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The North West 2020 Annual Survey

Industrial and logistics companies top the investment market in 2019 Andrew Richardson, Partner and Head of Manchester office at Ryden

The industrial and logistics sector was at the top of the list for investors in 2019, and interest in the first few weeks of 2020 shows little change in this respect. This is the result of three key factors.

First, a resilient occupier story across most types of industrial property. Second, rental growth, which is not universal and inconsistent, but real nonetheless. Last, Brexit uncertainty, which led to UK institutions to be less active and provide more opportunities for private investors.

Ryden currently has six transactions in legal hands, and several close to agreement. All of them in this sector and encompassing all shapes and sizes of units.

Demand for modern industrial investments below £1.5m is very strong. We are selling a small detached prime industrial 12,000 sq ft unit with two years unexpired let off £5.00 psf at sub 6.5% net initial yield, and a capital value around £75 psf. Rental growth is real for these smaller units as supply has not matched demand in the best locations.

In the secondary market, we are acting for traditional property companies on four/five transactions, all driven by capital value with ready demand for units or estates below say £35 psf, in towns like Haydock, Bolton, Bootle and Lancaster. The occupier story is the same: a limited supply of cost effective space.

Tenants and owner occupiers also compete against investors, as we’ve seen in Rayburn Trading Companies’ purchase of Bury Point for £6m equating to £40 psf.

CBRE Confirms Letting At Core in Manchester

Acting on behalf of Boultbee Brooks, the Office Agency team at CBRE secured a letting to the UK’s largest hiring platform, Totaljobs at CORE, a fully refurbished Grade A office building on 30 Brown Street, in Manchester. Knight Frank advised Totaljobs on the acquisition of the entire second floor of CORE, comprising 8,769 sq ft. The building has recently undergone a full refurbishment to offer more than 50,000 sq ft of Grade A office space across five floors. CORE is designed to help forward thinking businesses who are looking for adaptable and creative space which promote open collaboration and teamwork.

CORE's new layout actively encourages modern working. Having Work.Life on the ground floor, occupiers are never far away from a breakout area, meeting room or communal workspace, offering a number of flexible, yet productive solutions. In addition, the ground floor of the property offers an eclectic mix of food and drink options further promoting a casual working environment.The building

is located in

the heart of Manchester's financial and professional quarter Salford Central and several Metrolink stations are also close by. OBI are joint letting agents with CBRE.


Legal & General Acquires BTR Tower

Legal & General (LGIM Real Assets) announces

that it has exchanged

contracts on a new Build to Rent (BTR) tower “North Tower” in Deansgate Square, Manchester. The acquisition, which is in line with LGIM Real Assets’ strategy to strengthen its exposure to alternative and operational sectors, has been made on behalf of its two largest balanced funds, the UK Property Fund and the Managed Fund, in a 50:50 ownership structure.

The deal represents the

Managed Fund’s first BTR acquisition as part of a sustained push into alternative sectors. Previous investments include the

purchase of hotels, healthcare

facilities and student accommodation. The Managed Fund, launched in 1971, has grown by £2bn in the last six years to a current value of £3.4bn.

For the UK Property Fund, this acquisition represents a further strengthening of its exposure to operational assets. Since its launch in 2006, the UK Property Fund has grown from £100m to around £3bn today, with its success underpinned by a blended and high quality portfolio of assets.

Mediacity’s First Buld-To- Rent Scheme Opens its Doors

MediacityUK’S first Build-to-Rent (BTR) scheme, Duet – a luxury development of 270 residential apartments, has opened its doors to residents. The new development spans across two 15-storey towers and features one, two and three bedroom premium apartments in a prime waterfront location next to the Harbour City tram stop. The building is the latest joint project from Moorfield’s BTR brand, More, developer Glenbrook Property and specialist rental operator Allsop and follows the successful launch of Manchester’s The Trilogy in 2018, which is now fully occupied.

Available exclusively to renters, occupants will be able to enjoy unrivalled facilities designed to deliver both convenience and a community feel. Residents will enjoy free access to an on-site gym and fitness centre, 24-hour concierge, communal podium garden with waterfront views, a co-working space and residents’ lounge with a free coffee bar, as well as an exciting calendar of residents-only events – including Friday drinks and pet socials. Apartments are available in furnished and unfurnished options and come in stylish designs, with inbuilt

appliances, premium packages and modern designs. COMMERCIAL PROPERTY MONTHLY 2020 furniture

In the logistics market, there is a split between prime and secondary, with local authorities filling the gap for prime left by the funds with yields moving back from sub 5% to 5 to 6%. Covenant strength and lease length are more significant than 12 months ago, and it will be interesting to see if these local authorities continue spending.

Overseas investors have become active too. We are acting for a Middle Eastern buyer seeking 10 year + income, and a US investor seeking short income on good secondary but well located sheds, buying on capital values below replacement cost ie below £70 psf. In the secondary market, pricing is more sensitive to issues such as eaves height, site density and potential capital expenditure.

In conclusion, a strong investment across the industrial sector is set to continue, but pricing has to reflect quality. Valuations are being written down by owners that need to sell, and this is likely to increase. The weight of money to buy will continue as local authorities, overseas investors, well financed but `starved` property companies, and smaller funds compete.

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