Lambert Smith Hampton’s latest UK report commercial property report reveals investment volumes in the North West in the first half of 2108 hit £1.4bn. Tony McDonough reports
Liverpool City Council’s purchase of the Central Station shopping mall was one of the key retail deals in the North West commercial property market in the first half of this year, a new report shows.
Lambert Smith Hampton’s (LSH) latest UK Investment Transactions (UKIT) report reveals investment volumes in the region during the six-month period hit £1.4bn, exceeding the first half of 2017 by £250m.
The city council acquired Central Shopping Centre in a deal believed to be worth up to £17m. The estate comprises 17 retail units generating a total income of £860,000 a year. The authority sees the facility as part of the gateway to the £2bn Knowledge Quarter.
In terms of investment totals, the retail market in the North West remains largely consistent with quarter two transaction volumes at £94.48m ( compared with £105 million in Q1).
However, the report adds this can be attributed to only a handful of deals and there remains a great deal of investor caution in the market.
Office transactions accounted for 31% of the total investment volume in quarter two, which was dominated by core plus deals, compared with the long income deals of the previous quarter.
Industrial remains high on investor wish lists due to anticipated rental growth and average yields have been falling as better quality industrial assets have changed hands, according to the LSH report.
Despite the North West’s continued lack of stock, significant deals have included Olympic Court in Salford for £10.8m (with a yield of 4.6%) and the ENZA Building and Grandstand in Warrington which sold for £4.9m (4.75%) and £8.9m (4.9%) respectively.
Investment volumes in the alternative market, which includes residential, student, hotel and leisure, have increased at the half year point, largely due to the first quarter of 2018 being one of the strongest on record.
Alternatives are expected to outperform all other sectors by the end of the year, thanks to a number of significant schemes being under offer.
Ben Roberts, director in the Capital Markets team at LSH in the North West, said: “At the half year point the North West is performing well and certainly better than the same period last year, but we must temper the story a little, as some very sizeable deals in quarter one are largely responsible for this.
“Quarter two is a more accurate reflection of where the market is at and, with squeezed stock levels and downward pressure on yields continuing, stock selection will continue to be very important for investors.”