A premium office building in Cheltenham has been acquired for nearly £15 million, national property consultancy Lambert Smith Hampton (LSH) has announced.
Jessop House, a 59,828 sq ft multi-let office block located close to Cheltenham’s town centre, was purchased by The Property Income Trust for Charities fund (PITCH), which is managed by Mayfair Capital Investment Management. The purchase price of £14.8 million represents a 6.5% net initial yield (6.9% to PITCH).
Built in 2002, Jessop House provides space over basement, ground and four upper floors and is multi-let at a current annual rent of £1.03m, which equates to an average rent of £17.20 per sq ft. The building is a short walk from Cheltenham’s railway station.
Commenting, LSH Capital Markets Director Charlie Lake said: “This transaction illustrates that the UK’s regional markets continue to represent an attractive home for commercial property investors looking for rental growth outside of London.”
“The Cheltenham market has lost a vast amount of office supply to residential conversion and as a result, there is now a marked supply and demand imbalance; Jessop House, as one of Cheltenham’s premium office buildings, is well placed to capture the strong rental growth that we’ve seen over the past twelve months.”
PITCH Fund Manager Simon Martindale said: “The Cheltenham office market has been marked by a declining volume of office stock as buildings have been converted to residential use under permitted development. Cheltenham is a location that appeals to employees for its live/ work balance whilst the technology companies that support the activities at GCHQ is stimulating office demand, particularly from firms involved in cyber security.”
The off-market deal follows the publication of LSH’s inaugural South West Office Market Report in December, which highlighted the current lack of office supply in Cheltenham and the town’s potential for high rental growth. As stated in the report, the town has seen a significant number of buildings converted to residential use under permitted development in recent years, but as an appealing location for both employees and occupiers, particularly in the technology sector, demand for quality office stock remains high.
LSH’s Bristol and London capital markets and agency teams worked collaboratively to advise Mayfair Capital on its purchase, and Cushman and Wakefield advised Aviva, the vendor.