Central Square South primed for £16m sale
Abrdn has instructed Savills to find a buyer for the 85,000 sq ft Newcastle office building, close to the station and Stephenson Quarter.
Tenants include PwC – which occupies the top two floors – DWF, HSBC, Towergate Insurance, East Coast Trains, and Sanderson Weatherall.
Both DWF and Sandersons have downsized within the Orchard Street building in recent years, while East Coast has increased its footprint. Towergate and Debit Finance Collections have committed to 10-year deals in the last five years.
The seven-floor building comes with 87 parking spaces, representing a ratio of 1:978 sq ft, while another feature is a 750 sq ft bookable conference facility on the ground floor.
Reception and common areas at the building have been refurbished, with further amenity improvements planned. The building features a 14m full-height atrium surrounding a bronzed central water feature. The EPC rating is C.
The investment summary heading the sales brochure presents the sale as “an excellent opportunity to acquire a highly reversionary grade A office building, situated adjacent to Stephenson Quarter and Central Station”.
In total, the passing rent tops £1.75m per year, which reflects a passing rent of around £24 per sq ft – comparing with recent grade A Newcastle deals at £30 per sq ft to £32 per sq ft.
The average unexpired lease term is 5.2m years, with breaks due at an average of 3.3 years. A purchase at the asking price of £16m would reflect a net initial yield of 10.25% and a capital value per sq ft of £188.
As referred to in the sales brochure, the most comparable recent sale in the local market would be the purchase by Motcomb Estates of Wellbar Central, the 120,000 sq ft building trading for £21.25m in 2023. Eversheds Sutherland has since been attracted to the building.
