Investment in the Manchester commercial property sector in the first half of the year reached £282.4m, down 53% on the same period in 2014, according to Knight Frank’s latest research,
While the first half recorded the highest number of deals over a six-month period since 2004, the market was characterised by low to medium-priced assets up for sale and limited prime stock, which ultimately had an impact on total investment volumes.
The largest deal in H1 occurred in the first quarter and involved the purchase of 3 Hardman Square by M&G Property Portfolio for £91.73m, reflecting a net initial yield of 5.79%.
Take up of office space in Manchester reached 679,000 sq ft in the first half of 2015, the highest of all regional cities outside of London, according to Knight Frank.
A total of 153 transactions were completed, averaging at 4,435 sq ft and representing a 23% rise on the last half of 2014.
The number of active requirements however fell to its lowest since the third quarter of 2011, although take-up in the second quarter was 13% higher than in Q1.
Firms in the professional services sector were among the most active occupiers in H1, accounting for 48% of total take-up. Other key sectors included organisations in finance, banking and insurance, and retail, distribution and transport, which accounted for 15% and 14% of the total respectively.
Prime office rents are expected to rise to £33/sq ft by the end of 2015, and are forecast to continue to rise as a number of new office developments near completion.
Steve Carrick, partner in Knight Frank’s investment team added: “The second half of the year is expected to show an improvement in investment volumes, with a number of office developments already attracting high levels of interest from investors.
“While investment activity appears to have slowed compared with last year, Manchester is likely to have another year which sees inward office investment exceed other major regional centres.”
David Porter, head of Knight Frank’s Manchester office said: “The market is currently experiencing buoyant levels of activity, and we could see another year of over 1m sq ft of take-up. While the number of active requirements has fallen, levels of take-up are expected to remain robust. Many of the current schemes under construction have good levels of interest and should see lettings prior to completion. This could trigger further development in 2016 and 2017.”