Artmax Property has bought the Observatory in Manchester from the Universities Superannuation Scheme for £20m.
The 55,138 sq ft building is let to eight firms, including Nationwide, Aviva and Capita Property and Infrastructure, with 11,102 sq ft still available.
The Observatory is one of the few major offices sold in Manchester this year due to a lack of sellers in the market. In June, Bet365 bought the Zenith office from AM Alpha in Spring Gardens for £31.5m – a yield of about 5.25%.
Given the lack of sellers, yields have tightened on existing opportunities. The Observatory was initially marketed at £19m – a 5.8% yield – but achieved a yield closer to 5.5%.
Artmax is a Stockholm-based property company, which invests in European assets with a focus on the UK and the Nordics.
James Porteous, director for capital markets at JLL, which advised USS, said: “The Observatory is a modern building in a prime location in the heart of Manchester’s central business district.
“It’s unsurprising given its location and tenant mix that it has drawn interest from a broad range of investor types.
“Domestic and overseas funds continue to view the city as a low-risk and attractive option with a range of opportunities for continued growth of capital values and rents over the next five years.”
Matthew Stretton, partner at Cushman & Wakefield, which advised Artmax, added: “The building offers the opportunity to undertake a number of asset management initiatives to deliver enhanced returns and significantly improve the property’s credentials, while also benefitting from a prime location in the heart of Manchester’s traditional business core.”
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