Offices lead in the South West investment market
So far 2015 has been active year in the investment market across the South West region, particularly in the offices sector where we have seen prime yields move in by at least 50 basis points. 66 Queens Square, Bristol was a significant example of this which Skanska sold to Aviva for £32.7 million at a yield of 4.95%.
The retail market remains challenging due to the historic levels of rent and a concern in respect of rental growth prospects. However, we are seeing a rise in demand for both smaller and larger lot sizes, particularly for the units in the best locations where rents have been rebased.
Investor demand for industrial investments remains strong particularly for multi let industrial estates and an emerging distribution sector geared around internet shopping parcel delivery.
Interest in the hotel sector remains robust, with a number of investors looking to secure regional sites. Recently AXA Real Estate Investment completed the forward funding for a 168-bedroom Premier Inn hotel at Cubex Land’s Finzels Reach development in Bristol. Savills advised Cubex in the £17.8 million deal, which reflects a 4.85% yield.
Other sectors that are also looking strong include healthcare and leisure. Overall across the investment market we are seeing good institutional interest from both domestic and international funds.
Going forward we are seeing a number of cranes on the horizon, signalling a return of speculative office development in Bristol, which bodes well for 2016-2017.