Refurbishment leads to Quantum leap

The regional office specialist has attracted and retained large occupiers through proactive asset management at the site at Heriot -Watt University Research Park, near Currie.

Since acquiring it in 2015, Squarestone has seen rents increase by 33 per cent and value by 25 per cent.

The company’s strategic moves to reposition the campus, which consists of seven office buildings, included landscaping to increase the kerb appeal and refurbishing three vacant units.

These improvements attracted JBA Consulting, specialists in environmental engineering and environmental management, and IT company CAS, which both took on 3,200sq ft units at £15 psf (per square foot).

Squarestone also worked with its existing tenants at the site, C-Mist, Abelon Systems, Lux Assure and Tritech International, and they all extended their leases for five years, moving rents to £16psf.

In addition, Trig Avionics, systems specialists, has expanded and taken on a second unit.

An opportunity to further improve the asset value was undertaken in a comprehensive refurbishment of unit 7, when it became vacant.

As a result, electric car battery designer, Dukosi has taken the 8,000sq ft unit on an eight-year lease at £116,000 per annum, reflecting a headline rent of £16psf.

Paul Coulter, founding partner of Squarestone Growth, comments: “We immediately saw potential in this park with high-quality units at low rents of £12 psf, on an excellent  campus in a superb location next to the Edinburgh City bypass and minutes from the airport.

“A park-and-ride adjacent and a regular public transport system, due to the proximity of the out-of-town university campus, were an added bonus.

“Because it is close to the canal, it links up with the cycle paths and a lot of our tenants cycle to work from Currie or Balerno.”

Coulter reveals that in 2015 his company was looking to diversify into a research and development park and the Heriot-Watt University Research Park felt like the best option.

“Another attraction was that the buildings felt a little unloved, hence the stagnation in rent, and there had been a lull in capital investment.

“No-one had spoken to the existing tenants, some of whom had been there for 20 years. That is exactly the opportunity we look for – we restore the buildings, and that gives rental growth, which leads to an uplift in value.

“It was a classic Squarestone purchase which ticked every box and one of the first assets we bought.”

The company is actively seeking similar value opportunities in cities throughout the UK, and so far it has invested in Birmingham, Peterborough, Manchester, Leeds, Liverpool, Newcastle, Glasgow and Edinburgh.

Coulter continues: “We have £120 million to invest this year, which will take the total fund to £350m which is the target.

“I feel that there is growing demand – every one of the cities has a university, so you have a highly educated workforce, and the rents are a quarter of what they are in Central London.

There is so much value in these cities and a real drive to decentralise businesses.”