Buying secondary space

In an improving investment market, secondary markets in the West Midlands are in line for increased activity.

That is the view of DTZ ’s Money into Property 2011 report which predicts a 4% increase compared with 1% in 2010. DTZ notes that the 4% is modest in comparison with global invested stock which is due a 9% rise this year. Nick Allan of DTZ said of the Midlands market: “The big opportunity is behind us in the UK prime markets. With prime property fairly priced, investors will begin moving up the risk curve, targeting non-core

markets for opportunities.”

This process is being helped by increased lending in the process of banks and institutions working out their debt on property, a process which is well established in prime real estate. Allan said: “Activity in the secondary market is increasing, with opportunistic investors, many of whom raised funds some time ago, keen to invest. More properties have become available as lenders start to take action on defaulted loans. For example, at the end of 2010 Saltley Business Park was sold on behalf of Lloyds Banking Group for £23.285 million for a yield of 9.49%.”

One prime property that could come onto the market is Aegon Asset Management’s 55 Colmore Row. The owner has asked Abstract Land to review the 11,613 sq.metres (125,000 sq.ft.) property which could include a sale. It was leased by the law firm Wragge & Co in the early 1990s.

One deal that has gone through is the sale of the Caxtongate block of retailing in New Street, Birmingham where a client of LaSalle Investment Management has paid Cosgrove Group £16 million through Jones Lang LaSalle and Lewis Ellis for a yield of 6.5%.