German investor Commerz Real has called off the sale of One Snowhill in Birmingham after failing to attract high enough bids for the 264,000 sq ft trophy building.
The fund was seeking £124m – a 6.25% yield – for the property. It was put up for sale through Jones Lang LaSalle in May.
However, sources said the price was too high and had put investors off.
PRUPIM is understood to have bid at a price reflecting a yield of around 7%, but was knocked back by Commerz Real.
“In the current market One Snowhill was just too big for a regional asset,” said one local agent. “The focus still remains firmly on London for big ticket assets in this price range.”
Successful disposals in the city have generally been at yields of around 8% and at sub-£50m lot sizes. In October Tristan Capital Partners went under offer to buy the city’s iconic Cube mixed-use building from administrators at PwC for £37m – an 8.5% yield – and last month it was revealed that Hermes was buying the 196,000 sq ft Baskerville House for circa £42.5m – an 8.35% yield – from administrators at Deloitte.
Figures from Knight Frank show that the average value of a transaction in Birmingham this year has been just £8.8m, less than a third of that achieved in 2011. The volume of deals has also dwindled, with just £140m expected to be transacted by the year end, compared with almost £320m in 2011.
Commerz Real paid £126m for the property, which is let mainly to Barclays and KPMG on 15-year leases and produces an annual rent of £8.2m, in January 2010.
Around 38,500 sq ft remains vacant in the building, although talks are under way with law firm DWF to take 21,000 sq ft on a 10-year lease.
All parties declined to comment.
lisa.pilkington@estatesgazette.com
