10-18 Victoria Street

London SW1H 0NB

Overview

Core historic central London location on Victoria Street with stunning views of Westminster Abbey and the Houses of Parliament.

Victoria is undergoing substantial change with a number of landmark new developments including Ten Broadway, located adjacent to 10-18 Victoria Street, as well as significant ongoing infrastructure improvements.

The Property benefits from a 65m frontage to Victoria Street and currently provides 81,597 sq ft of flexible office accommodation arranged over basement, lower ground, ground and nine upper floors.

Single let to the undoubted covenant of the British Government, with an unexpired term of more than 7.75 years.

The Property produces a rent of £3,100,000 per annum, reflecting an extremely low average passing rent of £37.99 per sq ft, just 43% of the highest rent achieved in Victoria (£87.50 per sq ft) and 34% of the prime West End rent (£112.50 per sq ft).

10-18 Victoria Street benefits from numerous opportunities to significantly add value which include:
  • Future massing potential on a substantially underdeveloped site
  • Extension and refurbishment of the existing building
  • Substantial office or mixed use redevelopment
  • Hotel redevelopment or alternative use such as residential
  • A lease restructure with the British Government
  • Future site amalgamation through strategic acquisitions
  • A well timed upward only rent review in February 2021
We are instructed to seek offers in excess of £95,000,000 (Ninety-Five Million Pounds), reflecting a net initial yield of 3.21% and an exceptionally low capital value of only £1,164 per sq ft, assuming an acquisition of the Jersey based SPV which holds the freehold (assuming 1.80% purchaser's costs).

Location

10-18 Victoria Street occupies a prominent location in the heart of Victoria, one of central London's principal commercial and residential sub-markets.

Historically, Victoria has been a hub for government occupiers due to its proximity to The Houses of Parliament, Downing Street and Whitehall. In recent years, however, the location has benefitted from a plethora of high quality developments and place-making schemes, largely driven by renowned UK REIT Landsec. This has resulted in a vibrant office, retail, leisure and residential destination.

This has attracted a diverse mix of office and retail occupiers including Guggenheim Partners, Jupiter Asset Management, Deutsche Bank and global media and fashion brands such as Microsoft, Google, Burberry, Giorgio Armani and Tom Ford.

Over the coming years there are a number of exciting schemes due to be delivered. The most significant development is Ten Broadway (New Scotland Yard), located adjacent to 10-18 Victoria Street and set to deliver 258 private and 10 intermediate residential units and over 190,000 sq ft GEA of commercial space, due for completion in late 2021.

Situation

10-18 Victoria Street occupies a prominent site at the eastern end of Victoria Street and forms part of a distinct triangular island site comprising seven commercial properties bounded by Dean Farrar Street, Tothill Street and Victoria Street.

Victoria Street itself is the principal commercial and retail thoroughfare linking Victoria Station with the Houses of Parliament, Parliament Square and Westminster Abbey.

Description

10-18 Victoria Street benefits from a 65m frontage to Victoria Street and provides 81,597 sq ft of flexible office accommodation arranged over basement, lower ground, ground and nine upper floors.

The ground floor extends to more than 10,500 sq ft and the upper floors range from approximately 5,163 sq ft to 7,100 sq ft and benefit from exceptional levels of natural light. The central core of the building creates an efficient floorplate that provides a degree of flexibility. In addition, the sixth and eighth floors benefit from external terraces with stunning views across historic London.

In addition, there is a residential caretakers flat on the ninth floor.

Specification

The property benefits from the following specification:
  • Regular open-plan floorplates
  • Chilled ceiling air-conditioning system
  • Suspended ceilings with inset fluorescent lighting
  • Part perimeter trunking and part three compartment underfloor trunking
  • Male and female WCs on each floor and disabled WC provision at ground and lower ground floor levels
  • Three 15-person passenger lifts, providing access from the lower ground to the eighth floor
  • 13 car parking spaces at basement level accessed at the rear of the property
  • Extensive external terraces on the sixth and eighth floors

Accommodation

The Property has been measured by Lane and Frankham in accordance with the Code of Measuring Practice (6th Edition) published by the Royal Institution of Chartered Surveyors. The full measured survey is available in the data room.

The Property provides areas seen in the link below:


Tenure

Freehold. The property is held freehold under title number LN168709.

Tenancy

An extremely low passing rent of £37.99 per sq ft, just 43% of the highest rent achieved in Victoria (£87.50 per sq ft) and 34% of the prime West End rent (£112.50 per sq ft).

  • 10-18 Victoria Street is let in its entirety to The Secretary of State for the Environment, Transport and the Regions on a fully repairing and insuring lease for a term of 15 years, expiring 19 February 2026.
  • The current passing rent is £3,095,000 per annum subject to a fixed increase on 20 February 2019 to £3,100,000 per annum.
  • The vendor proposes to top up the rent to the fixed increase which equates to an extremely low average rent of £37.99 per sq ft.
  • There is an upward only rent review on 20 February 2021.
  • The lease is inside the security of tenure provisions of the Landlord and Tenant Act 1954.
  • 10-18 Victoria Street is occupied by a variety of Government bodies including the Cabinet Office, BEIS, Labour Market Enforcement, Mayors Office for the Policing and Crime (MOPAC) and Nuclear Decommissioning Authority.
10-18 Victoria Street is single let to the British Government

Since 2010, the Government has significantly reduced their central estate particularly in central London where overall costs are much higher. An example is the relocation of the Metropolitan Police from New Scotland Yard, to the Curtis Green Building on Victoria Embankment.

There are suggestions that the British Government has downsized too far, and with Brexit at the forefront of UK politics, a renewed increase in Government demand is likely. We are of the opinion that 10-18 Victoria Street remains an important Government office building, situated in very close proximity to Parliament Square and the House of Lords.

The Houses of Parliament will undergo a major restoration from 2025 with the House of Commons expected to move to Richmond House and the House of Lords to relocate to the nearby Queen Elizabeth II conference centre.

VAT

The Property is elected for VAT.

EPC

An EPC is available in the data room.

Data Room

Access to the online data room is available upon request, which includes:
  • 2015 Lane & Frankham measured survey
  • PLP Architecture study
  • Legal and title documentation
  • DP9 Planning note

PLANNING

10-18 Victoria Street is located within the Central Activities Zone, the Victoria Opportunity Area, and an Archaeological Priority Area. The existing building is not listed and is not located within a conservation area.

DP9 have prepared a summary of the relevant planning policies which is available to view in the on line data room.

CAPITAL ALLOWANCES

Further information is available on request.

Proposal

We are instructed to seek offers in excess of £95,000,000 (Ninety-Five Million Pounds) subject to contract and exclusive of VAT.

Pricing at this level reflects a net initial yield of 3.21%, and an exceptionally low capital value of only £1,164 per sq ft, assuming an acquisition of the Jersey based SPV which holds the freehold (assuming 1.80% purchaser's costs).

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NET INITIAL YIELD:
3.21%
PRICE:
£95,000,000
REGISTER INTEREST
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