North West sees hike in office investment

Almost £317m was invested in the North West office market in the first six months of 2010, according to CB Richard Ellis’s latest Manchester Offices Market View.

The figure is a significant increase on the same period in 2009 when just £46m was transacted.

One of the most significant deals to complete during the first half was Aerium’s purchase of 3 Hardman Street, Spinningfields, for £180m, reflecting a net initial yield of 6.25%.

Rehan Zaman, associate director in the Capital Markets team at CBRE’s North West, said: “The market in the first half of the year saw a robust recovery in office values. The recovery in Manchester has been stronger than in other regional cities as vacant space has become so limited, creating scope for real rental growth. Manchester has therefore become the firm favourite for investors seeking office assets outside central London.”

In terms of take-up, CBRE expects 2010 to be a record year, with figures set to exceed 1m sq ft for the third time in 10 years. During H1 2010 city centre take-up reached 337,800 sq ft, compared with 247,000 sq ft in the same period last year. Grade A take–up accounted for 102,500 sq ft.

At the end of June 2010 the total availability in Manchester was 2.5m sq ft, up from 2.4m sq ft 12 months ago.

Will Kennon, associate director of Office Agency at CBRE North West, said: “At the end of H1 2010, there was evidence that net effective rents were on the increase for Prime Grade A accommodation, with the market shifting to a shortage of supply for large CBD floorplates.

“However, with the possibility of an unexpected addition of up to 180,000 sq ft returning to the market at 3 Hardman Square [following the collapse of law firm Halliwells], it is likely that this anticipated market shift may be slightly delayed.”

samantha.mcclary@estatesgazette.com