Birmingham landmark Alpha Tower is for sale at just a quarter of the price it was purchased for in 2008.
Catalyst’s European Property Fund has placed Alpha Tower on the market for £10.25 million. Five years ago they paid Arena Central Developments £42.5 million for the 200,000 sq ft office building, but have since faced a series of setbacks described by city property expert, David Smeeton, as ‘a perfect storm.’
The chief difficulty is that the building was purchased at the height of the market, after which the value of regional commercial property plummeted. To make matters worse the biggest tenant, Birmingham City Council, chose to relocate when its lease came to an end in 2010. As a result, the property is now over three-quarters empty.
Alpha Tower opened in 1973 as the headquarters of regional television company ATV. When ATV closed in the early 1980s, its location, at the heart of Birmingham’s business district, ensured there would be high demand for office space in the building.
Today, the surrounding area is undergoing a £400 million redevelopment which is one reason there has already been significant investor interest in the refurbished property. According to Mr Smeeton, there have already been 25 inspections, although he cautions that potential buyers must be prepared to face initial losses.
“Although you have got some income from the building, that is completely gobbled up by the rates, so someone needs to have pretty deep pockets to take the building on.
“It is a real landmark property but even if you are going to buy it with cash there would be a lot of costs before you actually start making money from the building.”
Despite this the fact that the asking price equates to just £50 per sq ft, and that it has a potential rental value of around £3 million per year, looks certain to ensure Alpha Tower isn’t on the market for long.
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