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News - 03/05/2018

Flying start to the year for yorkshire's investment market

Analysis of our latest UK Investment Transactions (UKIT) data shows that £411m of commercial property assets changed hands across Yorkshire in the first quarter of 2018, up 27% on the same period in 2017 and the strongest first quarter for four years.

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Number of deals increases 

Reflecting the productive start to the year, the total number of deals was also 48% above the same period in 2017, albeit the average deal size fell from £9.8m to £8.4m.

Industrial sector rebounds

Interest in Yorkshire’s industrial sector rebounded from the somewhat muted Q4 2017, with £121.6m worth of industrial deals in the first quarter, underpinned by Columbia Threadneedle’s purchase of the Network North portfolio for £41.9m, which included assets in Barnsley, Rotherham, Hull, Sherburn-in-Elmet and Castleford.

Offices see strongest quarter in two years

The real show stopper however, was the office sector which, at £103m, saw its second strongest quarter in two years. Deals included Mayfair Capital’s £37.2m acquisition of 6 Queen Street in Leeds on behalf of Swiss Life and M&G Real Estate’s purchase of 3 St Paul’s Place in Sheffield for £24m.

Investment into alternatives continues

The theme of strong investment into alternative asset classes, which includes segments such as PRS, student accommodation and hotels and leisure, also continues unabated. With a volume of just under £100m, the sector was 44% above the same period in 2017, boosted by Grainger Plc’s £32m acquisition of Eccy Village in Sheffield, a PRS scheme which will comprise more than 230 homes.

Conversely, the once-dominant retail sector remains patchy, with just £87.3m worth of deals crossing the line in the first quarter. This is almost half the volume transacted in Q1 2017, reflecting high levels of investor caution.  

UK institutions dominate volume

At £45m, investment from UK private companies was relatively subdued in Q1, marking its worst quarterly performance in 15 months, and down 37% year-on-year. In contrast, UK institutions purchased their third highest volume in four years at £166m.

Luke Symonds, Capital Markets – Yorkshire, commented: “Yorkshire’s commercial property investment market has had a flying start to 2018, with volumes returning to pre-EU Referendum levels and the reappearance of several big ticket deals in the industrial and office sectors.

“It’s also really encouraging to see locations such as Sheffield, becoming a target location for PRS and student accommodation schemes. This will hopefully offset the ailing retail sector which, despite showing an improvement from Q4 2017, remains a volatile asset class as evidenced by UK stalwart ‘Toys R Us’ falling into liquidators’ hands.”

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