Sheffield — 2-18 Fargate

Sheffield — 2-18 Fargate
Prime City Centre Freehold Mixed-Use Investment Opportunity
Sheffield — 2-18 Fargate
Investment Summary
Sheffield is England’s 3rd largest metropolitan city with a primary
catchment of 641,000.
■ Sheffield is one of the most prosperous cities in the North of
England and boasts an economy worth in excess of £7.5bn.
■ The subject property is situated on Fargate, Sheffield’s premier
pedestrianised retailing thoroughfare.
■ The property comprises an attractive block of eight retail units
at ground floor with four floors of separately accessed office
accommodation above.
■ The property is held Freehold.
■ Total current income of £1,303,300 pa.
■ Retailers in the immediate vicinity include Topshop, Boots,
Caffè Nero, Next and Marks & Spencer.
■ The office uppers of 26,776 sq ft (2,488 sq m) provide a rare city
centre opportunity to enhance value through alternative use
conversion (STPP) or refurbishment.
■ There are a number of asset management initiatives available to
the freeholder to enhance rental growth going forwards.
■ We are instructed to seek offers in excess of £17,000,000
(Seventeen Million Pounds) reflecting 7.47% NIY on the
contracted retail income, assuming a capital value of £500,000
for the upper parts.
■ Location
Economy & Demographic Profile
Sheffield is South Yorkshire’s principal administrative and commercial centre
and borders Derbyshire, the Peak District and the Pennines. The city is
located approximately 33 miles south of Leeds, 38 miles east of Manchester,
40 miles north of Derby and 175 miles north of London.
Retailing in Sheffield
Retailing in Sheffield city centre extends to approximately 1.78 million sq ft
and stretches along a linear pitch from Castle Market in the north east to
The Moor in the south west. At the centre of this pitch is Fargate, the 100%
prime pitch, where retailers include Marks & Spencer, Topshop, H&M, River
Island, WH Smith, New Look and Next. In addition, John Lewis are located
to the southern end of Fargate, adjacent to one of the city centre’s busiest
multi-storey car parks.
Road communications to and from Sheffield are excellent with the M1
arterial motorway route skirting the northern and eastern fringes of the city.
The M1 in turn links directly to the M62 and M18 motorways providing quick
access to the north east and north west of England.
The city centre has only one shopping centre, the small Orchard Square,
which is anchored by TK Maxx and Waterstones. A new shopping centre
has long been proposed and the council is currently seeking a development
partner to deliver the scheme, which is likely to be anchored by a new John
Lewis store at Sevenstone.
Sheffield benefits from modern transport infrastructure including a light
railway service, the Supertram, with three main routes travelling within the
city centre and connecting to the outer suburbs of Middlewood, Herdings
Park and Malin Bridge.
M6
A1(M)
Morecambe
Sheffield is well connected to London by train, with regular services to London
Kings Cross, the fastest journey time being approximately two hours. Sheffield
Robin Hood Airport is located approximately 12 miles to the north east of the
city, while to the north, Leeds Bradford International Airport is located within
a one hour drive time, as is Manchester International Airport to the west.
Harrogate
M6
Leeds/Bradford
Blackpool
Bradford
M55
Blackpool
Preston
M65
Blackburn
M61
Bolton
Sheffield boasts a population of over 2.1 million people within a one hour
peak travel time. This catchment population is significantly boosted
by approximately 61,000 students at Sheffield’s two universities and as
a consequence, the city’s catchment population also benefits from a
particularly high proportion of young adults.
International and domestic employers within the city including HBOS,
Nationwide, Aviva, HSBC, Santander, BskyB, Eon and Plus Net. The public
sector is also a leading employer with Sheffield City Council, the Department
for Children, School & Families and Department for Work & Pensions
represented (Source: PROMIS).
A1(M)
Leeds
M62
Halifax
Huddersfield
M6
Sheffield is England’s third largest metropolitan authority and benefits from
a primary catchment of 641,000 persons (Promis). The city has grown
from its industrial roots to encompass a wider economic base and build an
economy worth in excess of £7.5 billion. Due to its industrial heritage, the
city has undergone significant population growth over the past century and
this is showing no sign of abating, with the population projected to increase
significantly by 2020 (welcometosheffield.co.uk).
York
M62
M66
M180
M181
Scunthorpe
Humberside
M18
Doncaster
M58
St Helens
M60
Manchester
M62
Stockport
M60
Liverpool
Liverpool
M6
M53
Sheffield
A1(M)
M1
Manchester
M56
Macclesfield
M1
Lincoln
Chesterfield
Chester
Mansfield
Newcastleunder-Lyme
Stokeon-Trent
M1
Nottingham
Derby
M6
East Midlands
Burton upon Trent
Stafford
Shrewsbury
Telford
M1
Tamworth
M54
Leicester
M42
M6
Wolverhampton
West Bromwich
Nuneaton
Birmingham
M1
Birmingham
M6
Coventry
M42
M5
Peterborough
M69
A1(M)
Rugby
M45
Royal
Leamington
Spa
Northampton
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The four upper floors comprise office accommodation which is accessed
separately via a self-contained entrance off Church Street and includes
disabled access facilities.
Tenure & Tenancy
Tenure: Freehold.
Tenancy: The retail accommodation is fully let on effectively full repairing
and insuring terms to a range of national multiple retailers.
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The property comprises a multi-let parade of eight modern well configured
retail units with four floors of separately accessed offices above. The retail
units are typically arranged over ground floor and basement although two
of the units benefit from first floor sales accommodation. Each retail unit has
rear servicing, accessed via the service yard from Church Street.
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The strength of the subject property’s situation is highlighted on the
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The subject property occupies a prime retailing location on the
pedestrianised pitch of Fargate, opposite the main entrance to
Marks & Spencer. National multiple retailers in close proximity
include Next, River Island, Topshop, Boots and WH Smith.
The property is situated at the busy junction of the High Street
and Fargate opposite the Cathedral tram stop and benefits from its
proximity to the A2 banking pitch with tenants including Lloyds,
Santander, RBS and Halifax.
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The office accommodation is currently vacant and provides a number of
interesting asset management opportunities (STPP).
The total current income is £1,303,300 per annum and a full list of the
tenancies and floor areas can be found in the tenancy schedule overleaf.
Tenancy Schedule
Address
Tenant Name
Lease Start
Lease Expiry
Next RR
Current Rent
Floor Areas
2 Fargate
HSBC Bank Plc
29/09/1987
25/12/2012
-
£242,500
ITZA
Basement Sales
Basement Ancillary
4 Fargate
Starbucks Coffee
Company (UK)
Limited
25/01/2006
24/01/2016
-
£175,000
ITZA
Basement Ancillary
761 units
1,324 sq ft
123.00 sq m
6 Fargate
Greggs Plc
29/06/2005
28/06/2020
29/06/2015
£126,000
ITZA
Basement Ancillary
605 units
814 sq ft
75.62 sq m
-
8 Fargate
Vodafone Limited
25/12/2005
24/12/2015
-
£88,600
ITZA
443 units
-
-
Basement Store
(8 Fargate)
Vacant
-
-
-
-
Basement Ancillary
619 sq ft
57.51 sq m
-
25/03/2015
24/03/2023
25/03/2019
£125,000
ITZA
Basement Sales Basement
Ancillary
554 units
548 sq ft
384 sq ft
50.91 sq m
35.67 sq m
-
25/03/2015
24/03/2023
25/03/2019
£125,000
ITZA
Basement Ancillary
596 units
717 sq ft
66.61 sq m
-
10 Fargate
12 Fargate
The Carphone
Warehouse
Limited
The Carphone
Warehouse
Limited
Comments
971.5 units
1,258 sq ft
620 sq ft
116.87 sq m
57.60 sq m
Tenant served S26 requesting a new lease.
Negotiations ongoing.
Reversionary lease to Starbucks franchise (Soul
Coffee House (Central) Limited) t/a Starbucks,
agreed upon current lease expiry. Draft HOT’s
available upon request.
14 Fargate
Office Holdings
Limited
09/03/2006
08/03/2021
-
£147,500
ITZA
First Floor Sales
Basement Ancillary
575.5 units
1,096 sq ft
902 sq ft
101.82 sq m
83.80 sq m
Reversionary lease at £147,500 pa
signed from 09/03/16.
16 Fargate
Green + Benz
Limited t/a
Pandora
02/10/2014
01/10/2024
02/10/2019
£125,000
ITZA
Basement Ancillary
586.5 units
725 sq ft
67.35 sq m
Lease guaranteed by T.H. Baker Group Limited.
Guarantor’s liability capped at £75,000
and expires 02/10/2019.
£148,700
ITZA
First Floor Sales
First Floor Ancillary
Basement Ancillary
493 units
1,026 sq ft
580 sq ft
743 sq ft
95.32 sq m
53.88 sq m
69.03 sq m
Refurbishment programme underway.
-
1st Floor
2nd Floor
3rd Floor
4th Floor
4,477 sq ft
7,698 sq ft
7,136 sq ft
7,465 sq ft
415.92 sq m
715.16 sq m
662.95 sq m
693.52 sq m
-
18 Fargate
2-18 Fargate Offices
Total
Vodafone Limited
Vacant
13/11/2002
-
12/11/2017
-
-
-
£1,303,300
Sheffield — 2-18 Fargate
Estimated Rental Value
Asset Management Opportunities
Fargate historically reached £230 Zone A at its peak in 2008, and recent letting activity would suggest positive rental growth once again. Based on current
comparable transactions as detailed below, we believe the estimated rental value of the property reflects between £186 to £207.50 Zone A, graded upwards
from the junction of Fargate and Church Street.
The subject property provides a potential purchaser with the ability to own
a prime, multi-let parade in one of the UK’s strongest cities. In addition, the
property has a number of deliverable asset management opportunities
through which the freeholder can drive performance over the short and
medium term. We highlight a number of these initiatives below:
Recent Comparable Transactions
Address
Tenant
Transaction
Date
Headline Zone A
10 Fargate
Carphone Warehouse
Regear
June 2015
£200.00
12 Fargate
Carphone Warehouse
Regear
June 2015
£198.00
14 Fargate
Office
Regear
May 2015
£207.50
16 Fargate
Pandora
OML
December 2014
£200.00
58-64 Fargate
River Island
OML
August 2014
£186.00
33-35 Fargate
Topshop
OML
June 2014
£205.00
Renew lease to HSBC at 2 Fargate. The tenant served a Section 26
Notice on 4th August 2014, requesting a new lease. We understand that
the subject property provides HSBC’s only cash bank in the city centre.
Regear lease on 18 Fargate with Vodafone and surrender 8 Fargate,
providing an opportunity to relet the space and drive rental tone further.
Conclude reversionary lease to Soul Coffee House (Central) Limited
t/a Starbucks.
Refurbish and let vacant offices accommodation, providing an immediate
opportunity to increase the asset’s performance.
We believe the upper parts could also offer a range of alternative uses
(STPP). These opportunities could include: residential, student and
hotel conversion which would prove a significant development upside
for the purchaser.
Covenant Status
Tenant
Experian Rating
Date of Accounts
Turnover
Pre-tax Profit
Net Worth
HSBC Bank Plc
90 – Low Risk
31/12/2014
-
£1,953,000,000
£28,784,000,000
Starbucks Coffee Company (UK)
Limited
89 - Low Risk
10/02/2015
£408,721,070
£1,056,196
£35,513,083
Greggs Plc
100 - Very Low Risk
28/12/2014
£803,961,000
£49,743,000
£241,982,000
Vodafone Limited
100 - Very Low Risk
31/03/2014
-
£251,536,000
£53,722,031,000
The Carphone Warehouse Limited
60 - Below Average Risk
29/03/2014
£37,866,000
£213,169,000
£1,120,748,000
Office Holdings Limited
100 – Very Low Risk
26/01/2014
£256,044,000
£28,106,000
£103,595,000
Green + Benz Limited t/a Pandora
91 – Very Low Risk
28/02/2014
-
-
£1,099,261
Service Charges
There is a service charge in operation at the property for maintenance
and security of common parts/service yards and repairs. For the year 1st
April 2015 to 31st March 2016 the budget is £73,220, equating to a low
£1.54 per sq ft.
Further information available upon request.
EPCs
The Energy Performance Certificates and Recommendation Reports for
the property are available upon request.
Proposal
We are instructed to seek offers in excess of £17,000,000, subject to
contract, for the freehold interest in this property.
Assuming a nominal capital value of £500,000 on the upper parts, this
reflects an attractive 7.47% NIY, assuming purchaser’s costs of 5.80%.
Value Added Tax
The property is not currently elected for VAT, meaning that at present VAT
is not payable on the purchase price.
Further Information
For further information please contact:
Chris Lewis
T: 020 7152 5991
E: chris.g.lewis@eur.cushwake.com
Sam Waterworth
T: 020 7152 5149
E: sam.waterworth@eur.cushwake.com
Cushman & Wakefield LLP (and any joint agent appointed) on its own behalf and for vendors or lessors of this
property, whose agent it is, gives notice that: (1) The particulars are produced in good faith, but are a general
guide only and do not constitute any part of a contract. (2) No person in the employment of the agent(s) has
any authority to make or give any representation or warranty whatsoever in relation to this property. (3) The
property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4)
Nothing in these particulars should be deemed a statement that the property is in good condition, or that
any services or facilities are in working order. (5) Unless otherwise stated, no investigations have been made
regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out
their own investigations if required. Publication Date: June 2015