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Albion’s Dream

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Even its new owners admit Albion House in Woking is “not a looker.” Yet it could be about to provide stellar returns for Palmer Capital’s Wrenbridge vehicle.

The 41,000 sq ft block will be refurbished, re-let and sold back to the institutional market by mid-2016, a little over a year after Wrenbridge bought it from Carisbrooke Investments for around £120 per sq ft.

Palmer Capital director Rupert Sheldon says: “Woking is a serial underperformer among the South East office markets. But the town has superb communications and if we get the building right and the timing right, we should see stellar returns.”

Around £450m of the £850m Wrenbridge portfolio is in the South East. Palmer is now starting to raise money for a fund targeted directly at offices, particularly in the South East.

Sheldon says: “We have a simple investment thesis, that there is likely to be a need for higher quality office space in some South East towns as the pressure for jobs to move from central London grows. It all points to a really positive growth dynamic, if you buy the right property.”

However, Palmer remain cautious. “The South East office market is cyclical. For now we want to buy in, do a refurbishment job, sell out, and not over-hold in the region until there is more petrol in the market,” says Sheldon. “A lot of today’s investment pricing is based on the assumption of punchy rental growth rates, which may not be fulfilled. People are paying very full prices.”

Author: David Thame, Estates Gazette