After increasing interest from international investors Bruntwood has sold Manchester’s 30-storey City Tower to asset manager Schroder for £132m — seven million above the regional landlord’s asking price.
The sale of the 615,000 sq ft tower is the biggest office transaction in the region since the Co-op Group’s new headquarters building, One Angel Square, was sold for £142m last year. The City Tower deal comes just six months after Bruntwood’s £16.6m disposal of Manchester’s No 1 Portland Street to Cordea Savills.
In a stock market statement Schroder said it had acquired the building through the Schroder Real Estate Investment Trust, which will hold 25 per cent in the property, and two of its managed funds, Schroder UK Property Fund and Immobilien Europa Direkt.
City Tower is fully let to tenants including Indian outsourcing firm Aegis and recruitment specialist Hays. Bruntwood also has its headquarters there. Until last year the data centre business, UKFast, occupied the top two floors before moving to its new Hulme headquarters, but it still holds a lease at City Tower.
Duncan Owen is head of property at Schroder Property Investment Management. “Bruntwood has already made significant improvements through an extensive refurbishment programme,” he said. “We believe there is further opportunity to deliver rental growth for this element of the asset in the future, underpinned by improving occupational demand.”
Still run as a family firm, Bruntwood bought the former Sunley Tower in 2004 as part of a £65m purchase of the run-down Piccadilly Plaza site. In 2008 it invested £38m in a revamp. Chief executive Chris Oglesby confirmed the office property and its three-acre site had attracted significant international interest.
“We are delighted to have been able to identify a purchaser that paid a good price and could acquire this complex asset in a reasonably tight timescale,” Oglesby said, while adding that the capital from the sale will be recycled, “allowing us to continue to deliver our substantial development pipeline in Manchester and at sites such as Alderley Park”.
Bruntwood acquired Alderley Park through its interest in Manchester Science Parks earlier this year. It is also looking to develop a housing project at Booths Park, near Knutsford, Cheshire.
“We were also delighted to find an organisation that will be a responsible owner of this important asset for Manchester and be a great addition to the investor base of the city,” added Oglesby. “We look forward to working with Schroder, as we maintain the ongoing property management of the building and to continue to serve the customers at City Tower.”
Bruntwood currently owns and services more than 110 properties across Manchester, Liverpool, Leeds and Birmingham. Its property marketing director, Colin Sinclair, said that a number of investors now saw Manchester and the North West as the natural rival to the capital.
“The Manchester market has heated up to an unbelievable extent,” Sinclair added. “It’s all credit to Manchester which now has a lot of global interest which doesn’t really apply to other areas outside London.”
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