£5bn investment turnover for central London office market since start of 2022
Central London’s office market has marked £5bn investment turnover since the start of the year, as confidence in the category returns.
Property advisors Knight Frank have revealed a 300 per cent increase in comparison to the first quarter of 2021 when there were transactions worth £1.2bn.
There are £5.8bn worth of central London office deals currently under offer, with institutional investors targeting secure income opportunities and green premiums.
Blockbuster deals to complete this year include CK Asset Holdings’ £1.2bn sale of 5 Broadgate, let long-term to UBS, to Broadgate Five Holdings, Ho Bee Land’s £718m acquisition of The Scalpel and Sun Venture’s £120m purchase of WeWork-let 120 Moorgate.
Deals have been driven by the capital’s higher yielding office assets in comparison to other cities and larger pool of green-rated stock.
The market is currently under supplied with just £4.1bn worth of assets currently available, Knight Frank added.
This month the Australian pension fund Australian Super injected £290m into a 50 per cent stake in British Land’s 53-acre Canada Water Masterplan project. The mixed-use development will be completed over the next 10 years and feature offices.
Nick Braybrook, head of London capital markets at Knight Frank, said : “The big-ticket deals since the start of the year reflects strong global investor appetite, with institutions hunting for assets that offer secure income opportunities as well as ESG credentials that align with portfolio targets.”
Investor activity has been given a shot of momentum from confidence in the capital’s “underlying fundamentals and attractive pricing compared to global cities,” Braybrook added.
New business districts such as Canada Water are also catching the eye of long-term investors, according to Shabab Qadar, Knight Frank’s London research partner.
These districts have “demonstrated greater resilience in times of economic distress, stronger commercial performance compared with other submarkets and have generated social value gains,” Qadar explained.
Current active occupier demand stands at 7.6m sq ft, suggesting a large flow of future transactions.
Some 24.5m sq ft of lease is set to expire within the next three years – as companies look to review their models of working and adapt their office approaches to a post-lockdown world.