Manchester property markets remain investment hotspots

MANCHESTER’S retail and industrial property markets continue to be rated as hot prospects for investors, according to DTZ.

Its latest Fair Value Index rated all 20 of the markets it covered as either “hot” or “warm” as prime property has proved to be more attractive due to the difficult economic climate.

DTZ said pricing in the property sector is the most attractive it has been for investors since mid-2009.

Russell Hefferan, associate director in DTZ’s Valuation team in Manchester, said: “Positive news for the North West region continues following the results of the latest Fair Value Index report as both Retail and Industrial remain a ‘hot’ market for investors.

“Prime retail yields have moved out to around 5.50% and with highest average annual rental growth forecast over the medium-term, demand from investors is likely to increase.

“The industrial/logistics prime market continues to show signs of improvement as a flight to quality has arisen, resulting in supply dwindling and negotiations beginning to favour the landlords in respect of incentives and length of income secured.

“Similar activity is evident within the office market for Grade A accommodation. This is again due to limited in supply with the proposed One St Peter’s Square providing the only current major office development ongoing in Manchester, with completion not expected until 2014.”

Meanwhile, Jones Lang LaSalle’s latest Industrial Property Trends report highlights the growing gulf between prime and secondary property valuations in the sector.

It states that 70% of the 57.7m sq ft of industrial property available in the North West is under 100,000 sq ft – and much of this is secondary space in undesirable locations.

The firm said demand for new stock of all sizes remains strong, with headline rents holding steady – at £5.75 per sq ft in south Manchester and Trafford Park, £4.50 in Liverpool and around £5.50 in Warrington.

“However, there is still an oversupply of poorer quality second-hand stock across all size ranges and it remains a tenants’ market, with flexible terms and considerable incentive packages still available,” said Daniel Burn of JLL’s industrial agency team.

The amount of sub-100,000 sq ft secondary industrial space available is equivalent to around four years’ current demand, JLL said.