Peel L&P to sell £40m Salford Quays office 

Harbour City is being sold following a £9m refurbishment and a raft of lettings in recent months. 

Peel L&P has appointed CBRE to market the Salford Quays asset, comprising 182,000 sq ft, and seek offers of £40.3m. A sale at the asking price would reflect a net initial yield of 10%. 

Harbour City, billed as Greater Manchester’s most successful out-of-town office development comprises two buildings – The Alex and The Vic – and is let to the likes of Bupa, M&S, RAC, Tech Mahindra, and the DWP. 

The Vic is a 123,148 sq ft office building arranged over nine floors and was recently refurbished. Rents are currently around the £17/sq ft mark but there is an opportunity to secure “substantial capital growth” through additional renovation to push that towards £25/sq ft, according to CBRE. 

The Alex is a five-storey office building totalling 58,944 sq ft. A multistorey car park adjoins the scheme.  

Mike Pochin, director at CBRE, said: “This is an exciting opportunity to acquire one of Greater Manchester’s most successful office buildings over the past two years and access material capital growth via rental growth and yield compression as the asset reaches full stabilisation.  

“The blue-chip occupier lineup of recently committed tenants is a testament to the high quality of the asset and the Salford Quays location. The rental tone offers significant day one reversion, with further rental growth achievable via rolling refurbishment.” 

Pochin added that a lack of office stock at Salford Quays presents an opportunity for would-be buyers. 

“Salford Quays is a vibrant and successful submarket that consistently outperforms established regional city centre markets in Liverpool, Sheffield and Newcastle. As an office market, it is increasingly undersupplied, with many older buildings repurposed for residential use, and new build development is challenging against a backdrop of build cost inflation, increased financing costs and higher cap rates. 

“Harbour City is, therefore, exceptionally well positioned to be market-leading throughout the next cycle.” 

A spokesperson for Peel L&P said: “A recent £9m investment into The Vic and Alex has transformed them into prime, grade A office space verified as net zero carbon in operation, attracting a raft of high-profile occupiers. 

“The sale of these buildings presents a fantastic opportunity for an investor and will enable us to support future investment into regeneration projects, creating further jobs and opportunities.”