Town office block priced at £2.3 million
Charlotte House, home to the job centre and the Scottish rural affairs office, is up for sale at offers over £2.3 million.
The Commercial Road building is owned by London-based property investment company Mapeley and was built in the early 1970s. It is leased to department for communities and local government at Westminster until May 2037 and is Shetland’s only large commercial office block.
The SIC has just completed a major redistribution of its ground floor office space, which now contains trading standards, environmental health and children’s psychological and sensory services. The old occupants, finance and revenue, have moved to the “White House” in the North Ness.
The Orkney and Shetland Valuation Joint Board recently moved back to its office at 20 Commercial Road, across the street.
Although the majority of the four-storey building is occupied by local and national government offices, a number of rooms on the second and third floor are empty.
According to Edinburgh-based selling agents Eric Young & Co, Charlotte House is an opportunity to invest in an “open plan office accommodation in Lerwick where no identifiable alternative supply exists”.
Annual rent yield from the 19,419 square foot building currently stands at around £365,000, due to rise to £424,000 by May 2017. This is in line to rise further to £496,000 by 2022.
It is understood Charlotte House has attracted a good deal of interest from both private and institutional investors. It has not been advertised locally and is being pitched at a fairly “specialist” investor market. Eric Young & Co’s brochure emphasises Shetland’s “particularly buoyant local economy” and long-term oil and gas prospects.
Although the government has leased the building for 60 years until 2037, it has the option to end the lease on 31 March 2018.
According to Eric Young & Co Charlotte House could provide an attractive yield of 15 per cent, with a reversion in May 2017 to 17.4 per cent assuming purchaser’s costs of 5.8 per cent.