Peel’s landmark multi-let office scheme, Harbour City in Salford Quays, has been brought to market by CBRE’s Investment Properties team in Manchester. Over 180,000 sq ft of Grade A offices in two buildings has been launched for sale with a quoting price of £40.30m, reflecting a net initial yield of 10%.
The investment opportunity to acquire Greater Manchester’s most successful out-of-town office development, comprises two Grade A office buildings totaling 182,092 sq ft (The Alex and The Vic) and an adjoining multi-storey car park set in a prominent waterfront position in the thriving international business and leisure destination of Salford Quays.
The scheme, which is within walking distance of MediaCity and benefits from a dedicated Metrolink Station, has attracted six new lettings totaling over 60,000 sq ft in the last two years. Harbour City is home to multiple blue chip tenants, including Bupa, M&S, RAC, Tech Mahindra and the Department for Work and Pensions, reflecting the asset’s status as best-in-class.
The Vic, a 123,148 sq ft office building arranged over basement, ground and eight upper floors has benefited from a £9M refurbishment programme to modernise the office accommodation, creating an attractive and sustainable working environment. It also includes a waterside communal area with green spaces. There is an opportunity to secure substantial capital growth via additional renovation works to further enhance and futureproof the asset, driving the rental tone towards £25 psf from the current low base of £17 psf. The Alex is a landmark five storey office building totaling 58,944 sq ft with a prominent entrance and reception area. The building is situated on a landscaped site with paved piazza to the waterfront.
Adjoining the scheme is a multi storey car park which delivers a car parking ratio that outperforms most out-of town business parks (up to 1:250 sq ft) with additional car parking let to Bupa on a long term lease and neighbouring residential occupiers. No guarantees will be provided on the surplus car parking spaces, providing significant value add potential.
Mike Pochin, Director, CBRE Investment Properties team commented:
“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 line up of recently committed tenants is 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.”
“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 under-supplied, 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 £9million 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 including the RAC, M&S and The Department of Work and Pensions. 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.”