Police investigating the stabbing of three people at the Arndale Center raided a house north of Manchester.
Officers plunged into Rochdale Road apartment around 6 pm yesterday.
Teams of skin scientists are thought to have spent about five hours searching the home of the 40-year-old suspect.
This morning, the police confirmed that a search had been conducted in a secret location in Manchester where the suspect previously lived.
Rochdale Road's neighbors told the Manchester Evening News They immediately recognized the suspect when footage of his arrest by armed officers began circulating on social media.
He is thought to have lived on the property for about 12 months.
The investigation is now conducted by the anti-terrorist police.
The officers are trying to establish whether the man had any political, religious or ideological motivation for the attack, although this has been understood so far, nothing has been discovered.
Mental health of man is also considered closely as a factor of attack.
Police were called to the scene at 11:15 yesterday.
The suspect was arrested by armed police in the Street Corporation.
After being arrested on suspicion of terrorism, he was arrested under the Mental Health Act.
Three people – Chloe McGurk, 19, from Belfast, who was in Manchester with friends for a "girls' weekend", another 19-year-old woman and a man in her fifties – were stabbed before being taken to the hospital.
A woman in her 40s was not stabbed but was assessed by paramedics.
Another woman received a "superficial knife wound".
Deputy Chief of Police Russ Jackson said this morning: "The investigation will be continued by counterterrorism officers.Any motive remains open, but the man is considered unfit for detention and was transferred to detention for cause of mental illness. "
Mayor of Manchester Andy Burnham told the Manchester Evening News He wanted a "speedy recovery" for the victims and was prepared to allow greater use of police control and search powers to fight knife crimes.
He said: "The investigation is under way but it seems to be an isolated incident.
"We are not unique, these things are happening all over the world and we live in a more volatile period.
"Mental health is a growing concern, not only for our society, but everywhere.
"A lot of people come here for different reasons. It's a big city. It is for this reason that it creates additional pressure. It's always like before, and it's good to see everyone coming back.
"We are going through hard times and that probably means we have to be careful of each other and be extra vigilant, but for people who come to town, we have to recognize that we are not immune to the period in which we live. "
"It is a city that has a strong civic reaction and we will do everything to keep people safe here."
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