Glover and Jarrow Network Centres

Tyne and Wear NE37 3HB

Overview

  • Rare opportunity to acquire two prime multi let industrial estates prominently located within the popular and established industrial areas of Washington and Jarrow
  • Comprising 31 modern well specified light industrial units, ranging between 860 sq ft up to 2,950 sq ft and totalling 61,557 sq ft
  • Glover Network Centre is prominently situated in the immediate vicinity of Nissan UK in Washington and is fully let to 10 tenants with Jarrow Network Centre 94% let to 17 tenants, producing a total annual rent of £286,936
  • Low site coverage on both estates with 25% on Glover and 26% on Jarrow, giving generous yard and parking areas
  • Low passing rents on both estates giving excellent reversionary potential
  • Buoyant occupational market, with a notable shortage of quality units within this size bracket
  • Substantial further income surplus from both the facilities and utilities charges, averaging £71,500 pa
  • We are instructed to seek offers in excess of £4,000,000 (Four Million Pounds) subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 6.73% reverting to 7.94% after purchaser's costs of 6.54%, representing a capital value of only £64.98 per sq ft
  • The significant utilities and facilities recharge surpluses add a further 1.68% to the income return

Location

Washington and Jarrow are strategically located towns, which form part of the wider conurbation of Tyne and Wear, the seventh largest in the country, with a population of 1.3 million people. Washington is situated 8 miles south, and Jarrow 6 miles east of Newcastle upon Tyne, the commercial and administrative capital of the North East.

Washington and Jarrow are both situated very close to the A19(M), a key arterial route throughout the North of England, connecting the A1 to the south to Northumberland to the north. Glover Network Centre also benefits from immediate access to the A1231 Sunderland Highway, which connects the A19(M) to the A1(M).

The North East is well served by public transport, with Newcastle Central Station, a main station on the East Coast mainline, connecting the city to London in 2 hours 50 minutes and Edinburgh in 1 hour 30 minutes. The Metro system comprises 60 stations throughout Newcastle, Gateshead, Sunderland and Tyneside, making it the second largest in the UK behind the London underground. Newcastle international airport serves over 40.8 million passengers annually to 80 destinations worldwide. The airport operates via 18 scheduled airlines, including Emirates, British Airways, Easyjet and Air France providing daily flights to domestic and international destinations.

Situation

Glover Network Centre

Glover Network Centre is situated at the very heart of the North East's industrial market on one of Washington's newest estates, close to Nissan's UK manufacturing plant and numerous tier one suppliers to Nissan, including Calsonic Kansei and Vantec.

The estate is accessed off Spire Road, the main route through Glover Industrial Estate, which gives immediate access to the A1231 Sunderland Highway, which connects the A1(M) to the west and the A19 to the east.

Jarrow Network Centre

Jarrow Network Centre occupies a position in a well established and popular industrial area on the south bank of the River Tyne, with access to the Tyne Tunnel A19(M) provided via the A185. The area is in a strategic location less than a mile from the A19 dual carriageway and less than 3 miles from the Port of Tyne, the UK's second largest car exporting port.

The estate is accessed via Blackett Street (B1297) which is a key local route and is equidistant between Jarrow and Hebburn town centres. Jarrow Network Centre is well served by public transport, with two metro stations within a one mile radius.

Description

Glover Network Centre

Glover Network Centre consists of 12 self-contained modern workshop/trade counter units, arranged in 3 terraces around a large shared yard.

The units are of steel portal frame construction with part brick, part insulated profile cladding elevations. Each unit has roller shutter access to the warehouse and a separate personnel front door leading to an office/trade counter area. Each unit benefits from a minimum eaves height of 4.3m rising to 5.6m at the apex.

Externally, the shared yard provides 53 car parking spaces as well as waste storage areas and cycle store provisions, with the estate secured via an electric gate and perimeter wire fencing and benefitting from an estate wide CCTV system.

Jarrow Network Centre

Jarrow Network centre comprises 19 self-contained modern workshops/trade counter units. The development is arranged via 3 blocks, all facing onto a large central shared yard.

All the units are of steel portal frame construction with part brick, part insulated profile cladding elevations and roof. Each unit comprises a roller shutter entrance to the warehouse and separate personnel door leading to an office/trade counter area. Internally, each unit benefits from a minimum eaves height of 4.86m rising to 5.92m at the apex.

The shared yard provides parking for 63 cars and waste storage. The site is secured by a perimeter fence and electric gate, whilst CCTV is operational throughout the estate.

Tenure

GLOVER NETWORK CENTRE
Glover Network Centre is held Freehold.

JARROW NETWORK CENTRE
Jarrow Network Centre is held on a Long Leasehold basis from Homes England for a term of 125 years from 22nd November 2000 at a peppercorn rent without review, therefore leaving 107 years unexpired. Homes England have confirmed that they would be prepared to sell the freehold.

Tenancy

GLOVER NETWORK CENTRE
A Tenancy Schedule can be found in the link below.
Additional Income
Each tenant pays a facilities charge currently totaling £40,465. This charge is apportioned on a floor area basis and is not reconciled. This makes a substantial surplus, which has averaged £28,000 pa over the last 3 years. Electricity, gas and water are supplied on a central landlord's meter, with each tenant sub-metered and recharged. This account also generates a substantial surplus which has averaged £12,000 pa over the last 3 years.

JARROW NETWORK CENTRE
A Tenancy Schedule can be found in the link below.
Additional Income
Each tenant pays a facilities charge currently totaling £42,882. This charge is apportioned on a floor area basis and is not reconciled. This makes a substantial surplus, which has averaged £16,200 pa over the last 3 years. Electricity, gas and water are supplied on a central landlord's meter, with each tenant submetered and recharged. This account also generates a substantial surplus which has averaged £13,600 pa over the last 3 years.


VAT

Both estates have been elected for VAT and therefore it as anticipated the sale will be treated as a TOGC.

Market Commentary

The North East industrial market has performed very strongly over the past 5 years, demonstrating consistent rental growth. This has been driven by the region's strong advanced manufacturing base and increasing demand from the urban logistics sector.

Major manufacturers such as Hitachi, Nissan, Komatasu and Caterpillar have significant representations in the region and require extensive local supply chains to support their 'just in time' operations.

Vacancy levels across the region are at historic lows for all unit sizes and, whilst the market has responded with an increase in speculative development, this has not been sufficient to meet demand. Rental growth has been maintained with new schemes having achieved rents at £8 psf and above.

Evidence supporting significant growth exists within the estates and can be validated and enhanced by recent evidence. Please see the Marketing Brochure for more information.

Asset Management Initiatives

Both estates offer significant reversionary potential, fully evidenced through the comparable transactions set out in the Marketing Brochure. We consider a notable proportion of units holding over on both estates to be under rented, therefore providing excellent short term reversionary potential.

We consider the following asset management initiatives pertinent in maximising the full potential of both estates.
  • Initiate discussions with tenants holding over regarding new leases at market rent.
  • Consider potential lease regear or extension with tenants at Jarrow units G, S & T.
  • Explore possible removal of break clauses and rolling break options to improve overall WAULT.
  • Purchase the freehold of Jarrow from Homes England who have indicated that they would be willing to sell.

EPC

All EPCs and recommendation reports are available upon request.

Proposal

We are instructed to seek offers in excess of £4,000,000 subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 6.73% reverting to 7.94% after purchaser's costs of 6.54%, representing a capital value per sq ft of £64.98. Surpluses on facilities and utilities recharges move the initial yield to 8.41% based on the average of the last 3 years expenditure and income.

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NET INITIAL YIELD:
6.73%
PRICE:
£4,000,000
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