Commercial property consultants Mason Owens, acting on behalf of Palace Capital who are listed property investment company, has completed a £14 million deal on the freehold for One Derby Square in the heart of the city centre, reflecting a 6.75% net initial yield. The building possesses 70,000 sq ft, with extensive frontages on to Lord Street, Castle Street and Derby Square itself. The building comes with six retail units, a leisure unit and four floors of office space above and also possesses a current rental income of £1 million per annum from tenants such as Pret A Manger and Tesco on the ground floor of the building. They have their office space almost completely let with only around 1,000 sq ft remaining. Worthington Owen and CBRE are the appointed agents for this particular space and the rent is around £15 per sq ft.
Palace Capital, who owns a diversified portfolio across the UK, has stated that they are excited to become part of the “Northern Powerhouse” with their new investment within Liverpool. The company is known for being ‘entrepreneurial and opportunistic’ and acquire their properties where they see the potential to ‘enhance the long-term income and capital value through asset management and strategic capital development in locations outside London.’ Palace Capital have stated that they have a ‘tailored plan’ to increase their new building’s income and capital value over the next few years, with a ‘strategy’ that ‘focuses on city centre locations in thriving university towns and regional cities, particularly where permitted development and a lack of speculative development has reduced the office stock’, highlighting how 1.15 million sq ft of office space has been taken out of the market in Liverpool since 2014.
The building had previously been owned by Hong Kong based property company Mordril since the 1990s. It was the company’s only investment within Liverpool and the sale of the building is said to mark the investor’s exit from the market. Simon Bland, Managing Director for Mason Owen which acted as part of the transaction states how ‘the One Derby Square deal, which was completed on Christmas Eve, was a fitting end to a productive 2018 for us at Mason Owen – and for Liverpool’s property market.’ He also went on to highlight how ‘despite the foreseeable challenges across the retail sector, the city is exceeding expectations with both office and industrial growth remarkably positive.’
Neil Sinclair, Chief Executive of Palace Capital, emphasized One Derby Square’s ‘central location’ and the ‘considerable renaissance’ that Liverpool is undergoing as a city in general. He also went on to state how ‘we are pleased to make this investment following the recent announcement of the sale of most of the Warren residential portfolio for £18.2 million.’ Palace Capital also owns the 77,000 sq ft Boulton House on Manchester’s Chorlton Street, which they let to tenants including Arrive Rail North.
It will be interesting to see what the future holds for Palace Capital’s involvement in One Derby Square. However, with such a renowned London-based company reaching out to make such a huge investment in the city it appears that those at the top of the industry have strong faith in the continual development of Liverpool and its property market.
Written by Rachael Gray.
Rachael Gray is a Director at Clifton Gray specialist property recruitment company. Rachael has recruited within the residential property industry for fifteen years.
Follow Rachael on linkedin or email rachael@cliftongray.co.uk to discuss current Liverpool and Manchester property jobs, or to find out how Clifton Gray can secure the best talent for your property business.