The Update - Quarter 4 2022

Quarter 4 2022

Wow, the final quarter of 2022, where do I start!?!

Let’s begin with the positives. As I reported in the last Update the Leaders Romans Group became the new owners of The Acorn Group in September 2022. The final quarter, therefore, served as a period of bedding-in for the management and staff of both businesses, and it was a resounding success. Referrals between us began immediately, pooled procurement has enabled us to secure efficiencies from suppliers and we’re looking at sharing office space in certain strategic locations.

We also contributed towards our first internal auction, with Acorn generating a third of the lots sold by First For Auctions on 16th December.

In my last editorial I made the mistake of mentioning the Government. Rosie edits The Update in-house, and became increasingly more vexed with every change to my copy prompted by the comedy of errors we suffered during the shortlived Truss regime. I’m not going to fall into that trap again, but it would be remiss not to comment on the impact as far as the market is concerned.

Understandably buyers and tenants got nervous. The cost of living crisis, high inflation, rise in interest rates and industry-specific considerations including the closure of the Help To Buy incentive made for a rather bleak outlook. Those issues plus the shock of disastrous leadership reign resulted in the loss of some deals, and renegotiation of others. Once the dust settled though, reality bit. Our industry is driven by transactions, and in our sector of the market deals are the be-all and end-all. Quite simply investors need to buy, and developers need to build, otherwise it becomes rather difficult putting food on the table. Every deal we lost, we replaced, and we have a strong pipeline to carry into 2023.

The general view is that with inflation dropping (albeit only slightly), and US interest rate rises slowing, the Bank of England base rate should peak in the Spring. We’ll have a Budget underwritten by the chap that spent most of the country’s cash

over the last 4 years, and hopefully that will give our industry more reasons to be cheerful. In the meantime the market is stable, and sensibly priced properties are selling well.

At the risk of sounding like a broken record, if you’re thinking of selling, letting, buying or renting a property, expert advice is vital at present. Sure, you can get lots of information online, but there’s simply no substitute for the local knowledge and experience that a good estate agent can offer.

If our teams in London Bridge or at our Bromley HQ can’t assist, we’d be happy to put you in touch with one of our 250 branches nationwide, so please get in touch!

In the meantime this Update provides commentary on a selection of the deals we concluded during the final three months of 2022, and also illustrates the diversity of the services that we’re able to provide. I hope you find it an interesting read.

Jeff East — Director Jeff.east@acorngroup.co.uk

London

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

Bromley

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

acorncommercial.co.uk

commercial@acorngroup.co.uk

Honor Oak SE23

Vacant double shop unit on the popular Honor Oak parade, let on new FRI terms at £40,000pax to Amrutha Lounge; a plantbased restaurateur with an existing outlet in Wandsworth.

Broadstairs CT10

We’re regularly recommended to new clients, and it was a kind referral from a longstanding surveyor friend that resulted in us managing the marketing and sale of this strategic site on the outskirts of the fashionable Kentish seaside town of Broadstairs.

Bought as part of a portfolio in the late 1990’s, our clients were fortunate enough to be able to play the long game – leaving the land fallow for more than two decades whilst a planning overage expired. Once free of the fetter, the owners did the obvious thing and submitted a residential scheme for pre-application advice. Indeed, the Council shared the view that residential was an appropriate use having allocated much of the site for residential development in their Local Plan.

Seal TN14

Freehold comprising vacant E class unit over ground and lower ground floors with consent for conversion to a 1 bed duplex, and ground rent income from two upper flats. Sold for £191,000 –27% over guide.

Our appraisal, however, concluded that residential was only one of several possible uses for the site. Our thinking was that at c2.3 acres a large residential scheme would require an affordable housing provision of at least 35%. The low benchmark value would make a viability argument difficult, and with residential values limited and build costs rising at the time, it was likely that no land value would be forthcoming from any affordable element.

With that in mind we ensured that our marketing campaign was farreaching, and ultimately received offers for residential development, commercial development and from close care operators. In fact it was the demand for, and undersupply of care beds in Thanet that ultimately drove the value. The top three bidders were all care operators, and Leeds-based LNT Care Developments were selected as the preferred buyer. LNT have built more than 200 care homes nationwide, and their experience told. They secured consent for a 66 bed care home in

Brockley SE4

Small backland plot in the popular Brockley Conservation Area. No planning permission, but apparently suitable for a small residential or commercial building stpp. Sold to a cash buyer for £165,000.

Westerham TN16

We managed the sale of this modern office building in the centre of Westerham on behalf of a private investment company.

The tenants had expressed an interest in surrendering their lease early, and our clients were able to secure Permitted Development Rights to convert the building into 6 apartments. With parking provided undercroft, the rear car park was then surplus to requirements, and a planning application made for the construction of two houses.

We conducted an open marketing campaign which, as is usually the case with consented development sites, generated considerable interest. Terms were promptly agreed to a local developer previously unknown to us, and the matter completed in a timely fashion during the final quarter of 2022.

In a nutshell

Norbury SW16

Whilst our strong reputation precedes us, we still work as hard as we possibly can to maximise value for each and every client. Our skills were put to the test in the Autumn at a moment in time where almost everything seemed two be working against the development sector, and challenging residual land values as a result.

Our client in this matter held an option to purchase a detached house on a large plot, and had secured planning permission for the construction of 9 new houses. Similarly to the Westerham site we were able to generate considerable interest, and despite rising build costs and the challenge of a sloping site we still managed to achieve in excess of £280,000 per plot.

Bexleyheath DA7

End-of-terrace Victorian cottage close to the town centre and subject to an Assured Shorthold Tenancy producing £13,200pa. Sold to a private investor as part of a small portfolio break-up.

Nunhead SE15

Small freehold site in a popular road with full planning permission for a unique, ultramodern 2 bedroom house. Sold to a local developer with full working drawings package for £300,000.

Blackheath SE3

Mixed-use freehold comprising vacant lock-up E class unit, vacant self-contained 1 bedroom flat and ground rent income from an upper maisonette. Sold on behalf of the previous owner-occupier for £500,000.

Swanley BR8

Consented development sites are always hot commodity. At present much is conspiring against developers including increased debt costs, the removal of buyer incentives, increased labour & material costs, and inconsistent supply chains (and don’t get me started on the planning permission process). Nevertheless, most developers need to keep building, and consented sites remain in short supply.

This site ticks the vast majority of the boxes –consent for 20 flats (10 one beds & 10 two beds),

smart, contemporary design, no basement, 4 floors, 100% parking, no affordable housing and just 0.2 miles from a decent station. We were instructed to assign the benefit of our client’s option just at the point that Truss & Kwarteng were doing their level best to ruin the British economy. We weren’t going to let a political implosion derail our efforts though, and successfully introduced a local developer with a strong track record.

Pricing is key at present, and the deal was concluded at £1.45M against a GDV of £6M.

Welling DA16

Whilst we don’t widely publicise our Planning Management services, we’ve been regularly coordinating the promotion of development sites on behalf of certain clients for many years.

Projects have ranged from a single house on a redundant garden plot to a major strategic development site, and pretty much everything in between. The formula has to be right for us to get involved though. Time is money, and planning takes an awful lot of time (and money) nowadays!

We’ll therefore only consider partnerships where we can add considerable value in return for a healthy fee.

In this particular case the retired owner of an office building didn’t have the energy or patience to promote their site. We adopted the role of lead, and with the very able assistance of On Architecture & RE Planning, successfully secured permission for the construction of 6 new apartments over a smart commercial unit.

London Bridge SE1

The press would have you believe that the office market in London is dead, and everyone works from home nowadays. That’s certainly not our experience though!

Blue Lion Place, just off the uber cool Bermondsey Street, is a very smart conversion of a factory built in the 1950’s for the Blue Lion Shirt Company. Arranged as office suites of varying size, we offered a unit spread over three floors and extending to approx. 4,933 sqft for sale in the summer of 2022. Benefits included a strikingly modern fit-out, Cat5 cabling, low energy M&E initiatives, cycle storage and showers.

Interest was forthcoming from numerous owneroccupiers from different business sectors, and the property was ultimately sold to a production design company for £2,050,000 (£416/sqft). The outgoing tenants were expanding, and the new owners relocated from expensive rented offices in Soho.

Tunbridge Wells TN2

The properties that we sell are often a little unorthodox, and equally we’re regularly challenged to structure deals that are far from straightforward. This 1.56 acre site just north of Tunbridge Wells comprises four separate buildings and a vast amount of hard standing. Multi-let on short term agreements the property offered a variety of angles including intensification of built floorspace, re-letting or re-negotiation of existing leases and medium term commercial, residential or

Please get in touch if you have office space to sell or let; particularly in London Bridge, Southwark or Bermondsey.

mixed-use development potential.

Our clients held an option to purchase the property, but were willing to step aside for the right premium. With that in mind we set about generating interest, and structured a deal with a private equity-backed investor to not only take over the contractual position, but also simultaneously complete the purchase. That arrangement not only appeased our clients, but also the top seller, and the matter completed in the autumn of 2022.

In a nutshell

Meet the Team

Welling DA16

Prime quadruple E class unit on Welling’s busy ‘high street’ extending to c5,300 sqft. Let on a new long term FRI lease to fitness trainers Novo Armory at an initial rent of £58,000pax.

Bermondsey SE1

Adjacent industrial units close to Central London. One let to a film production firm for £70,000pax, and the other to a contract flooring business at £73,500pax. Similar space always required.

Beckenham BR3

Turnkey 120 cover bar/restaurant in a busy spot in central Beckenham. Tastefully fitted to a high quality by the previous tenant the c1,150 sqft unit was let on new FRI terms at £80,000pax.

Daniel Dennis Commercial & Development Agency

Rosie Davis Senior Team Assistant

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

Blaise Ribbons Team Assistant

Rishil Patel Commercial & Development Agency

Tom Luck Director

Steven Flannighan Commercial & Development Agency

Tudor Raileanu Commercial & Development Agency

We are pleased to introduce The Acorn Group’s newest division; Shared Ownership

Our experienced New Homes and Build to Rent divisions have been selling and letting new-build homes across London and Kent for over 30 years.

We therefore felt the natural progression was to combine our wealth ofexperience to create a dedicated Shared Ownership Division.

As with all our New Homes sites, our in-house PR & Marketing Division, branch network of 40 offices and dedicated New Homes Division work together for maximum exposure and impact.

Call 020 8315 6917 for more information or visit acorngroup.co.uk/sharedownership

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Kimberley Ellen Head of Shared Ownership

Shared Ownership