Investment property disposals bode well for the region’s investors

COMMERCIAL and industrial property in the East Midlands can still offer investors a healthy return on their investments despite the challenging economic environment. That is the view of commercial property agent Innes England which has recently undertaken a raft of investment disposals in the region – including the sale of an investment in a prime industrial site near Junction 28 off the M1.

Acting on behalf of Quinn Plastics, Innes England sold the investment of a 69,682 sq ft modern warehouse at Clover Nook Road on the Cotes Park Industrial Estate in Alfreton.

The unit, currently let to Chromalloy UK for a period of 10 years, attracted several bids.  However, following detailed negotiations, a preferred bidder was identified and the property was sold for a figure representing a net yield of 8.9 per cent.

This deal concluded a number of disposals undertaken by Innes England on behalf of the same client, including two similar transactions at Gateway 28.

Scott Osborne, associate director at Innes England, said: “This latest disposal was evidence of the investment opportunities which still exist in commercial and industrial property in the East Midlands.

“During 2012, £2.587m worth of industrial investment properties were transacted throughout the UK.  Although this number was down from the 2011 level (£3,322m), it still represents over 8% of the total commercial property investment market. The banner of ‘industrial’ property covers a wide range of buildings from warehouses to multi-occupied estates.

“Across the East Midlands region, prime yields in the sector remain stable in Nottingham and Derby (7%) but improved slightly in Leicester down from 6.75% in 2011 to 6.5% in 2012. It would appear that the sector is holding up well.

“One of the key attractions to investors is the ability to ‘manage’ the asset. At first glance you might expect purchasers to want property which is ideally fully income producing with a strong tenant and let on medium to long term arrangements. That is not always the case. Prospective purchasers will continue to look for opportunities where there may be shorter term leases or even vacant units, which will enable them to manage the asset by renegotiating leases and filling vacant units, and consequently increase the value of the property.”