Leading UK property development and investment company Cowell Group and Bravo Investment House have completed their first acquisition in the Welsh marketplace, with potential for further deals.
Cowell Group, whose founding director Nicholas Cowell is the brother of television personality and record executive Simon Cowell, and fellow London business Bravo have acquired the freehold interest in the 90,000 sq ft (net) Churchill House office building in the centre of Cardiff in a joint venture.
The value of the acquisition, out of property receivership, has not been disclosed, but the new owners are confident of driving the building’s current occupancy rate from 80% to a fully let position.
Current tenants in the building on Churchill Way, which was built in the late 1960s and designed by architect Sir Alexander Gordon, include Redkite, SRK Consulting, Jacobs, and Careers Wales.
Mr Cowell said he sees the investment as a long-term hold, with no plans to repurpose it for other uses, such as residential.
He said: “We bought it for investment purposes. We believe in the office market and have no interest or desire to redevelop the building for anything other than serving as a prime office location.
“We are looking to improve the entrance to the building and be respectful of our surroundings and where we are with the emerging Canal Quarter to bring a better offering, not just for the building but for Churchill Way and the wider city centre.”
The new owners have retained Knight Frank and Fletcher Morgan as marketing agents, with Mr Cowell confirming there is live interest from potential new occupiers.
He added: “We like working with them (agents). They have given us good advice, and we have to give them an opportunity to get the job done (100% occupancy). We already have interest in the available space of just over 20,000 sq ft from a number of sources. This interest includes a number of coffee shop companies for a vacant retail unit on the ground floor, which extends to around 4,000 sq ft.”
The building, which currently generates an annual rental income of just under £1m from £16 per sq ft, has a 85% to 15% split between its office and ground floor retail elements. Retail tenants include hairdresser Toni & Guy.
Mr Cowell said: “While we have received encouraging expressions of interest, we want to make sure we get the best tenants in the building. You get the right people, and everyone mixes well, and you have got a happy building.”
On a potential coffee shop tenant on the ground floor, Mr Cowell said: “We could use the mezzanine area to allow for additional seating and potentially, we wouldn’t charge rent for that area.”
On investment in the building and its infrastructure, Mr Cowell said: “There is always work to be done, but we are around 90% satisfied with the condition of the building.”
Churchill House has more than 100 car parking spaces. Mr. Cowell said: “We want to improve the offer with things like electric vehicle charging points and upgrading facilities for people cycling to the office.”
Mr Cowell, whose company’s portfolio of commercial and residential properties is mainly in London, said there is growing demand for office space, fuelled by a return to the workplace after the pandemic.
He explained: “The central London office market is absolutely on fire at the moment, where office rents have shot up 20% to 30% in the last 12 months. There is now a shortage of offices in central London, and we believe there will soon be a shortage in Cardiff. People aren’t building it (new stock)... it is as simple as that.
"Grade A office space (for rent) is currently between £28 and £30 per sq ft in Cardiff. We are in the category of Grade B space, between £16 and £20 per sq ft. Compared to other cities like Bristol, we are around 50% lower, so Cardiff, in my opinion, represents a good opportunity to invest.”
He said Churchill House is well-positioned to benefit from the increased rail services as a result of the £1bn South Wales Metro rail electrification project, which will see significantly improved capacity and frequency of services through Queen Street Station just yards away. He said he is also encouraged by potential plans for a wider Canal Quarter, with the current section of the former dock feeder canal at the top end of Churchill Way being expanded.
He said: “People want to work in city centres. The whole point of coming to the office is not just about work but also social interaction. Part of that is also what happens outside the building as well, and when you walk out at night, you know there are places to have fun with bars, restaurants, gyms, and ease of transport. It is where people want to come, and this is why I believe buildings like Churchill House will really survive and prosper.
“People who want Grade A offices are the PwCs of this world, but this (Churchill House) is going for a much wider marketplace. The floors are excellent, with great light and height to ceilings. It is a nice building in a lovely location.”
On the potential for further office building acquisitions in Cardiff, Mr Cowell said: “Absolutely, but of course we firstly need to bed this one down. Once you have connections with a city, then opportunities will come up, so we would be open to possible further investment.
"We have been made to feel unbelievably welcome in the city, from the likes of Ken Poole and his team (economic development) at Cardiff Council and Principality Building, with whom I have been working with for a number of years (funding for other group investments).
“From our perspective, we are not only investing in a building but investing in Cardiff.”