Legal and General Investment Management has bought Birmingham's 1 Temple Row building from Aviva Investors, increasing its footprint in an area of the city centre where it already has planning permission to build a circa 640,000-square-foot office led development.
Aviva Investors was quoting £18 million, reflecting a net yield of 8.29% for the circa 105,000-square-foot mixed-use building housing circa 64,000 square feet of offices. The price paid by L&G has not been disclosed, but a market source suggest it went for slightly under quoting.
It is an interesting buy for L&G which already has a long leasehold interest over the second floor at 1 Temple Row, which it uses as a loading bay for the next door Rackhams building, the former House of Fraser department store.
L&G already has planning consent to refurbish and redevelops Rackhams, where it has plans to build a circa 643,000-square-foot office-led mixed-use scheme. Plans in 2019 revealed a reworking of the department store to house workspace alongside shops, bars, restaurants and other leisure, as well as a boutique hotel.
JLL, the agency marketing 1 Temple Row before its sale to L&G, highlighted that any new owner of the building could collaborate with L&G to redevelop the combined site with the Rackhams building, labelling the prospective scheme the "best ground-up development opportunity in Birmingham city centre".
The Rackhams building also benefits from an immunity listing notice, meaning it can be demolished subject to planning. Should L&G redevelop the two buildings, it could create a prime island site in the centre of the city for a number of uses.
1 Temple Row sites in the heart of Birmingham's central business district, just off Cathedral Square. Other flagship buildings in that part of town include 103 Colmore Row, Colmore Gate and One Snowhill. It contains 12 above ground office storeys, which underwent a £3 million refurbishment in the last few years. There are also 23 retail units.
The property generates a circa £1.6 million annual rental income and is let to 22 tenants, including Capsticks Solicitors, Greens Solicitors and British Heart Foundation across office and retail accommodation. It has an average weighted unexpired term of five years to expiry and 2.7 years to break.
CBRE advised Legal & General Investment Management, while JLL advised Aviva. L&G declined to comment on its plans for the site.