Retail premises for sale in Eastgate Street & Eastgate Row North, Chester CH1

£1,450,000 (£736.79/sq. ft)
Retail premises for sale From 1,968 - 3,526 sq. ft*
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Property description

Introduction
An opportunity to invest in the internationally renowned Historic city of Chester. Steeped in history, Chester was founded as a Roman fort in 79 ad and gained city status in 1541. The city is awash with rare landmarks including the Roman city Walls, the Rows and the medieval black-and-white architecture. It is one of the best preserved walled cities in Britain.

Summary
100% prime retailing pitch, within the historic walls of Chester city centre

Let for over 5 years to the undoubted covenant of Telefonica UK Limited (Net Assets £2.65bn) trading as “O2”

Rent recently rebased (March 2020) – 25% below previous prime rental levels

Tenant has committed to a new lease during covid-19

The only O2 Store in Chester

Chester is the 3rd best place to live in the 2020 UK Hot Housing Index (Source: Property Week/caci)

Freehold

Potential future redevelopment of the upper parts, subject to consents

Rare opportunity to acquire in a world-famous location

£1,450,000, subject to contract

6.5% Net Initial Yield

Location
The Cathedral city of Chester is one of the premier retailing destinations within the UK and is a popular tourist centre. The city is the administrative centre of Cheshire and is situated in the north west of England approximately 15.4 miles (25 km) south of Liverpool, 11.1 miles (18 km) east of Wrexham and 33 miles (54 km) south west of Manchester.

Chester has a good transport infrastructure. The A55, to the east of Chester city centre, connects in a northerly direction to Junction 11 of the M53 Motorway. This leads to Liverpool in a north westerly direction and also to Junction 15 of the M56 Motorway which leads to the M6 Motorway and Manchester in a north easterly direction. The A55 also provides access to north Wales to the west and the A483 provides access to Wrexham and Shrewsbury to the south. Some 1.3 million people live within a 30-minute drive of Chester (Source: Census 2011).
Rail links are also strong with direct services to Liverpool (42 mins), Manchester (1h 4 mins) and London Euston (2h 4 mins). Chester is within close proximity to two international airports in Manchester International Airport and Liverpool John Lennon Airport. Both airports provide both domestic and international flights.

The city is one of the premier retailing destinations within the UK, benefiting from an estimated population of circa 323,000 within the Primary Retail Market Area. The Consumer Base of Chester is projected to be approximately 218,000 and the city is estimated to see growth in population within its Retail Market Area over the period 2020-2024. The level of car ownership within Chester is also far above the national average with a high amount of 2 car households. (Source: Promis). Further investment is being injected into this historic city centre with the redevelopment of Chester Northgate with Cheshire West and Chester Council investing £70million into the scheme. The development, due to open in summer 2022, will build on the success of Storyhouse and complement the existing businesses in the city centre. The old library frontage will be transformed into a new arcade and provide a stunning arched entrance into the development, which will also be accessible from Hunter Street and Princess Street. The scheme will also create a new public square for the city, linking the new market hall, Storyhouse and the Town Hall. (source: )

Chester is also an important tourist destination, attracting over 8 million tourists each year, with key attractions including the Cathedral, the Zoo, the “Row-level” shopping and Chester “Roodee” Racecourse which is recognised as the world’s oldest operational racecourse. It is estimated that tourism contributes more than £2bn annually to the local economy. (Source: )

The city is also home to The University of Chester, established in 1839, is one of the oldest higher education institutions in the country. The University has some 19,000 students with five campuses in and around Chester.

The city’s cultural heritage, excellent communications, and significant retail and leisure offer has also attracted numerous financial and business services to the area. Businesses based in and around Chester include Bank of America, dtcc, B&M Retail and Bristol-Myers Squibb.

Situation
Chester is one of the region’s premier retail destinations, boasting an attractive and appealing retail environment. Its retail heart is focused on Eastgate Street, extending into Foregate Street and Northgate Street. There are a number of well-known tenants with a presence here including Primark, Boots, Marks and Spencer and Hickory’s Smokehouse – the us company’s first opening in the UK was in Chester.

The pedestrianised section of Eastgate Street that falls within the historic Roman walls is regarded as the true prime pitch where the subject property is situated.

Chester is also famous for its Row Level trading format, with its principal thoroughfares accommodating the distinctive two-level properties known as “The Rows”. This provides a unique and appealing retail environment that attracts up market, boutique style retailers, shoppers and tourists alike.

The property occupies a 100% prime trading location on the pedestrianised Eastgate Street, close to the junction with The Cross. The property sits within arguably the strongest footfall area inside the city, lies opposite to Mappin & Webb and Jo Malone with Jack Wills and Fat Face in close proximity. During the recent “Eat Out to Help Out” scheme, of the 155 restaurants registered in the city of Chester, the average number of attendees per restaurant was 17% higher than the national average, highlighting the strong draw of the city centre (Source: ).

The subject property is the only O2 store within Chester city centre. The nearest branch is some 5 miles (8 km) to the west at Broughton Shopping Park with the next closest being some 7 miles (11 km) to the north in Ellesmere Port.

Description
The property comprises a mid-terrace retail building with two self-contained retail units, one on Street level and one on Row level. Constructed in part 18th century and part mid 20th century, the building is formed of brick masonry with a pitched slate roof with timber sash windows.

At Street level, the property provides ground floor retail accommodation with storage/ancillary accommodation on the first floor at the rear.

There is further self-contained retail accommodation at Row level, with sales and ancillary/storage at first and second floor levels. The third-floor front of the property was previously used as a residential flat which is no longer in use, providing a buyer with an opportunity to redevelop this area and provide residential accommodation. There is a small service yard at the rear of the property, accessed via Leen Lane.

The property has been fitted out by O2 to their usual corporate style.

The entire property is let to Telefonica UK Limited t/a O2. The Row level retail premises have previously been sub-let but are currently vacant.

Planning
17 Eastgate Street is Grade II Listed and is located within the Central Historic Core Conservation Area.

Rateable Value
According to the Valuation Office website, the rateable value for the property is as follows;

11 Eastgate Row North £11,000
17 Eastgate Street £95,500
The business rates multiplier is currently 51.2 pence per pound and the small business rate multiplier is 49.9 pence per pound for rateable values below £51,000.

As the property is Grade II Listed there are no empty business rates payable.

Accommodation
The property has been measured by bkr Floor Plans and provides the following accommodation:
17 Eastgate Street & 11 Eastgate Row North
17 Eastgate Street
Net Frontage 3.81 m 12’6”
Gross Frontage 4.34 m 14’3”

Ground Floor Sales
Zone A 24.99 sq m 269 sq ft
Zone B 23.69 sq m 255 sq ft
Zone C 27.59 sq m 297 sq ft
Remainder 52.95 sq m 570 sq ft
itza 542
Total Ground Floor 129.22 sq m 1,391 sq ft
First Floor Ancillary 15.51 sq m 167 sq ft
Total 144.74 sq m 1,558 sq ft

11 Eastgate Row North
Net Frontage 3.05 m 10’
Gross Frontage 5.41 m 17’9”

Row- First Floor Sales
Zone A 22.11 sq m 238 sq ft
Zone B 8.27 sq m 89 sq ft
Zone C 8.27 sq m 89 sq ft
Remainder 31.03sq m 334 sq ft
itza 347
Total First Floor 69.68 sq m 750 sq ft
Second Floor Sales 67.63 sq m 728 sq ft
Third Floor Ancillary 45.52 sq m 490 sq ft
Total 182.83 sq m 1,968 sq ft

total 327.57 sq m 3,526 sq ft
A set of floor plans is available to download and will be re-addressed to a purchaser at a cost of £495 + VAT.

Tenure
Freehold.

Tenancy
The entire property is fully let to Telefonica UK Limited, trading as O2, until July 2026 at £100,000 per annum.

The tenant has been in occupation since 2006. The current lease runs from 28th July 2016 until 27th July 2021. A reversionary lease was signed in March 2020 whereby the term was extended to 27th July 2026 and the rent was reduced from £128,750 per annum to £100,000 per annum (a 22% reduction).

The passing rent of £100,000 per annum equates to a Zone A rate of £155 per sq ft, allowing for £5.00 per sq ft on the first floor and £15,000 per annum in respect of 11 Eastgate Row North.

The lease is subject to a rent-free period of 6 months expiring on 31st July 2021. The tenant is also due to receive a rent free period of 3 months upon completion of shop fit works (subject to fit-out works being completed by the tenant with a long stop date of 30th March 2022). The vendor will ‘top-up’ the income by an appropriate adjustment on the completion sum in order that a purchaser does not suffer an income shortfall.

Under the terms of the lease, the tenant is liable to keep the premises in good and substantial repair and condition throughout the term. The tenant is also liable to maintain and repair the row stall and steps as defined in Section 80 Part XI of the Cheshire County Council Act (Rows and Stalls) 1980. A copy of the Act can be found here.

The tenant has an excellent payment record. All rents are paid and up to date, with no arrears.


Erv


We have analysed the passing rent of £100,000 per annum to reflect £155 Zone A on 17 Eastgate Street. Given the reversionary lease was only agreed in March 2020, we consider the property to be rack rented.

However, given prime rents in Chester have previously reached £210 Zone A, we believe the re-based rent offers excellent value and positive prospects for future growth given the passing rent is over 25% below previous prime levels within the city.

Covenant
O2 is a mobile network operator and the principal commercial brand of Telefónica UK Limited, which is part of the global telecommunications group Telefónica S.A, headquartered in Spain and operating in Europe, and North, Central and South America. In the UK they have some 6,700 employees, approximately 34.8 million customers and over 450 retail stores. They are the second largest mobile operator by market share in the UK. They currently sponsor England Rugby, The O2 and 19 Academy music venues across the UK. For further information visit .

In May 2020, it was publicised that O2 and Virgin Media were in negotiations over a potential merger in a deal worth a total of £31bn. If formed (the transaction is currently being reviewed by the Competition and Markets Authority), the combined entities will form one of the largest entertainment and telecommunication companies in the UK.

Telefonica UK Limited (Co. No.: 1743099) has reported the following figures:

31 December 2019 31 December 2018 31 December 2017
Turnover £5,980,000,000 £5,740,000,000 £5,470,000,000
Pre-Tax Profits £765,000,000 £715,000,000 £534,000,000
Total Net Assets £2,650,000,000 £2,580,000,000 £1,700,000,000


VAT


The property has been elected for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (togc).

Upper Floors Potential
Although they are demised to O2 within their lease, the tenant does not occupy 11 Eastgate Row North. Historically it had been sub-let to And Albert Fair and is now vacant. This could provide a buyer with an opportunity to take these premises back from O2 and let to a commercial tenant or consider a residential conversion of the second and third floors.

Subject to consents, it is suggested the second and third upper floors could potentially provide residential accommodation with an exit value in the region of £300,000 (£250 per sq ft / £2,690 sq m capital value) after refurbishment, providing an opportunity to enhance value.

Proposal
We are instructed to seek offers of £1,450,000 (One Million Four Hundred and Fifty Thousand Pounds), subject to contract. This price reflects a net initial yield of 6.5%, assuming purchasers’ costs of 6.08%.

Please note that a purchaser will be re-charged the cost of searches and surveys which are provided in the data room.

Please note a purchaser will be charged a Transaction Fee of £5,000 + VAT.

Investment Considerations
An opportunity to purchase a highly secure investment within the internationally renowned city of Chester

Chester is a major tourist attraction with 14 million visitors in 2018. The property is located in a 100% prime position;

Let to the Undoubted covenant from Telefonica UK Limited (Net Worth £2.65bn) for over 5 years;

The property is the only O2 store in Chester;

Grade II Listed property in Chester’s Historic Conservation Area;

The tenant has recently renewed their lease proving their commitment to the property;

Rent rebased from £128,750 pa to £100,000 pa thereby offering good prospects for future rental growth;

New rent is 22% less than previous rent;

An opportunity to acquire a rare Freehold;

Future redevelopment potential of the upper parts, subject to consents.

For full details please visit our website or view PDF brochure below

* Sizes listed are approximations. Please contact the agent to verify actual sizes.

Property info

* Sizes listed are approximate. Please contact the agent to confirm actual size.

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Singer Vielle, W1C on +44 20 8128 4245 * (local rate)

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Property descriptions and related information displayed on this page, with the exclusion of Running Costs data, are marketing materials provided by Singer Vielle, and do not constitute property particulars. Please contact Singer Vielle for full details and further information. The Running Costs data displayed on this page are provided by PrimeLocation to give an indication of potential running costs based on various data sources. PrimeLocation does not warrant or accept any responsibility for the accuracy or completeness of the property descriptions, related information or Running Costs data provided here.

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