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Read about the latest news, views and developments in the commercial property world from our industry expert.

R & D groove
BUILDING blocks
InBrief #1
The REAL DEAL
QUAY West
InBrief #2
WHAT’S UP? ....Dock!
TIME FOR Auction
Cheshire CATCHMENT
Spinning WILL
Young GUNS BLAZING
dunedin Soap Works

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North West Commercial Property News - Saturday, March 31, 2018

Issue #83

R & D groove

North West News

A magic formula continues to work in Manchester as it powers ahead as a dynamic global city. A key to success now lies with innovation and a significant research and development base – which is exactly what Manchester has. That is indicated by the fact that it scores so heavily in the league table of cities that receive tax relief for research and development.

A report from specialist tax firm Catax logged Manchester’s tax relief claims as four times higher than its nearest rival at 1,140 claims in a year with a value of £75 million. Next on the list is Edinburgh with 290 claims. However, Catax also said there is a general lack of awareness about what constitutes a valid tax claim.

The basis for judging the performance of Manchester is a wide one with Lambert Smith Hampton (LSH) reporting that Manchester and Salford is well ahead of other UK regions in the expanding market of build to rent (though behind London). LSH makes the point that: “The rapid growth of build to rent has led to it increasingly being recognised as a separate asset class."

Ian Scott of LSH commented: “Manchester, unsurprisingly, tops the charts for the North West, driven by the scale of the young population and demographic suitability on the ACORN profiles as opposed to affordability constraints. The same is also true of Salford and Liverpool."

Another peg in the firm commercial market is the strength of hotel investment in Manchester, which Savills said is the highest of any regional city. Last year, reported Savills, there were nine hotel deals totalling £178.55 million, which was 52% higher than Edinburgh in second spot.

The dominant investors were from overseas in 2017, which continued the overseas expansion of the investment market in the North West.

Tom Cunningham of Savills said: “Manchester is a truly global city with high levels of recognition thanks to its international airports, forward thinking city council, strong visitor numbers and numerous sporting, business and leisure events every year. The strength of the hotel investment market is a reflection of this, and we expect this to continue with another robust year."

In fact, the commercial property market continues to power ahead in the North West, said Harry Skinner of Avison Young, which has recently bought WHR, another agency. Apart from the buoyant office market in the city centre, Avison Young has the 1,858 sq metres (20,000 sq ft) Atlantic House in Birchwood, Warrington, which Skinner said is “a strong, well-established business park.”

BUILDING blocks

North West News

A plea for increased commercial and residential development to sustain the strong market in the North West has come from Savills.

It noted that demand from businesses and residents had grown steadily and looked to continue, despite “the destabilising influence of Brexit negotiations. But commercial and residential property supply must diversify and bring forward more property across all classes if it is to meet growing demand and maintain competitiveness."

Toby Haslam of Savills commented: “If Manchester wants to meet its growth aspirations, it needs a broader range of developments to appeal to the varied demographic."

Another Savills view comes from John Evans who said: “Demand for Grade A offices is so high that it’s spilling into secondary stock and pushing rents up. This is expected to drive future demand for services, offices and light touch refurbishment in the short term. Longer term, we expect to see the core office market expand into areas previously seen as fringe such as Oxford Road, Ancoats and the Irwell corridor”

InBrief #1

North West News

MItty Group has raised £1.84 million from Assetz Capital to fund two new mixed-use schemes in Merseyside to transform a 360-year old former barn and row of Victoria townhouses for a residential and leisure development. The residential space is for students and the ground floor will be a restaurant. Adam Mitty commented: “We pride ourselves on restoring listed buildings to their former glory.”

The REAL DEAL

North West News

Judging by the number of deals - and their size - there is a healthy appetite for investment in Manchester.

Advised by JLL, Invesco Real Estate has sold the 10,521 sq metres (113,256 sq ft) One New York Street to Royal London Pension Trust Fund.

The building was completed in 2009 and has 11 occupiers.

James Porteous of JLL commented: “The city centre office investment market has been particularly active with over £600 million transacted up to December and it is likely to exceed 2016 when the deals are completed.

There has been a definite trend towards off market deals and the city is attracting equity from overseas investors."

In another major deal, Schroders’ Regional Office Property Unit Trust has acquired the 2,462 sq metres (26,500 sq ft) 340 Deansgate. Schroders will refurbish the building and reposition it in the market. It has recently also bought the nearby 1 Spinningfields.

QUAY West

North West News

The jewel in the Salford Quays crown, the 40,427 sq metres (435,000 sq ft) Exchange Quay, is now being intensively promoted by Ekistics on behalf of the new owner.

The Place Activation strategy, which has been developed by CBRE and the marketing team at DS Emotion, together with research on occupier needs by joint agents Knight Frank and Canning O’Neill, aims to launch a series of events for the office complex, such as dragon boat racing on the adjacent docks.

Ekistics is starting on another phase of the refurbishment at the 2,415 sq metres (26,000 sq ft) Building No3 with completion due this year.

On behalf of the previous owner, Hunter invested £10 million in refurbishment and it continues as asset manager of the office complex.

The refurbishment lifted the scheme and resulted in lettings of 18,580 sq metres (200,000 sq ft) in a 12 month period.

In nearby Trafford Park, Seneca has bought the 1,858 sq metres (20,003 sq ft) Brightfield House from London & Oriental. Seneca’s Jeff Morton commented: “This purchase followed on from our £20 million acquisition of the Biz-Hub service office business in September and sits alongside several other deals currently in lawyers’ hands."

Also in Trafford Park, JLL is marketing the 4,784 sq metres (51,500 sq ft) Tenax Cross 2. Richard Johnson of JLL said: “With a shortage of units in Trafford Park competing at this size and quality, Tenax Cross 2 will offer an excellent opportunity following its refurbishment for a distributor/ industrial occupier."

The unit suits the current market as analysed by Savills IM that warehouses and logistics facilities are the strongest investment themes in the UK at the moment, particularly on the edge of major urban areas such as Manchester.

Irfan YounIs of Savills said: “The UK industrial sector continues to benefit from the rise in online shopping and the artificial intelligence revolution, increasing demand for facilities and reducing labour costs as automation picks up.”

InBrief #2

North West News

Among the 120,770 sq metres (1.3 million sq ft) of industrial and business parks sold by Dominus for around £100 million to a private buyer is the 1, 390 sq metres (14,957 sq ft) Kayley Industrial Estate, Ashton-under-Lyme; the 391,016 sq metres (4,209,000 sq ft) Walker Park, Blackburn and Grimshaw Park, also in Blackburn.

WHAT’S UP? ....Dock!

North West News

A key moment has arrived at Peel’s vast Liverpool Waters project with development underway after the ground breaking ceremony at Plaza 1821 as part of the construction at Princes Dock.

This first phase of a £21 million, sixteen-storey residential tower is part of a Private Rented Sector scheme by Peel on behalf of Regenda Group and will be the first residential building on the 60 hectares development at Liverpool Waters.

Two other buildings are due to start construction in the docks in the near future. The important point is that the pace is quickening on the £5 billion project with a revised master plan for Central Dock and progress on plans for a new Liverpool Cruise and Isle of Man ferry terminals.

Lindsey Ashworth of Liverpool Waters commented: “2017 was a breakthrough year for Liverpool Waters so it is fitting that the first building starts this new year and 2018 will be a significant year for the project.

Plaza 1821 marks the beginning of an exciting new chapter here."

Also at Princes Dock, KPMG has signed a new lease on its 1,115 sq metres (12,000 sq ft) office, where it is the longest serving tenant in the commercial space. Indeed, there has been a string of companies renewing their leases at the dock.

Chris Fry of KPMG said: “Over the past two decades we’ve been at the docks we have seen the area grow into a vibrant and diversified business community."

As part of the Liverpool Waters scheme, Peel now has planning permission to place eight former shipping containers at Collingwood Dock to be transformed into a visitor trail centre highlighting the history of the North Liverpool and Bottle Docks. The facility will be managed by the Docklands Trail charity focusing on showing schoolchildren and visitors the vital role played by the docks in the local economy.

Ian Pollitt of Liverpool Waters commented: “Much of the land at Liverpool Waters is currently disused dockland. As more and more projects progress past the planning stage and enter the development stage, we are looking forward to sharing even more good news in the future.”

TIME FOR Auction

North West News

One indicator of the strength of the property market in Liverpool is provided by the latest auction by Sutton Kersh with more than 100 lots, or 90% of the total on offer in the February auction, sold.

Cathy Holt of the auction house said: “We realised £7.8 million, which is a fantastic start to the year. The turnout was even better than expected with many properties sold for prices much higher than their guide price.

She said that there was interest from a broader geographical area of the UK and that the buoyancy reflected Liverpool becoming an important part of the Northern Powerhouse.

Cheshire CATCHMENT

North West News

With its easy access to major urban areas in Greater Manchester, Merseyside and even the Midlands, Cheshire is a favoured location for leisure schemes.

One of the latest is David Lloyd’s plan for a £9 million Adrenaline World adventure park at Sandbach on an 18.5 acre site close to Junction 17 of the M6.

Lloyd said: “We have agreed on the name Adrenaline World as there will be more activities than were first imagined, some of which will be on water. He said there were a further nine sites in the pipeline but the company is still seeking brownfield sites of around 10 acres within a 30-minute drive of population centres.

Also in the county, McArthur Glen’s Cheshire Oaks Designer Outlet has started construction of a further 25 units totalling 3,716 sq metres (40,000 sq ft) extension in a £40 million project. This will be the centre’s sixth expansion since it opened in 1995.

McArthur Glen’s Kenny Murray said: “Once complete, visitors will be able to enjoy some 37,160 sq metres (400,000 sq ft) of premium shopping space and an even greater mix of fashion, lifestyle and restaurant brands."

Hotels are also a feature of the leisure scene in Cheshire and the latest deal is the brewer and pub owner, JW Lees, buying the refurbished 52-bed Stannelands hotel at Wilmslow with its 3.4 acres of ground from the Merge Group.

Cheshire is a favoured county for distribution units. Tritax Big Box REIT has bought the 36,017 sq metres (387,541 sq ft) AO World national distribution centre at Crewe for £36.10 million.

Colin Godfrey of Tritax commented: “This dedicated e-commerce facility, which plays an integral role in ao.com’s national distribution network, further diversifies our portfolio by tenant and geography. Against the background of strong tenant demand and the limited supply of modern big box units, this investment offers the potential for attractive rental growth in 2021."

JLL’s Joel Duncan said: “Investor demand for UK logistics assets has been particularly strong over the past few years and this trend continued in 2017 when yields compressed further. Our preliminary estimates for total industrial investment volumes indicate that some £10.2 billion was transacted last year, over double the level of 2016, and marking the highest year on record where our numbers go back to 2006.”

Spinning WILL

North West News

There are so many indicators of the success of Manchester as a powerful regional city economy that it is hard to choose the most important.

One milestone is that the Allied London Spinningfields development is nearing completion.

It has really set the agenda in the city for the past decade and more since Allied boss Michael Ingall’s first proposal in 1997.

Allied has now released two floors on N0 1, Spinningfields on the 15th and 16th floors. Such large scale schemes are necessary for the success of the Northern Powerhouse, a concept that looms so large in the economic future of the North of England.

The fact that £3.4 billion has been committed to Northern Powerhouse projects should go some way to assuaging the critics of the project. In fact Brexit could help the Northern Powerhouse by increasing the UK’s redistribution of power away from London.

Manchester (and Leeds) is equipping itself for the challenge of the concept with new developments, such as the development by Ask and the Richardson family in a joint venture with Patrizia for a 59,675 sq metres (750,000 sq ft) office scheme in First Street.

This takes Ask back to the 20-acre site which it previously sold to Patrizia, which continues to own and manage the retail and leisure space at First Street.

The office development will be in four phases.

Another major scheme is the £175 million mixed-use development of the former Boddington’s Brewery by Prosperity Capital Partners to be named Old Brewery Gardens. Indeed, it will have a large central garden that features an open air cinema.

At the nearby NOMA scheme, MEPC has been appointed by Hermes as development manager for the 20-acre project. Hermes’ Chris Taylor said: “Appointing MEPC is in line with our long-term strategy for the development to create a leading commercial hub in the heart of Manchester.”

Young GUNS BLAZING

North West News

Harry Skinner says ‘In November last year WHR Property Consultants were acquired by Avison Young, a Canadian based commercial real estate services firm with over 2,600 professionals across the US, Canada, Mexico and Europe.

Following the takeover we have relocated into a bigger office at St James Square and now have 38 full-time staff including a new Valuation team enabling us to provide a full service offering to clients.

Avison Young has 81 offices worldwide and we are now working with colleagues in both London and the Midlands which has increased our market reach and contact base across the UK. The office market in Manchester has remained buoyant over the last year with several keynote deals edging towards completion such as Irwin Mitchell and WSP taking large chunks of space in the city centre and whilst these high profile transactions attract the bigger headlines and underpin the take up statistics, it is the sub 5,000 square foot market which continues to thrive with this number of transactions again accounting for 80% of the market in 2017. Landlords who are willing to refurbish tired office space to meet the changing needs of occupiers will be rewarded with rental growth. We have seen in buildings such as 196 Deansgate and Abbey House a sharp increase in achieved rents’.

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