Drake Howard Property acquired a dilapidated joinery workshop in February this year in an off market deal, for a property company client.
Buying a vacant manufacturing facility in the condition illustrated by the pictures below, might well have put many investors off. However, the client was able to see the potential in a property which fitted a gap in the market, created by a shortage of supply of similar premises.
The main workshops and rear paint spray workshop extension measured approximately 7,000 sq. ft., although frontage parking, side and rear yards, added to the attraction. On the downside, the building and all service installations dated from the late 1960’s. With much ad-hoc adaptation, but not a great deal of modernisation and maintenance, a comprehensive refit was long overdue.
Our costed refurbishment schedule came in at an estimated £85,000 and on the strength of recommendations and confidence in the market, the client was persuaded to part with £450,000 and a deal was struck.
The contract was tendered and programmed for 10/12 weeks. The first task being a general strip out, including all electrics and defunct space heaters and to remove substantial wood-burner and extraction plant to the side yard, make the good flank wall and concrete. An opening was to be formed on this side of the building, for a new 4m height electric roller shutter door for improved loading access. Offices, kitchen and toilets needed to be completely renewed. New electric distribution boards were fitted, together with 3 phase points and energy efficient lighting throughout and two Powrmatic space heaters. Roof sheets and fibre glass roof lights have been repaired and replaced where necessary, valley gutters lined and drains cleansed.
At times the workers looked as though they had been in a sawdust storm, but persevered with cleansing and a myriad of general repairs, before redecoration of the premises and floor coverings was possible.
What a transformation and realisation of the imagination of client and agent!
As for the risk of the capital outlay on purchase and refurbishment? The first prospective tenant to visit the premises, committed to a 10 year lease, without break, at a stepped rent average equivalent to the asking price, prior to completion of works and the projected building cost came in on time and on target.
The tenant is an established company in the automotive trade and the combination of strength of covenant and long term commitment has brought an agreement for further improvement works to extend and resurface frontage parking and part of the rear yard.
In such a tight market, to produce an incredible return on capital invested of 6.95%, after all costs, has the investor client desperate for Drake Howard Property to find the next refurbishment project!