Plymouth City Council has purchased a prime edge of town centre Retail Park in the Plymouth as part of a long-term investment strategy to promote the local economy and generate income.
The Council has used historically low borrowing rates to acquire the freehold interest of Friary Retail Park fronting Exeter Street. The property extends to circa 7,456 sq m (80,250 sq ft) and is located beside a strategic gateway to Plymouth’s city centre.
The investment will provide the Council with a long term income stream, secured against quality tenants who are unrepresented in the traditional shopping centre. These include Dunelm, Smyths Toys and Hobbycraft, Pets at Home etc.
A spokesman at the Council commented “We are capitalising on our in-house property expertise and access to historically low borrowing costs to invest in commercial property in Plymouth. This will boost the local economy, support jobs and generate long term sustainable income to improve the wider financial position of the Council. After all costs, it is estimated that the property will deliver an annual income from rents of over £500,000 a year and this will grow over time. That’s half a million pounds worth of savings we don’t have to make elsewhere and it will help us protect vital frontline services.”
It is believed many councils are doing this as a reaction to diminishing funding from Central Government hence the need to be entrepreneurial and look at other sources of revenue. Plymouth City Council are already landlords of a significant amount of commercial property and have a good track record in maximising returns from their property estate.
This year over £1 billion has been spent on commercial property investments by local authorities nationwide. This reflects the growing trend of Councils taking advantage of the low cost of debt to acquire commercial property to generate a secure and steady income stream for the future, examples include Portsmouth City Council, Surrey County Council and Leeds City Council to name a few.
The freehold interest of Friary Retail Park has been sold by AXA Investment Managers Ltd to Plymouth City Council. The Council were represented by Plymouth agents Monk & Partners and Savills (Bristol) whilst AXA Investment Managers were represented by Edgerley Simpson Howe LLP.
Acquiring agent John Slade of Monk & Partners commented, “this Retail Park Investment is a rare opportunity to come to the market which we identified as fitting the needs of the Plymouth City Property Investment fund and we were pleased to be able to negotiate and deliver a purchase on their behalf. The scheme is fully let and accommodates a number of well-known retailers in a range of unit sizes and should perform well for them as investors.”
John Slade further comments “2016 has been an extremely active year for Monk & Partners as agents particularly in the retail warehouse market. Jointly with agents Bruton Knowles, we also acquired the former B & Q premises at Coypool Retail Park, Plympton, on behalf of local retailers for their own occupation. This warehouse totalled circa 3,369 sq m (36,264 sq ft) and was purchased from former owners, Threadneedle Property Unit Trust.
Acting on behalf Santander UK plc, Monk & Partners jointly with Core Consult have secured a sub-letting of a former Bank premises at 65 New George St located within Plymouth’s main shopping thoroughfare.
On offer was a 2350 sq ft A2/retail unit with upper parts held on the remainder of a 25 year lease expiring in March 2019 and national employment charity, Tomorrow’s People Trust Ltd, were identified as needing to relocate from Mayflower House, an office building in Plymouth City Centre earmarked for redevelopment as a new student block.
John Slade of Monk and Partners comments “we have let premises to Tomorrow’s People on a couple of occasions in Plymouth following their initial set up in The Crescent and now their need for relocation as the result of their current premises being needed for redevelopment.”
Tomorrows People are engaged in helping disadvantaged adult and young people to get and keep jobs.
“Having identified their need to relocate we offered the former Santander unit in New George Street to them as it was prominent and convenient and ideally suited as a recruitment base for the Charity.”