Standard Life Investments is buying a 180,000 sq ft office building in Manchester from German fund manager Patrizia for £66m – a circa 5.75% yield.
The property investor and developer is buying Number One First Street, where occupiers include engineering service provider Jacobs, media publishing company Auto Trader, Ford Credit Europe and Gazprom.
The fully let building forms an early stage of the 17-acre partially developed First Street project, which has the capacity for a further 1.8m sq ft of offices and 1m sq ft of housing.
The £500m First Street scheme was bought by Patrizia from developer Ask Real Estate in May 2015, with Ask retained as development manager. Manchester City Council, which jointly launched the original scheme with Ask at MIPIM 2011, has retained its interest in the project.
The deal marks the third-largest office investment in Manchester this year. The largest was Ares Management, which went under offer in January to buy Caryle Group’s Piccadilly Place for £118m – a 5.7% yield.
In March, Union Investment confirmed its purchase of Allied London’s XYZ building for £85m – a 4.8% net initial yield.
JLL is advising Patrizia.
One First Street: the components
One First Street is just part of the wider 17-acre First Street scheme being developed by Patrizia and Ask.
First Street North
First Street North is now complete, comprising the 208-bedroom Melia INNSIDE hotel, a 274-room Vita student accommodation development, 700-space multi-storey car park, Sainsbury’s Local and Pizza Express.
First Street Central
This phase has the potential to deliver 2.2m sq ft of office accommodation, including Number One First Street. A 220,000 sq ft office building under construction, Number Six First Street, is due for completion by summer 2017.
It is being delivered in a jv with the Greater Manchester Property Venture Fund and will be part-occupied by Gazprom, which signed a 40,000 sq ft lease, as well as 32,000 sq ft of shops. A further five plots suitable for office accommodation are available, ranging in size from 82,500 sq ft to 133,000 sq ft.
First Street South
The final phase is projected to deliver 977,000 sq ft of residential and student accommodation alongside 44,670 sq ft of retail, leisure and hotel space. The masterplan includes flats and townhouses with a completion date of 2018. An application was submitted in January for a 624-unit PRS development.
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