West Midlands Police has bought its Colmore Circus headquarters in a deal worth more than £15 million less than a month after the neighbouring property was sold.
The police authority has freed itself from a 51-year lease on Lloyd House after an off-market transaction was agreed with former owner R20 Group.
The deal came after property developer Alan Chatham secured a £5.2 million deal to buy the nearby former Post & Mail Building on Weaman Street.
An expert on the Birmingham property market said the vast difference between the two sums was down to Lloyd House having a tenant in place and reflected market conditions where landlords need to free up cash.
Bishop Derek Webley, chairman of West Midlands Police Authority, said it was a good time to purchase the freehold, and refuted rumours the move would see the headquarters moved elsewhere.
He said: “We have taken the opportunity to buy Lloyd House at exactly the right time, which secures the future for West Midlands Police and gives flexibility for the foreseeable future.
“Lloyd House remains the headquarters for West Midlands Police and will continue to act as the headquarters for West Midlands Police for the for the foreseeable future.”
The 143,000 sq ft landmark 11-storey tower has been home to the West Midlands Police since the mid-1960s and has become synonymous with the force in Birmingham.
The expansion of the central Birmingham office market eastwards over the past five years means that Lloyd House has become central to the Colmore Business District and has seen large-scale new commercial schemes such as Ballymore’s Snowhill development, Colmore Plaza and 2 Colmore Square.
Robert Graves, head of property services at West Midlands Police, said: “The opportunity to buy Lloyd House came up and the attraction to us in owning the property is having much greater control and flexibility over our occupation and use of our headquarters, both now and in the future.
“The Metropolitan Police did the same not long ago when they acquired Scotland Yard.”
RICS spokesman Mark Swallow, head of Knight Frank’s Birmingham office, said a recent spate of property transactions in the city was evidence landlords needed deals to get cash.
He added: “There are two reasons for the large difference in the price between the two buildings. The old Post and Mail building hasn’t got any income coming in and whoever buys it has to carry on the overheads.
“It was under offer two years ago for about £15 million but £5.2 million reflects what it is worth in today’s market with the difficulties people are having raising money and getting developments to work.
“The police are actually the tenants in there and they are on a very long lease. The owners needed to release some cash and the police are the occupier, and it is important to them to have the right owner and have control over the building, and they have taken this opportunity to buy it and be able to make more use out of it.”
Steve Benson, of property consultants GBR, who represented the police in the transaction, said the deal made sense from a financial perspective.
He added: “The police had a lease over Lloyd House which ran for a further 51 years. The purchase means that an escalating rental liability over an unusually long-term is effectively cancelled.”
Colliers CRE’s Birmingham office represented R20 when they acquired Lloyd House seven years ago and in this latest transaction. Eleanor Deady, supported by Zo Hoida, at Cobbetts provided legal advice for West Midlands Police Authority whilst R20 Group were represented by Nick Simpson of Osbourne Clarke.