North West commercial property investment at two-year high

The total value of commercial property investment transactions in the North West is at its highest level for two years, according to Lambert Smith Hampton.

The commercial property consultants found a 38% increase in investment - to over £292m - in the past quarter.

This is more than double the investment of this time last year, with activity dominated by Crown Estate’s acquisition of The Colisuem Shopping Park at Ellesmere Port for £80m, accounting for 28% of total investment activity.

Other key deals included Oaktree Capital Management and Moorfield’s acquisition of 100 Barbirolli Square, Manchester for £41m, LaSalle Investment Management’s acquisition of the shopping centre at Church Square, St Helens for £27.73m and Canada Life Assurance’s acquisition of Grand Central, Stockport for £22m.

Abid Jaffry, director and regional head of capital markets at LSH, who commission quarterly UK investment transactions research, said “The number of key transactions completed in Q2 2013 highlights the growing appetite for investment in the region.

“The major investors within the North West were UK Buyers, accounting for 93% of the quarterly total, as they seek value away from the ultra competitive Central London market. However, there is still the problem of a lack of prime stock to satisfy the growing number of requirements.”

Ezra Nahome, CEO of LSH, added that Central London offices still remain the most popular asset class - accounting for over 50% of the total UK investment - but demand for regional stock is increasing, with £3.24bn invested in commercial property outside of London in the past quarter.

This move towards the regions comes in conjunction with a drop in the average deal size, from £28m in Q1 to £16m in Q2, and an increase in trading in small to medium assets. LSH recorded double the number and volume of deals for assets between £10m and £30m in Q2 in comparison with Q1.

Concluding, Ezra said: “London will remain the driving force behind the market for the rest of 2013, with demand sustained by overseas money. However, investor appetite for regional stock is also expected to increase as the economic recovery, combined with attractive pricing and a gradual easing of the debt market have led to an improvement in sentiment.”

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