Barratt offloads Aberdeen empty rates liability
Housebuilder Barratt has offloaded a largely vacant office tower in central Aberdeen for just £20,000 in order to expunge a costly empty rates bill at a time of peak oversupply in the city.
Salvesen Tower was offered with a nil reserve at the Allsop sale on 16 October. It sold to a private property company at a staggering yield of 620%.
However, the 43,000 sq ft building was costing the housebuilder heavily owing to empty rates and service charges. Vacancies total almost 33,000 sq ft and the service charge budget totals £175,300 plus VAT pa.
Housebuilder Barratt has offloaded a largely vacant office tower in central Aberdeen for just £20,000 in order to expunge a costly empty rates bill at a time of peak oversupply in the city.
Salvesen Tower was offered with a nil reserve at the Allsop sale on 16 October. It sold to a private property company at a staggering yield of 620%.
However, the 43,000 sq ft building was costing the housebuilder heavily owing to empty rates and service charges. Vacancies total almost 33,000 sq ft and the service charge budget totals £175,300 plus VAT pa.
Barratt had inherited it through the acquisition of a landed estate around Aberdeen.
Eric Shearer, head of Knight Frank’s Aberdeen office, said the sale illustrated the “ludicrous empty rates” situation, which he said was “destroying half the city”.
Aberdeen currently has 3m sq ft of office space available, according to Radius Data Exchange.
“I think we are at the bottom of the [occupational] market,” Shearer said. “Oil prices are booming again, but we have such an oversupply of stock,” said Shearer. “When the price collapsed in 2014-15, we lost 30,000-40,000 staff. It will take a long time to fill all those desks again – if they ever can be filled.”
He added: “Salvesen Tower is old and dated, but people have been happily occupying it for three decades. It has good car parking and it’s right on the quayside. The simple reason it sold for this price is empty rates. Perfectly good buildings are being demolished.”
Allsop director George Walker said the new owner was likely to pursue a comprehensive redevelopment. Seven of the office floors are fully vacant, two are partially let and two are fully let but all producing only short income, while the lessee of the ground-floor pub has filed for bankruptcy.
The property also includes a 5,000 sq ft warehouse let until 2025 and a 112-space multi-storey car park. The total rent is £124,000.
Allsop commercial result
In the sale, Allsop raised £97m, notching up a 73% success rate in a tricky market.
Three portfolios of banks totalling 46 properties raised £22m. Allsop director George Walker said yields on these lots ranged from 4% to 9.9%, reflecting the market’s understanding of these assets and towns and how over-rented stock needed more yield.
The sale of three tertiary shopping centres was also encouraging, he said. The highest price was achieved for the Trident Shopping Centre in Dudley, West Midlands, which sold for £4m to an overseas buyer making its first entry into the UK market.
The price reflects a 17% yield.
“This shows that at the right level, we can find new buyers for these tricky and management-heavy assets,” Walker said.
The Dudley centre was previously sold by receivers through Allsop in 2014 for £3.5m.
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