Henderson upbeat over Zenith prospects

A new lettings strategy will see the Manchester city centre building fully let within six months, according to Marcus Langlands Pearse, fund manager at Henderson Global Investors.

Following its first prime Manchester acquisition, from Bill Wrather, Henderson has quickly announced rents will be slashed by as much as 50%.

The 66,000 sq ft of offices on Spring Gardens, above the Post Office, were refurbished in 2007 but are still only 60% let. The building was sold for around £24m by Wrather to Henderson's open-ended publicly quoted UK Property Unit Trust, in which shares are traded daily on the London Stock Exchange. Henderson says this structure means that cash liquidity is paramount to the fund and the building ought to have sufficient value to be sold at any time, although a medium-term hold of at least three-to-five years would be the norm.

The historic quoting rent of £28.50/sq ft will be cut to between £12.50/sq ft for the mezzanine over the ground floor rising to £23.50/sq ft on second, third and fourth floors. The uppermost vacant floor, the seventh, will be reserved for closer to the original £28.50/sq ft.

Marcus Langlands Pearse, fund manager at Henderson, said: "We will bring rents down to market level and then drop them a little bit further. We have a six-month goal for being fully let. There is really no reason why a building of this quality should not be fully occupied."

Langlands Pearse said he had shopped for office buildings in Manchester before and considered purchases in Spinningfields among other sites but saw "ex-growth" prospects.

He said Manchester compared more favourably than London in terms of likely rental growth and he had looked at Edinburgh, Glasgow, Leeds, Bristol and Birmingham before making Manchester the fund's "prime target".

Zenith was brought to Henderson's attention by Steve Carrick, investment partner at Knight Frank in Manchester. The vendor, developer Bill Wrather, had, said Langlands Pearse, become too proudly attached to the building and held out for high rents at the expense of doing more flexible deals in a buyer's market.

Existing tenants include Octapharma, fit-out firm Overbury, recruitment agency Robert Half and Cushman & Wakefield.

Lettings agents on the building are Knight Frank and CB Richard Ellis.

Law firm Hill Dickinson advised Wrather Group.