The Update Quarter 3 2022

Much has changed since our summer Update, giving me lots to cover in little space!

The Leaders Romans Group (LRG) acquired The Acorn Group on 1st September 2022. LRG’s takeover marks the end of an era at Acorn in many ways, but the exciting beginning of another for our staff and clients. The operational management team at Acorn remains unchanged, but we’re now part of one of the largest property consultancy groups in the UK. We have the financial backing of Platinum Equity, meaning our mission won’t change either — we want to continue providing high quality agency services to more people, across a wider geographical area.

There’s been a takeover in Downing Street too, with Liz Truss winning the contest to be the new Prime Minister. With Brexit and Covid now in the past, a fresh approach is what her campaign claimed we need to get the country back on track. Truss said of her Autumn mini-Budget that she would “cut taxes to reward hard work and boost business-led growth and investment.” The new Chancellor duly cut taxes, and then performed an embarrassing U-turn less than a week later. He was then sacked. An interesting take on a ‘fresh approach’, and fodder galore for the opposition. Nevertheless, that same Autumn Budget also delivered a raft of changes to Stamp Duty Land Tax as a direct attempt to support the property market at a time when interest rates are rising monthly.

So, what of the interest rate rises? I’m no economist, but we’re told they’re essential to curb inflation. Meanwhile, what impact will they have on the property market? Well, on the professional side of the industry, the obvious effect is on investment yields. Interest rate rises are good news for savers, so professional investors will need some added encouragement to buy income-producing assets, and yields at auction are likely to lengthen noticeably over the next few sales. Selling via private treaty opens a property up to a wider market including local and amateur investors, and a decent agent will winkle out that ‘special purchaser’ that drives past the property on the

school run or owns the building next door. If you’re selling an investment like any of those reported in this Update, take professional advice. We offer it for free, so you have nothing to lose!

Beyond investments, if the base rate rises as far as is rumoured and as quickly, there will ultimately be a knock-on effect. Utility caps and tax cuts will help borrowers to a point, and whilst mortgage rates have already jumped overnight, buying is still comparatively cheaper than renting. The development industry has remained lowly geared since the credit crunch, so interest rates are likely to have less impact on housebuilders than the cost of materials and labour. Besides, any developer has the broken planning system to tackle before worrying about fiscal issues!

There are always positives to a changing market, not least for the dynamic agent. Realistic sellers will continue to get results, and buyers will have to react quickly to secure value. Demand continues from commercial tenants, but again landlords can’t ignore rising costs for occupiers. The next quarter will certainly prove interesting! Jeff East — Director

London Office 120 Bermondsey Street, London Bridge, London SE1 3TX 020 7089 6555

Bromley Office

9 St Mark’s Road, Bromley, Kent BR2 9HG 020 8315 5454

nutshell

Sydenham SE26

Dated 1930’s semi in a popular location with a large garden to the side and potential for extension, or an additional dwelling stpp. Sold to a private individual at £20,000 ahead of the guide price.

Upper Norwood SE19

We had offered advice to various committees at the Crystal Palace Bowls Club over the space of several years before finally concluding a sale during the third quarter of 2022.

As a committee, selling your club’s premises is a thankless task. In this case the bowls club had merged with another locally, and therefore had an alternative site to operate from. The pressure remained, though, to extract best value from the sale of their long-held freehold.

The wrong agent over-valued the building initially, and their tenure yielded little or no serious interest. Several ‘direct’ offers followed but all aborted, resulting in nothing but a horrendous legal bill. We had remained in touch with the club throughout and were ultimately appointed when the need for a sale became more pressing.

Mixed-use freehold investment comprising a shop and two 1 bedroom flats. Fully let producing £31,230pa, the property offered active management and break-up angles. Sold for £550,000.

The subject property comprises a single storey, largely open-plan building extending to approx. 18,900sqft and occupying a site of 0.8 acres. By adopting a tried and tested marketing strategy that has been honed over more than 20 years selling similar assets, we were able to generate considerable early interest. Several block viewings were held, and offers received from developers, faith groups, educational and commercial operators.

The club favoured a prompt unconditional deal, and we concluded the sale of the freehold for £2.95M to an enterprise that runs artist’s studios and creative spaces. We have a long and successful track record in acting for clubs, committees and charities selling all manner of property-related assets from churches and schools, to Scout huts and sports clubs. If your organisation has a property to sell or let, please get in touch.

Beckenham BR3

Modern office unit on a small business estate sold with vacant possession. Approx 1,668sqft and offered with 3 parking spaces, we sold the freehold to an owner occupier for £425,000.

Lewisham SE13

In a nutshell

Tooting SW17

Streatham SW2

This mixed-use development was completed in 2007, the flats sold off and the two commercial units let to Carphone Warehouse and Tesco. We were approached in 2020 by the owners of the commercial space, who had acquired the commercial units as an investment some years earlier. Carphone Warehouse had recently vacated, and the Tesco lease was nearing expiration. We were instructed to let the vacant unit and introduced an NHS dental practice on a new 15 year lease. With the NHS letting serving as fresh evidence, we then opened negotiations with Tesco, and agreed a new 10 year lease on improved rental terms.

Once both new leases had completed we were instructed to market the investment. Producing a total rental income of £138,000pax we invited offers in excess of £2.6M for the virtual freehold interest, and ultimately concluded a sale at £2.65M – 4.9%NIY.

Attractive mixed-use freehold building offered for sale for the first time in 140 years. Previously operated as a butchers, we sold the shop, 3 bedroom flat and garage for £775,000 to an investor.

Herne Hill SE24

Two storey modern office building with parking for several vehicles. Extending to c1,945sqft and located close to Herne Hill Station, we achieved £780,000 for the vacant freehold interest.

Brockley SE4

Most of our work is conducted on behalf of sellers, but occasionally we act for a buyer. In this case we were put in touch with the owners of Skyline Roofing by a professional colleague. Skyline supply roofing materials from 12 depots across southern England and were given notice by their landlords in Brockley who were keen to sell.

The landlords had been advised that Skyline’s 0.9 acre yard had development potential, and a figure of £9M was being asked for the vacant freehold interest. Our role was to find alternative premises for Skyline – not an easy task in urban London.

Whilst searching, we closely monitored the attempted sale of the existing yard; strongly suspecting that the landlord’s agents would struggle. After two abortive sales and a major reality check, a deal was reached for Skyline to acquire their existing site for continued commercial use, and for considerably less than £9M!

Camberwell SE5

Freehold investment comprising the ground rent income from 9 modern flats, and full planning permission for 3 further flats in a new 4th floor. Sold to a local developer for £405,000.

Orpington BR5

Tooting

We were recommended to the long-term owner of this mixed-use building in Tooting. Keen to cash in on his investment, our role was to devise a marketing strategy that would maximise the value.

We pointed out that ‘special purchasers’ often prove to be the best buyers for this type of asset. Clearly every buyer is ‘special’, but the term specifically refers to neighbouring freeholders, local investors and incumbent tenants. We wrote to the surrounding freeholders and contacted the

We regularly act for faith and community groups, and over the last two decades have earned a reputation as being one of the most effective agents in the sale of premises for and to such organisations.

The Hope Church got in touch after relocating their operation into The Walnuts shopping centre in central Orpington. This left their previous premises, The Goodmead Centre, surplus to requirements. Keen to release the equity for reinvestment into various community initiatives, we were instructed to find a buyer.

Offering more than 12,000sqft of F1 (formerly D1) space over two floors, and well-located at the end of the High Street, interest was forthcoming from investors, developers and other faith groups. Whilst our clients had no preference as to the nature of buyer, they were delighted to agree a sale to another church upsizing from smaller premises. With no issues surrounding use or planning contracts were exchanged promptly, and the sale completed in September 2022 at £2.1M.

pharmacy tenant in the commercial unit. The tenant was keen to acquire the freehold, but we still wanted to maximise value.

We continued with an open marketing campaign, and generated offers from several third parties. The tenant wasn’t given preferential treatment but being aware of other interest encouraged him to bid strongly. He duly won the bidding and completed his purchase of the shop and two flats at £1.375M –a blended NIY of 4.4%.

Shepherd’s Bush W12

A friendly surveyor recommended our services to St Christopher’s Fellowship, a charity that provides support to children and young people nationwide. St Christopher’s previously used these two adjoining period houses as bed-sitting accommodation, but the facility was too small to prove financially viable.

We were asked to advise on the disposal and took the view that the property could be put to a variety of uses. With accommodation extending to approx. 2,800sqft GIA over four floors, the property appeared suitable for reversion to houses, conversion to flats or for use as a surgery or small educational facility. An open marketing campaign was undertaken, from which it became apparent that the strong residential values and demand in the local area would drive the ultimate interest in the buildings.

The preferred bidder was forced to take a positive view on several technical and compliance issues, but ultimately completed his acquisition at £1.35M in September 2022.

Camberwell SE5

We’ve had a long-standing involvement with this property having sold it for a faith group to a US-based investor, and then arranged the letting to Pure Gym.

Prior to concluding the letting our client explored the option for conversion to residential. With little fenestration and freeholder’s consent required though, a letting of the space to a commercial

operator was always going to prove more straightforward. We introduced Pure Gym – the largest gym operator in the UK with 320 sites nationwide. Pure Gym took the 6,500sqft unit on a 15 year lease at an initial rent of £85,000pax with fixed uplifts throughout the term.

Once fitted and trading we were instructed to sell the virtual freehold investment. Terms were agreed with a private investor buying via his SIPP, and the sale completed in the third quarter of 2022 at £1.225M – a NIY of 6.6%.

a nutshell

Meet the Team

Grove Park SE12

Another mixed-use freehold sold to a private investor. Close to Grove Park Station, this property comprises two shops and a large 4 bedroom flat producing £38,900pa in total. Sold for £700,000.

Brand new commercial unit with A3 use under Lewisham Travelodge. Offered in shell condition and extending to c1,582sqft, we completed a new lease to Taco Bell at an initial rent of £39,000pax.

Camberwell SE5

Ground and lower ground floor office space in a converted warehouse. Kings College Hospital Trust (NHS) have taken c3,079sqft on FRI terms at an initial rent of £55,000pax to house their HR team.

Administrators and deal-makers wanted!

If you are interested in joining our team, please contact Jeff East

Lewisham SE13

Daniel Dennis Commercial & Development Agency

Rosie Davis Senior Secretary

Adam Miles Commercial & Development Agency

Jamie Stevenson Commercial & Development Agency

Louis Markham Commercial & Investment Agency

Callum Reeves Commercial & Development Agency

Finn Robertson Commercial & Development Agency

Jeff East Director

Rishil Patel Commercial & Development Agency

Tom Luck Director

8315 5454

Steven Flannighan Commercial & Development Agency

Tudor Raileanu Commercial & Development Agency

APPEAL FOR UNWANTED BOOKS!

Acorn Book Club – The Acorn Group’s very own children’s literacy charity –gets high quality books into the hands of children who need them the most.

Have your children outgrown the books they once adored? Why not donate them to ABC!

All Acorn Group offices act as a drop off point for pre-loved books. To find your nearest branch, check out acornbookclub.co.uk.

The Acorn Book Club is a UK Registered Charity (1184137)

St Mark’s

Kent

Office

London

Bermondsey Street, London Bridge, London

Are you registered to receive our latest instructions and opportunities?

Scan the QR code to register