Newcastle Council adds to offices portfolio
Newcastle City Council has announced the purchase of a multi-storey office and retail building in the city.
The council has purchased Higham House (pictured – image source), a 6-storey building for £5m. The transaction has been debt financed. The ground floor is used for retail units and the upper 5 floors are used as office accommodation.
The council intends to continue to rent out the retail units and offices and believes that it can make a profit with the rental income covering the loan repayments. Rental prices for office space within the building have been previously quoted in the range £15 – £15.50 /sq ft.
The purchase is not the first foray into the commercial offices market made by the council. In April, 2009 it purchased the empty Northern Rock Tower in Gosforth for approximately £22m. The glass tower, headquarters style offices were put on the market when Northern Rock collapsed during the banking crisis. The council purchased the 120,000 sq ft building and currently lets the floor space to environmental support firm Eaga.
The latest office purchase has been criticised by opposing Newcastle councillors. Newcastle’s Labour leader, Councillor Nick Forbes commented: “My fear is that the council will have a huge property portfolio of office space which will be difficult to let out and taxpayers will have to start picking up the running costs. At a time when services are being cut, this is ludicrous.”
Local marketing agent Naylors are currently marketing 3,196 sq ft of open plan floor space on the 3rd floor of Higham House. Rental prices are for negotiation and have not been disclosed.
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