A SURGE in demand for logistics centres and residential schemes like student apartments has dominated commercial real estate deals in the East Midlands in 2022.
They accounted for 85% of all transactions in the first half of this year, according to our latest Market Insite snapshot review of activity across Nottingham, Derby and Leicester.
Although the total investment volume of £1.044 billion was slightly down by 14% on last year’s record-breaking figure, it was still significantly up on the five-year rolling average, by 34%.
Ben Robinson, Innes England investment director, said: “Following record levels of commercial real estate investment in the East Midlands in 2021, the first half of 2022 has continued in much the same fashion.
“We are still seeing very competitive bidding in the sub-£5m market, particularly in the industrial and beds sectors. Again, that market has dominated the activity.”
It’s the first time we have published a mid-year report, following the 15-year success of our annual review of the market across Nottingham, Derby and Leicester that provides a valuable insight into a range of sectors including office, industrial, retail and investment markets.
The report highlighted these key logistics deals in the East Midlands this year:
- ICG Real Estate’s £101m purchase of more than 500,000 sq ft of state-of-the-art logistics space at Mercia Park in Swadlincote
- Urban Logistics REIT’s £41m acquisition of the 670,000 sq ft East Midlands Logistics Hub near Melton Mowbray
- Realterm Global’s £19m purchase of the 240,000 sq ft facility at Forbes Close in Nottinghamshire
A number of key purpose-built student accommodation (PBSA) deals in Nottingham took place, including Bricks Group’s £70m purchase of the 783-unit student scheme on Bath Street, Nottingham, at the former Royal Mail sorting office.
Other PBSA deals in the city were the £59.8m sale of a 483-unit student accommodation on Ilkeston Road to UBS; Unite Group’s £34m forward funding of a 270-bed student scheme on Lower Parliament Street and Patron Capital’s £24.5m purchase of a 420-unit student accommodation scheme at Madison Gardens.
Meanwhile, the report highlights investments at Derby’s Pride Park - widely regarded as one of the most successful business parks in the UK and home to prominent companies like Rolls-Royce and Toyota. Assets brought to market there include the Travelodge, for £5.1m, and Euro Garages & MKM Supplies for £7.6m.
Other notable industrial transactions in Derby included BMO’s purchase of Orion One & Two at Markham Vale for £44.5m, PCT HealthCare’s purchase of a purpose-built warehouse at Horizon 29 for £17.9m and Northern Trust’s purchase of Raynesway Park for £9m.
Leicester continued its industrial focus with the conclusion of another forward funding deal at Cross Link 646, regarding two industrial units totalling 128,000 sq ft being purchased by London Metric for £16.0m, reflecting a 4.5% yield.
The living sector in the city saw a number of forward funding deals, including Saxon House, the former HM Revenue and Customs building where Oblix Living has sold a 102-unit scheme for £25m and Cinnamon Care Collection’s purchase of a 73-bed care home scheme on Uppingham Road from Charterpoint Senior Living.
Nottingham’s office sector remained popular with investors, with deals featuring Corum’s purchase of EON’s Trinity House HQ for £28m in May.
And Nottingham’s out-of-town business parks saw significant transactions, such as Specsavers’ £13m purchase of The Arc on NG2 Business Park for part occupation and part investment, the Speedo House £8.6m sale to KJS and PMW Property’s purchase of The Curve for £5.63m.
Said Ben: “These transactions demonstrate that there remains plenty of investor demand for city centre offices and well-connected business parks, despite the much talked-about shift to hybrid working patterns brought on by the pandemic, which some commentators expect to temper office returns.”
Matt Hannah, Innes England managing director, said: “We are seeing significant investment in the East Midlands commercial property market and this is an ideal time for our dedicated investment department to take stock of how things are evolving.
“Many clients will be reviewing their investment criteria mid-year to see where they've been allocating funds and to consider where their focus will be in the latter half of 2022.”
To receive a copy of the report, please visit - https://www.innes-england.com/assets/downloads/Mid-year_Investment_Insite_2022.pdf