Starting gun fired on £25m Victoria Square House sale

Ardstone Capital has instructed CBRE to find a buyer for the 152,000 sq ft central Birmingham office building, where tenants include the Gambling Commission and Avanti West Coast.

Overlooking Victoria Square and Birmingham City Council House in the city’s civic heart, the building comprises 152,439 sq ft of offices over six floors, with flexible floorplates of 23,000 to 27,000 sq ft wrapped around a central courtyard.

The property also benefits from 138 car parking spaces across three basement levels. Designed for the GPO around 1890, it served as Birmingham’s head Post Office up until 1972.

Offers are sought in excess of £25m, a sale at which price would reflect a net initial yield of 11.95% and a low capital value of £164 per sq ft.

Victoria Square House is multi-let to four tenants with a weighted average unexpired lease term of 3.93 years. Tenants include the Gambling Commission, The Secretary of State for Levelling Up, Housing and Communities, and First Trenitalia West Coast Rail Ltd, the train operating company better known as Avanti West Coast.

Around 90% of the property’s income is secured against the two government entities, generating a total annual rent of £3.19m for the building as a whole. In addition, October saw lease extensions agreed for both the Gambling Commission’s 26,000 sq ft and MLUHC arm The Office of the Public Guardian’s 81,000 sq ft.

Around 27,000 sq ft remains available to let.

Nick Woodward, executive director in CBRE’s Birmingham investment properties team, said: “Victoria Square House represents one of the most exciting investment opportunities in Birmingham’s city core. The combination of secure government income, strong rental growth prospects, and the longer-term potential to reposition the asset creates a compelling proposition for investors looking to capitalise on Birmingham’s growth story.

“Strategically located between New Street Station and Paradise, which continues to push prime rents in the city, Victoria Square House is perfectly positioned to benefit from the city’s strong occupational market dynamics.”

Irish firm Ardstone Capital is the asset manager on behalf of Ardstone Regional Office Fund, a joint venture fund with CBRE Investment Management.

Ardstone bought the building, then anchored by DLA Piper before the law firm’s 2020 move to nearby Paradise, for a reported £40m from F&C REIT Asset Management in 2013.