Bristol commercial property acquired in £2.75m deal
Linden House, in the affluent Bristol suburb of Clifton, has been purchased by South Somerset District Council (SSDC) for £2.75m.
The purchase forms part of the Council’s Commercial Strategy which aims to enable the council to be more commercial, business like and generate income whilst remaining focussed on our core purpose – to support and deliver for our communities.
The property was initially marketed at £2.85m and was purchased with assistance from leading global real estate consultants, CBRE, and Dorset based solicitors, Steele Raymond. The purchase reflects a net initial yield of 7.00%.
Comprising of 9,331 square feet of good quality, air conditioned office accommodation, Linden House is located within 200m of the commercial heart of Clifton. The property is one of few long-leasehold offices in Bristol which has allowed SSDC to enter a strong established market, where prime yields have reached sub-5%. It is currently tenanted by Galliford Try plc, one of the UK’s principle house-builders, who have been in occupation since 2007.
Above: Linden House in Clifton
Current demand for good quality office property substantially outstrips supply in the city and the Council considers the property to be underlet with excellent potential for future increased income.
Councillor Henry Hobhouse, portfolio holder for property at South Somerset District Council, said: “Current availability of offices in Bristol is particularly low at around four percent which is aiding rental growth. This property is in an excellent location, with a blue chip tenant and strong reletting potential should they decide to vacate at the end of the lease.”
The asset joins Marks & Spencer and Wilko in Yeovil and the recently completed purchase at Dunball Industrial Estate in Bridgwater as tenanted units purchased by the District Council and adds to the growing and diverse portfolio of investments made.
Why is South Somerset District Council becoming more commercial?
The Council is currently operating in a complex financial climate, where between 2018 and 2022, it needs to deliver savings rising to £6 million per year. This is in addition to having to cut its costs substantially since 2010.
SSDC has sustained a 70 per cent reduction in its Government grant funding since 2010 and further reductions are likely in the future whilst demand for and costs of many services continues to rise. It became clear that SSDC needed to make the most out of its assets and look for new opportunities which could generate income to protect the wide range of services our communities receive and create opportunities to fund new projects.
It has seen the Commercial Services and Income Generation team given an on going annual income target of £2m for commercial investment income and great progress is being made.
This is about making prudent financial decisions which will create significant income to get the best results for South Somerset but still, where possible, supporting the local economy.
How does the council decide on where it invests?
Every decision that is made is being rigorously tested and checked. The Commercial Property Team is working to ensure that SSDC does not overpay for property due to the lack of supply, and is not exposed to undue risk, for example within the retail sector, where significant changes are currently occurring nationally.
A huge and diverse range of opportunities have been considered and rejected in the past year from a car showroom in Newcastle to an industrial estate in Poole.
Reasons for rejection can include the asking price not matching our valuation, unacceptable risk to income, non-compliance with our commercial aims and objectives, and over-exposure to a particular market.