East Kilbride Retail Park, Howard Avenue

East Kilbride, Glasgow G74 4ZA

Overview

Prime retail investment sale with an attractive tenant profile and fixed uplifts
  • East Kilbride is Scotlands most successful new town and forms part go the Glasgow conurbation.
  • part of a dominant retail warehousing cluster serving a primary retail catchment of 144,000 people.
  • Modern retail park comprising four units, extending to a total of 59,404 sq ft (GIA).
  • Attractive retailer line-up including Currys PC World, Pets at Home, Halfords and The Range.
  • Demand for the park has been demonstrated by the recent arrival of Pets at Home, The Range and Halfords over the last eighteen months.
  • The property provides an annual rental £1,371,466 per annum, with fixed uplifts lifting the income in 2021 to £1,506,336.50 per annum.
  • Attractive WAULT to expert of 8.82 YEARS and to break of 8.29 years.
  • We are instructed to seek offers over £16,136,000 for our clients Heritable interest in the property.
  • A purchase at this level reflects a NET INITIAL YIELD OF 8.00%, allowing for purchasers costs of 6.24%, with the running yield rising to 8.79% in 2021.

Location

East Kilbride is part of the Glasgow conurbation, approximately 10 miles south east of Glasgow city centre. It is the largest town within the South Lanarkshire council area and has a population of over 75,000.

COMMUNICATIONS

East Kilbride has excellent accessibility to the M77, M74 and M8 which form the heart of the country's motorway network. The A725/A726, on which the subject property is situated, is the principal east/west route through East Kilbride and forms the Glasgow Southern Orbital which links the town with the M77 to the west and the M74 to the east.

As part of the Glasgow City Deal, there will be improvements made to transport infrastructure, including upgrades to the A726, the M77 and the M8. This will make East Kilbride an even more attractive location to residents and it will also make East Kilbride Retail Park even more accessible.

Situation

East Kilbride Retail Park is situated on the north side of the town, on the junction with the main arterial routes to Glasgow (A749) and to Hamilton, Motherwell and Bothwell (A725).

East Kilbride Retail Park lies beside Kingsgate Retail Park, which provides over 268,821 sq ft of retail warehousing, anchored by Sainsbury's with other tenants including TK Maxx, Boots, Nike, M&S Simply Food and Homebase.

Adjacent to the East Kilbride Retail Park is a new development which is pre-let to Aldi and Home Bargains. Opposite the park is a retail parade that includes B&Q, Carpetright, Home Store and Harveys.

The retail warehouse provision on the south side of Glasgow is limited, with the 166,350 sq ft Auldhouse Retail Park being the main park, which is 7 miles away and a 23 minute drive time.

Demographics

The East Kilbride catchment population includes a higher than average proportion (17%) of older working age adults aged 45-64 (Source: 2018 CACI), due to it being an attractive location for families. This flows through to there being a stable number of 15-24 year olds which is in line with the UK average.

Within a 10 minute drive time catchment of the retail park, the annual expenditure estimate is around £589,355,364 (Source: 2018 CACI). Within a 10-20 minute drive time catchment of the retail park, the annual expenditure estimate is around £2,391,530,180 (Source: 2018 CACI).

The retail catchment includes the wealthy suburban areas of Glasgow, which include Giffnock, Newton Mearns and Whitecraigs.

Proposed Housing Development between 2017-2022

In South Lanarkshire between 2017-2022, there are plans for a further 3,800 new private sector homes and 1,100 new affordable homes. Part of this housing need is satisfied by the redevelopment of the adjacent former Rolls-Royce site, which will accommodate 316 houses.

Now that key infrastructure funding has been agreed as part of the £1.13 billion Glasgow City Region City Deal, more than 2,500 new homes are set to be built in East Kilbride post 2022.

Description

The subject property comprises a parade of four retail warehouse units of steel frame construction, with the walls a combination of blockwork and composition cladding panels. The units are arranged around a tarmac car park accessed from Mavor Avenue to the west of the scheme, with approximately 225 car parking spaces and 13 disabled spaces, providing a car park to floor space ratio of 1:23 sq m (1:249 sq ft).

Service access is available via Howard Avenue, which serves the rear of each of the four units.


Tenure

The property is held on a heritable title (Scottish equivalent of English Freehold).

Tenancy

East Kilbride Retail Park has flourished with the recent amalgamation of the DSG brands into Unit 4 enabling the tenant line up to be expanded with Halfords, Pets at Home and The Range taking new leases.

The current rent is £1,371,466 per annum, with the fixed uplifts leading to this rising to £1,506,336.50 per annum in 2021.

Attractive WAULT to expiry of 8.82 years and to break of 8.29 years.


Covenant Information

Demand for the park has been demonstrated by the recent arrival of Pets at Home, The Range and Halfords over the last eighteen months.


VAT

The property has been elected for VAT and therefore VAT will be payable on the purchase price. However, it is anticipated the sale will be treated as a Transfer of a Going Concern (TOGC).

PLANNING

Non-food retail sale or hire of goods and for no other purpose within Class 1, restricted to non-food bulky goods only, restricted to electrical DIY, furniture, carpets, gardening goods, household furnishings, motor accessories and pet goods, and for no other purpose within Class 1.

SERVICE CHARGE

The current service charge budget to the year end 31st December 2018 is £57,774. This reflects a cost to tenants of £0.97 per sq ft based on the areas within the tenancy schedule.

EPC

EPCs are available on request.

Proposal

We are instructed to seek offers in excess of £16,136,000 (Sixteen Million, One Hundred and Thirty-Six Thousand Pounds Sterling) exclusive of VAT for the benefit of our client's interest.

A purchase at this level would reflect a net initial yield of 8.00%, after allowing for purchaser's costs of 6.24% based on Scotland's Land and Buildings Transactions Tax (LBTT). The running yield rises to 8.79% in 2021.

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NET INITIAL YIELD:
8%
PRICE:
£16,136,000
REGISTER INTEREST
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