The private owners of an office building at Coventry Business Park asked Drake Howard Property to provide market valuation advice in early summer this year. The owners had received a speculative approach to buy the office and wanted to be sure they would receive full value if the decision was made to sell.
Two opinions of value were given for the property, which at the time was arranged as a serviced office centre. A minimum purchase price for the benefit of an off-market deal and the maximum price which might be achieved through full exposure to a market which is in short supply of freeholds.
Learning the asset was held as a personal pension vehicle, the discussion turned to the merits of disposal in comparison to alternative investment media returns. The outcome was a strong recommendation not to sell to the speculative bidder, unless the offer came in at or close to the maximum price figure. It did not!
The office building had a potential net internal area of 2,850 sq. ft. after strip-out of all partitioning forming individual offices and meeting rooms, split evenly between the two floors. The location could not have been better. This is the premier business park on the south side of the City and with an incredible 18 parking bays to offer, we were confident the space would quickly attract new occupiers.
There was risk associated with conversion from serviced office accommodation to self-contained office suites and in this instance, further complicated by occupation of licencees on differing notice periods. However, the owners took the plunge on the strength of our confidence and set on a plan to remodel the offices in two phases to address the notice period issue.
Full possession of the ground floor was achieved in September by moving two licencees upstairs in lieu of an extension to their notice and the 4 week refit commenced.
Meanwhile, Drake Howard Property introduced BRI (UK) Limited to the availability of the ground floor suite. We were aware this insolvency practitioner needed to relocate and it proved Elliott Court was the perfect fit. BRI was able to tailor the layout during refurbishment works to suit their business model and new lease terms were agreed and subsequently signed one week after works practical completion.
The property owners have now moved on to phase two, with licensees vacating the first floor space over the holiday season. Refurbishment is planned towards the end of January with possession available from 1 March.
Drake Howard Property is marketing the 1,450 sq. ft. first floor office suite and is receiving strong interest. Particularly, as BRI has been kind enough to allow prospective tenants a view of the superb ‘finished product.’
Martyn Howard is confident the space will be occupied early March to prove the investment strategy advice is sound. The asset will produce in excess of 7 % per annum into the pension vehicle, rather than a 5% return from reinvestment of disposal proceeds into a mixed portfolio of equities.
Drake Howard Property has been retained to manage the office investment, collecting rents and administering a service charge for our maintenance of the parts and services shared by the two suites.