A landmark office block in the heart of Birmingham's business district has been sold for £39.5 million.

Ashtrom Properties UK, which is part of Tel Aviv-based construction and property group Ashtrom, has purchased Colmore Gate from Aviva Investors.

The building, which fronts onto Colmore Row, has 171,834 sq ft of office and retail space across 18 storeys and 86 basement parking spaces and counts the Crown Prosecution Service and Tesco among its tenants.

Guy Lewinsohn, chief executive of London-based Ashtrom Properties UK, said: "The acquisition of Colmore Gate is in line with our current strategy of investing in UK regional cities.

"We are excited to transform this landmark into a unique and exciting office building with strong environmental, social and governance credentials and unrivalled amenity.

"We are thrilled to add this office building to our growing portfolio across the country."

Joshua Morris, partner in the capital markets team at Knight Frank which acted for Ashtrom, added: "The impressive landmark building represents a rare opportunity to deliver a significant repositioned office scheme into a supply-starved marketplace.

"Birmingham's office market is witnessing a constrained level of existing grade A supply, with tenant demand rebounding to pre-pandemic levels as new requirements emerge."

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Ashley Hudson, head of the Birmingham office at Knight Frank, said: "Birmingham's office investment market had a bumper quarter four in 2020 with over 50 per cent of the city's £228 million of transactions closing in the final quarter of the year.

"Occupier activity is equally robust, despite the impacts of the pandemic, with take-up in Q2 2021 reaching 203,499 sq ft.

"This deal showcases not only the strength of the asset but also the increasing appetite for investment into the city."

Property consultancy JLL acted on behalf of Aviva Investors.