The prime Hodge House office building in the centre of Cardiff has been put for sale by its owner Legal & General with a £34.16m asking price.
The grade listed building has been transformed under the ownership of the financial services giant which has invested £20m refurbishing it to provide 110,000 sq ft of grade A modern space.
The building, which is fully let, has also set a new record rental level for Cardiff at £37.50 per sq ft for fitted out office space . When refurbishment work started in 2019 space was being marketed from £15 to £16 per sq ft. Rent for non fitted out space in the eight storey building is being quoted at £30 per sq ft.
L&G has appointed the capital markets team of property advisory firm Knight Frank to market the freehold interest in Hodge House, whose tenants include alternative broadband infrastructure venture Ogi, taxi technology company Veezu, renewables firm Bute Energy and marketing and PR consultancy Freshwater.
Andrew Mercer, offices sector lead at L&G, said: “Cardiff is very important to L&G and is where we have one of our own core office buildings as well as funding the award-winning Central Square development around Cardiff Central Station. As a development by L&G, Hodge House builds on this Cardiff success.”
He added:“Whilst we have seen significant construction inflation, we have been able to generate exceptional rental growth over a six year period at Hodge House - including through Covid - showing that clear vision and effective delivery can attract a community of regional customers looking for exceptional office space and are willing to pay higher rent levels to reflect the benefit that user experience brings to their business.
“So it’s a mutual benefit. Customers are happy to stay longer and pay higher rents and investors are happy about the increased return they receive. The calculated risks have paid off and we have created a building which is fully let and where the rents are at record levels. L&G is proud to have retained the building’s heritage in a way that is being so well received.”
Gareth Lloyd, partner in Knight Frank’s capital markets team in Cardiff, said: “Hodge House is an absolutely prime investment opportunity and it is very rare for a freehold, landmark grade II listed period office building of such striking quality, and located in the heart of Cardiff city centre, to become available.”
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While it will be dependent on market interest, there is potential for the freehold interest to be acquired for more than £34.16m.
The refurbishment works were designed by architects Stride Treglown. Knight Frank and Fletcher Morgan, as joint marketing agents, have successfully brought the building to full occupancy.
Matt Phillips, partner at Knight Frank in Cardiff, said: “As well as the traditional open plan category A office space, the redevelopment was one of the first in the regions to incorporate Capsule, L&G’s fitted office brand delivering office suites on a ‘plug and play’ basis.
"Of course, part way through the refurbishment programme the Covid pandemic arrived, which challenged occupational assumptions and traditional approaches to office occupation.
“However, thee post-Covid ‘back to the office’ resurgence has been characterised by a flight to excellence with employers seeking to impress their employees – and customers – with impressive office spaces that are good to work in and which add value to their operation. In that context L&G’s confidence in pushing on with the building’s high-quality refurbishment has paid massive dividends, and a total 108,000 sq ft of office space has now been let over 16 deals.”
John James of Fletcher Morgan added: “High-profile occupiers that have chosen Hodge House include Bute Energy, Currencycloud, Gleeds, Go.Compare, Harrison Clark Rickerby, Intelligent Ultrasound, Menzies, Ogi and Veezu. The building’s design success can be evidenced by the record rents achieved for category A (fitted out) office space at Hodge House.”
Stride Treglown project lead Toni Riddiford said: “Hodge House is a magnificent building from the street, but internally that character had been lost by years and years of adaptations and fit outs. We sought to bring that character back to shine through, and enhance it with new, high quality common spaces and amenities.
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" It wasn’t an easy task as the building was at least partially occupied throughout the works. But this challenge was overcome by a fantastic team working collaboratively and responsively together.
“I’m really pleased that the project has been so well received by occupiers. We’ve also significantly improved the building’s energy performance with targeted interventions, which we considered to be an equally important part of our brief.”
L&G acquired the building in 2014 from Aberdeen Asset Management in a £18.8m deal.