As prices in the London commercial property market in London continue to soar, investors are increasingly turning to the leading regional markets.
One of the prime locations is Manchester, with investment managers at Schroders now actively seeking opportunities within the North West’s largest city following the recent acquisition of City Tower.
The reason Manchester is a key target for Schroder, explains office investment portfolio manager Tom Newman, is really very simple. Since the start of this year, inward investment from companies such as Autotrader, Ford and Towergate Insurance has seen take-up within the city reach 800,000 sq ft – a figure which is already double the total figure for the previous calendar year.
Mr Newman says; “We think it’s the one city that stands apart from the rest – there are opportunities in Leeds but we haven’t believed the rental growth story at the moment.
“London is saturated, there’s not enough space and it’s hugely expensive.
“In the occupational market sentiment has picked up in line with the investment market; Manchester has been an example of a regional city where occupational sentiment has really started to grow.”
Another reason for Schroders’ interest in the Manchester market is increasing rental values, which have seen top rents in Spinningfields return to a pre-recession peak of £32 per square foot in recent months. Even the firm’s City Tower has seen rents climb since the £132 million acquisition deal, with rents varying from £18 – £30 per sq ft depending on the floor.
Yet Schroders wishes to further lift interest in the City Tower by making a number of improvements to the office space and retail units included in the deal. In total, City Tower includes the 30 storey tower itself, along with a 185 bed hotel, 22 retail units and the 80,000 sq ft property at 2 New York Street.
Former owner Bruntwood made a number of improvements to the New York Street side of the complex, but unfortunately campaigners have now begun to draw attention to the repairs and upgrades required on Piccadilly Gardens. Many wish to see the concrete “Berlin Wall” bordering the City Tower to be beautified and an improved level of maintenance on the lawns and benches spread around the popular area of Manchester city centre.
Mr Newman confirmed that the firm’s long term goal is to respond to campaigners’ requests, saying; “What Bruntwood has done on New York Street is great and we feel, in order to enhance the office offering that the retail on Piccadilly Gardens could and should be improved.
“But improvements will depend on what happens in Piccadilly Gardens.
“It’s all about getting the right customers in the door – we’d like to have more of the New York Street style on the Piccadilly side but this is a long term strategy.”
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