CBRE has been instructed to sell the 200,000 sq ft office for £10.25 million – significantly below the £42.5 million Catalyst’s European Property Fund paid Arena Central Developments for it in 2008
Dozens of potential buyers have taken an interest in Birmingham’s Alpha Tower after the landmark building was put back onto the market for just a quarter of the price it sold for five years ago.
CBRE has been instructed to sell the 200,000 sq ft office for £10.25 million – significantly below the £42.5 million Catalyst’s European Property Fund paid Arena Central Developments for it in 2008.
City property expert David Smeeton said the building had faced “a perfect storm” since that deal was agreed – falling property values and the loss of a major tenant – Birmingham City Council. The tower now stands three-quarters empty.
However, Mr Smeeton said there had been major interest in the building, which is a stone’s throw from the Paradise Forum development, including from some of his clients, and bids are expected by the end of the month.
Mr Smeeton, who heads Colliers International’s Birmingham office, said he understood there had been 25 inspections thus far.
He said: “It is perhaps the archetypal building that caught itself in the perfect storm, in that it was bought right at the top of the market, when it was occupied in the vast majority by Birmingham City Council and at the time it was not anticipated that they would move out of the building.
“At the time the relocation to Woodcock Street wasn’t on the agenda, so when the council lease was coming to an end the vast majority of the income fell away, which was a major blow to Catalyst.
“It was a sensible investment, but anything that could go wrong did go wrong – it was a major building that lost its major tenant and had to be refurbished, and that costs a lot of money.”
The office block is being sold by Nationwide after the bank put it into receivership last year.
Arena Central Developments — a joint venture between Miller Developments and Bridgehouse Capital – sold the tower in 2008 with Nationwide providing the funding for the purchase, which was the Catalyst fund’s debut buy, according to Property Week.
At the time the property had an annual rent roll of around £3.3 million, but Birmingham City Council left in 2010, and it is now 77 per cent empty.
Mr Smeeton said the interest showed many thought there was value in the current price.
“That is why there has been 25 inspections,” he said. “Colliers International is looking for some of its clients, and £10 million is only £50 per square foot.
“Although you have got some income from the building that is completely gobbled up by the rates, so someone needs to have pretty deep pockets to take the building on.
“It is a real landmark property but even if you are going to buy it with cash there would be a lot of costs before you actually start making money from the building.”
The tower sits on the Arena Central development site — a £400 million 2.3 million sq ft mixed-use scheme that will transform the Broad Street area.
Work on site began in July with the demolition of a multi-storey car park to make way for a 210-room Holiday Inn Express. The area will also benefit from a £25 million extension of the city’s Metro system from New Street station to the new ‘Westside’ district via Broad Street.
Alpha Tower was built in 1973 as the headquarters of ITV regional television franchisee Associated Television, which closed in 1982.