£2million sale reveals how office values have collapsed in Milton Keynes

Elder House, Elder Gate, Milton Keynes
Elder House, Elder Gate, Milton Keynes

An iconic Milton Keynes building has been sold for just over £2million but the agents reckon that’s a fraction of what it could have been sold for in the boom times.

Acting on behalf of Aberdeen Asset Management, Allsop have completed the sale of Elder House, Elder Gate, in a prime location close to the railway station.

The mixed office/retail/leisure scheme has more than £73,000 sq-ft of business space, making each sq-ft have a capital value of a little under £28.50. That compares with more than £150 per sq-ft before the credit crunch.

Andy Pointon, of Allsop, said: “The property required capital expenditure on a large building, with significant vacancies in a town with poor occupier demand.

“The non-recoverable costs being incurred in the building vastly diminished the rental income to a net income of almost zero.

“The price achieved demonstrates the risk premium that investors now demand for such investments reflecting a capital value of £28.50 per square feet in a town that was achieving over £150 per square feet in better times.”

The property was sold with about half of it being vacant, which meant investment in bringing it up to scratch.

Allsop believes the sale is significant for the Milton Keynes secondary office market which has suffered since the economic downturn with high vacancy rates and continued low tenant demand.