Investors favour Manchester – new research
MANCHESTER proved to be the most popular destination for investors outside of London in the first quarter of the year, according to Knight Frank’s latest research.
Total office investment volumes reached £182m with M&G’s purchase of 3 Hardman Square at £92m the most significant transaction.
The report also confirms Manchester now commands a premium over the UK’s other core markets at 5% and prime headline rents remain under upward pressure.
David Porter, head of Knight Frank’s Manchester office said: “Manchester is the best performing location outside of London and continues to see high levels of occupier demand, not just from indigenous companies expanding within the city, but from occupiers considering Manchester for the first time.
“This demand is proving attractive for institutional investors, demonstrating that Manchester is a seen as excellent location to recruit, retain and grow a company’s business. The City’s access into a skilled workforce and it’s unparalleled connectivity are real driving factors behind this.”
Assessing 10 regions across the UK, the research also showed that the substantial weight of money targeting regional offices has led to further yield compression in the regions – giving a 175 bps spread of prime yields, the largest seen in over 10 years (since Q4 2003).
While the regional occupier market got off to a slow start in Q1, investor appetite for regional office stock strengthened across the UK, with turnover in the investment market reaching £1.48bn in Q1 2015. This was almost double the turnover during the same period last year, 5% higher than the previous quarter and the highest single quarter since Q4 2006.
