviva Investors whilst Strutt & Parker represented the purchaser.
Michael Borello, Assistant Fund Manager at Aviva commented: “I am very pleased the market recognised the successful implementation of our asset management strategy for Keel Row House, with the level of interest reflecting the quality of the asset and the strong positive attributes of this regional market. Cushman & Wakefield provided excellent advice throughout the sale, which is reflected through the strong sale price achieved.”
The deals follows Cushman & Wakefield’s recent sale of Maybrook House, a 39,945 sq ft multi-let office building with ground floor retail on Grainger Street in Newcastle. The building is let to a number of tenants including Thompsons Solicitors, Places for People and Guitar Guitar with a weighted unexpired lease term of circa 5 years to expiry and 3.5 years to break. The property was circa 25% vacant and sold to Chinese company, Tuspark for £5.65m reflecting a NIY of 6.01%.
Richard Turner, Partner and Head of Cushman & Wakefield’s Newcastle Investment team commented: “This sale not only delivers a good result for our clients, but also for the city. The sale to Chinese based investors further demonstrates the international appeal Newcastle upon Tyne now has. In addition, looking forward, Tuspark’s initiative of setting up an innovation center to strengthen links between UK and Chinese companies is likely to bring new business opportunities to the region.”
Cushman & Wakefield represented the vendors Shildon Estates whilst Skyline Properties represented Tuspark.