Abstract buys key Croydon office site

By Paul Norman - Friday, November 25, 2011 8:20

Abstract (Croydon Ltd), a wholly owned subsidiary of Mark Glatman’s Abstract Securities, has gone under offer to buy a key NAMA controlled office development opportunity in Croydon out of receivership.

Abstract exchanged to buy 9-12 and 13-16 Dingwall Road, a 1.2 acre site close to east Croydon station, for around £3m on Wednesday.

The second part of the site - 13-16 Dingwall Road – has consent for a 17-storey, 250,000 sq ft office building. The other site – 9-12 Dingwall Road – is allocated for a circa 30,000 sq ft office development.

Abstract is understood to be proposing to replace these proposals with a scaled back 100,000 sq ft scheme offering rents of £22 per sq ft.

The site forms part of a portfolio of eight UK commercial properties transferred into NAMA via the state owned Anglo Irish Bank.

Anglo Irish Bank initially appointed Capita Symonds, then NB Real Estate, to sell on 13 properties owned by regional property company Magnet Property Investment in 2009.

There are eight remaining buildings from the original portfolio in NAMA. The largest asset is the 400,000 sq ft St George’s Central Tower scheme in the centre of Leicester - known as the “Blue Building” - which Magnet Property Investments redeveloped to shell and core.

News of Abstract’s investment in Croydon follows hot on the heels of Westfield’s announcement that Australian developer Westfield had entered talks to bring forward a major redevelopment of the south London town’s Whitgift Centre.

On Tuesday the Develop Croydon conference was also lifted by news that the GLA had set aside £23m to invest in Croydon following the August riots that damaged the town centre.

Take up of new space in Croydon has sunk to a record low of 61,000 sq ft so far this year, down on the 124,561 sq ft seen last year and the average pre-2008 five-year take up of 275,000 sq ft.

According to agent Sinclair Clark, underlying this however there has been 1m sq ft of lease renewals in the last 15 months with major occupiers such as Mott McDonald, Mondial, Network Rail and AIG either having regeared their leases or entering into talks to do so.

There are a series of unsatisfied demands from significant long-term occupiers in Croydon for Grade A space, most notably from Nestle.

Established in April 2000 by former Akeler chief Mark Glatman, the Abstract group of companies brings together combined experience of over 6m sq ft of business space development across the UK and Europe.

Earlier this month Abstract bought a 170,000 sq ft speculative office development opportunity at 301-303 St Vincent Street Glasgow out of receivership.

The 1.5 acre site was owned by Castlemore Securities before the company went into administration in February 2009. Abstract is targeting rents there of £23 per sq ft to undercut the area’s top rent of £28 per sq ft.

 Mark Glatman, chief executive of Abstract Securities, said: “We have now exchanged a contract to purchase a site in East Croydon, just minutes from the train station, on which we will speculatively build 100,000 sq ft net of 'Grade A' office space.

"To make this announcement so quickly after purchasing our Glasgow site is a realisation of Abstract's programme of creating top-quality space at rental costs that are achievable for corporate occupiers in local markets.

“We are at a point in time where, although quality and environmental performance remain key drivers for corporate occupiers, value for money is fundamental. By exercising tight design and procurement processes – especially in the purchase of land at the lowest point in the development cycle – we are able to bring both our Croydon and Glasgow developments to the market at exceptional rental costs, significantly undercutting both local markets, and with occupational costs that are likely to be lower than even refurbished second hand space.

“Opportunities to locate to such high-quality space at such reduced costs – both in Croydon and Glasgow – will be rare, perhaps even non-existent, in coming years, so we anticipate high demand for both schemes, particularly with Croydon set to benefit from extensive investment over coming years.”

pnorman@costar.co.uk

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