We reported on Client acquisition of a warehouse and office property at 23 High March, Daventry back in May 2018. We are now able to follow up with news of a letting to a substantial broadband provider to prove the value of buying vacant property for investment, in a market where yields are established at lower levels than in the past.
This property suffered from very little maintenance by the former occupier, a congregational church and foodbank. Daventry District Council were keen to sell and ‘the right price’ was struck.
The appeal to the buyer was the location, combined with sound building structure, scope and mix of accommodation, the good size yard and separate car park.
Drake Howard Property redesigned the layout and a 6 month managed build followed. To include separation of the two-storey office block on the corner of the frontage from the warehouse and rear office block.
This split allowed marketing in two parts and the joint agency campaign with Northampton based Drake Commercial, generated a steady flow of enquiries for each, despite a slow ‘Brexit’ market. A deal was agreed on the warehouse section but as can happen, the prospective occupier pulled out at the 11th hour.
This turned out to be a blessing, as Gigaclear Limited has taken a 6 year FRI lease on the whole property at a rent of £57,500 per annum.
Gigaclear Limited is recognised as one of the fastest growing tech organisations and is leading the roll-out of ultra-fast fibre connections to rural communities in Britain. 23 High March, with its high office content, satisfied warehouse and sales/administration office expansion needs in Northamptonshire, close to the A5 trunk road and M1 motorway.
The gross internal area is 10,600 sq. ft., with just over half the space being offices.
Analysis of the acquisition shows an income return of 9.5% on capital inputs of £500,000 and after allowances for hold costs, project management, marketing, stamp duty and purchase costs. The asset value today is in excess of £725,000. A capital gain above 30%.
“This has been an extremely successful investment buy for our property company client and comes on the back of two similar projects. The key to buying vacant property for investors is the identification of potential and a reasonably, predictable, market demand. There will be risk, but a quantified risk with the reward of a return above current market yields for ‘ready-made’ investments.
The quality of refurbishment is also critical to presentation to prospective tenants. The fine touches of quality internal doors and ironmongery, fully fitted kitchens and toilets will place the property ahead of the competition and sell it to directors and staff. Care has to be taken on project costs of course, but miss these touches and the offer is simply, just another commercial box.”