For the second quarter of 2018, the Yorkshire commercial property has had more than £500m in assets change hands. The commercial property market in Yorkshire grew at a faster rate in comparison to the wider Northern Powerhouse (Manchester, Liverpool, Leeds, Sheffield, Hull and Newcastle).
In fact, according to Lambert Smith Hampton’s latest UK Investment Transactions (UKIT) report, Yorkshire’s commercial property market experienced the highest volume recorded for almost three years, up 32 percent year-on-year with £523m assets sold in the second quarter. This compares to an uplift of 7 percent over the same 12-month period across Yorkshire, the North East and North West combined.
The majority of transactions were seen in the office market, which accounted for 45 percent of the activity or £235m in money exchanged. The volume of investment was more than double compared to the previous quarter. Some of the deals included Brockton Capital’s £63m purchase of The Pinnacle, a 145,000 sq ft office building in Leeds city centre, and APAM’s £26.6m purchase of Acero, an 80,000 sq ft multi-let office building at Sheffield Digital Campus.
Lizzie Murphy from the Yorkshire Post observes that investors seeking both value and up-front return could find well-located regional offices increasingly appealing in the current market. The relaxation in permitted development and a relatively weak development cycle has kept supply levels in check.
According to the UKIT report, the second most sought after asset class was the industrial sector with £109m transactions (accounting for 21 percent of the total investment volume). Deals included Aberdeen Standard Investment’s £39m forward funding of a pre-let of Logic, a 361,000 sq ft industrial unit in Leeds and Harworth Group’s £32.45m purchase of a 12-acre site at Wyke, Bradford.
Activity in the alternatives and retail sectors was largely in line with the first quarter, with £97m and £82m of assets transacted accounting for 19 per cent and 15 per cent of total investment volume respectively. Major deals included Aberdeen Standard Investment’s £17m purchase of Mabgate Gateway, a 107-bed PRS scheme in Leeds and Supermarket Income REIT’s £53m purchase of a 98,000 sq ft Tesco Extra supermarket in Scunthorpe.
UK Institutions were the major buyers in the Yorkshire commercial property for the first half of 2018, accounting for £225m of total activity or 43 percent. Compared to the overall activity in the Northern Powerhouse, UK Institutional Investment in Yorkshire accounted for 26 percent of the transactions.
When considering investment in commercial property across the Norther Powerhouse during the second quarter, total assets that changed hands was £1.27bn. This is down 18 percent from the previous quarter, but up 7 percent year-on-year.
Now the question arises, will regional offices become the sector of choice for investors seeking good returns? In our opinion, yes, there are strong commercial investment opportunities in Yorkshire for savvy and flexible investors seeking good returns.
