More than £100m of Manchester’s office stock is on the market as activity rebounds from a quiet start to the year.
At least five offices in the city are up for sale so far in the final quarter of the year, compared with just four that changed hands between January and September.
The largest of these is Patrizia’s Peter House (pictured), which is seeking bids in excess of £44m – a 5.25% yield – with CBRE and King Street acting for Patrizia.
CBRE is also advising on the sale of Deutsche Asset Management’s Norfolk House, home of GVA’s Manchester office. The 56,000 sq ft building is looking for offers of more than £18.4m – a 6.25% yield.
Eversheds House on the market
Meanwhile, JLL is marketing Eversheds’ Manchester office at 70 Great Bridgewater Street – also known as Eversheds House – for £24m, or a 6.93% yield. The office is marketed as a refurbishment opportunity given the end of the law firm’s lease in February 2021 and its move to the English Cities Fund’s 2 New Bailey.
Mayfield Capital recently put 86 Deansgate on sale for £18.9m – a 6% yield – with CBRE advising. The investor bought the 48,000 sq ft building in 2014 for £15.8m and has since secured a number of leases, bringing it to nearly full occupancy.
Besides these three offices, discussions are understood to have taken place over one other office, which is not being widely marketed: Helical’s 23,000 sq ft 31 Booth Street.
Why is the market finally heating up?
Investment volumes have lagged in Manchester this year, but given the scale of investment last year, including the £200m sale of No 1 Spinningfields to Schroders Real Estate, the market has attributed the dip to a lack of supply, rather than demand.
However, with the uncertainty of Brexit approaching, investors are keen to make deals before the end of the year.
Matthew Stretton, partner at Cushman & Wakefield, said: “With a buoyant occupational market, vendors are taking the opportunity to capitalise on investor demand for Manchester office buildings. Investor demand may slow next year, if we are unable to reach an agreement on Brexit.”
The expectation is that all these buildings will trade before the end of the year and give Manchester’s numbers a much-needed boost.
Appetite for offices
James Porteous, director for capital markets at JLL, said: “As we move in to the traditionally busy final quarter there is finally a bit more city centre office stock available. There is still a huge amount of appetite from both domestic and international investors for Manchester and the latest occupational take up statistics underpin why people want to invest in this great city.
“I would envisage all the buildings in the market to be sold prior to Christmas and we’re still seeing downward pressure on yields.
“I’d expect the final year’s office investment volumes to be down on previous years, but that’s a result of a lack of stock and certainly not lack of demand.”
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