Helical Takes Its Manchester Profits And Walks (South)
Listed investor and developer Helical is preparing to take its profits and walk away from the bulk of its Manchester office portfolio as the coronavirus, and a resurgence of interest in south of England opportunities, prompt a rethink.
Helical’s 417K SF Manchester portfolio includes the 59K Fourways building in the Northern Quarter, another Northern Quarter block at 35 Dale Street (54K SF), the Trinity building (59K SF) and the Tootal buildings (245k SF).
The move was foreshadowed by Helical announcements over the summer that predicted London’s global status meant it would bounce back from the pandemic — but conspicuously failed to mention Manchester.
“As we move through the various stages of the COVID-19 pandemic and arrive at the so-called 'new normal', we shall learn how businesses and their staff view their experiences and the productivity of working from home," Helical chief executive Gerald Kaye said. "What we do know, however, is that people are sociable and prefer to congregate together, both at work and at play. It is our view that a large majority of businesses will continue to seek space for their employees to gather in a centralised working environment and that the draw of London, as a pre-eminent global city, will remain.”
Their Manchester portfolio is both relatively small and a poor performer compared to London.
In the year to March 2020 the London portfolio’s valuation increased by 6.4%, like-for-like, with a value of £776.9M and a £31.1M rent roll. Average unexpired lease length in London was 7.8 years. In contrast Manchester’s valuation increased by just 2.9% to £137M, a rent roll of £6.5M and barely four years average unexpired rent.
The sale will not be Helical’s first in Manchester, In December 2018, only months after committing to the city, it exchanged contracts on the sale of its 25K SF 31 Booth Street office building in Manchester, to the Mayfair Capital-managed Property Income Trust for Charities fund, or PITCH, for £11.9M, a net initial yield of 5%, and a 20.5% premium to book value.
In July 2020 Helical announced the refurbishment of the 59K SF Fourways. The reception and atrium has now been substantially completed, providing new feature link bridges between the office floors and modernising the reception area.