This month’s news round-up looks at a positive few weeks for UK real estate, with strong activity across the office, retail and logistics sectors, while continued rental rises offer more encouragement for investors.
Our BRE team has been searching the headlines for the most fascinating and notable stories and trends over the past few weeks. Read on to see our pick of the most interesting themes impacting the UK real estate sector.
This month’s UK real estate market update highlights strong activity across multiple sectors, with continued momentum from both domestic and international investors. London’s office market remains resilient, with demand for central London space reaching record levels as occupiers continue to prioritise high-quality, sustainable spaces.
Major deals include GPE’s £70 million-plus acquisition of Bloomsbury office space and Mitsubishi and Stanhope advancing their £250 million West End office development, signalling robust investor confidence. On the investment side, Starwood Capital’s £673.5 million takeover of Balanced Commercial Property Trust and Segro’s £552 million bid for Tritax EuroBox were significant highlights, both contributing to strong investment activity in UK real estate.
Additionally, KKR-Mirastar’s £110 million purchase of a logistics portfolio in northern England and British Land’s £240 million retail park acquisitions underscore the growing investor appetite for logistics and retail assets. The trend towards value-add investments in London’s office market continues, with redevelopment opportunities being highly sought after.
Internationally, the UK outperformed both the US and European markets in terms of cross-border investment, with £10.9 billion in capital flowing into the country during the first half of 2024. Logistics continues to be a standout sector, with five UK regions ranking in the top 20 logistics markets across Europe, led by Greater London.
Looking ahead, rising rental values continue to support capital value growth for the third consecutive month in UK commercial property, and Derwent London’s upgrade of its rent guidance signals a positive outlook for the sector. With strong investor sentiment, demand for quality assets, and continued growth in logistics, the UK real estate market is well-positioned for a sustained recovery.
Starwood agrees £673m takeover of Balanced Commercial Property Trust
Private investment firm Starwood Capital has reached an agreement for the takeover of listed real estate investor Balanced Commercial Property Trust (BCPT) in a deal that values the firm at £673.5 million. BCPT has a portfolio valued at £1.01 billion, including retail, industrial and offices across the UK. (CoStar)
Segro seeks £552m takeover of Tritax EuroBox
Real estate investment trust (REIT) Segro has launched a £552 million bid to take over Tritax EuroBox as it seeks to diversify its portfolio with high-quality logistics assets. The price represents a 27 percent premium on Tritax EuroBox’s closing value as of 31 May 2024, but a 13 percent discount on its last reported net asset worth. (CoStar)
KKR-Mirastart completes £110m UK logistics investment
KKR Real Estate’s industrial and logistics arm KKR-Mirastar has completed the purchase of five assets totalling 890,364 square feet for a price thought to be in the region of £110 million, including locations in the north-west and Yorkshire. (CoStar)
British Land secures £240m retail parks deal
REIT British Land has added a sixth UK retail park to its recent acquisition spree, taking its total spending since April 2024 to £240 million, representing a net equivalent yield of 7.4 percent across the sites, which include the Orchard Centre in Didcot, Enham Arch Retail Park in Andover and Salisbury’s Southampton Road Retail Park. (CoStar)
Oxford Street block acquired for £71m by JP Morgan
JP Morgan has completed the largest single-asset sale on Oxford Street in nearly three years, paying around £71.35 million for 291 Oxford Street and 2 Harewood Place. The deal for the 26,121 sq ft property, which includes two shops and upper-floor offices, represents a yield of 5.76 percent. (CoStar)
Oval Real Estate completes £100m purchase of Mayfair office
Property investment group Oval Real Estate has completed the acquisition of 14 St George Street in Mayfair from Chinese Estates. It is set to pay £100 million for the 51,000 sq ft prime office space. (CoStar)
GPE in the frame for £70m Bloomsbury office deal
Great Portland Estates (GPE) has reportedly gone under offer for the purchase of the 70,000 sq ft Whittington House office development in Bloomsbury at a price above its £70 million guide, following strong bidding interest in the asset. (CoStar)
Opportunistic investors push London value-add to 15-year high
Investors hoping to benefit from a flight to quality have helped overcome an otherwise subdued office investment market to push London’s value-add share to a record high of 29 percent, with buyers focusing on discounted redevelopment and conversion opportunities. (CoStar)
Plans for £250m Victoria office development gain approval
A proposal by Mitsubishi Estate and Stanhope for a £250 million redevelopment of former government offices in London’s Victoria district have taken a step forward after plans for the scheme at 1 Victoria Street were recommended for approval by planners at Westminster Council. The plans would add over 100,000 sq ft of mixed-use space, for a total of over 700,000 sq ft. (CoStar)
Demand for London office spaces hits new high
Central London has seen growing interest in prime offices, with new figures from Cushman and Wakefield showing active demand reached a record high of 13 million sq ft in Q2. Leasing activity rose by 29 percent on the previous quarter, with grade A offices seeing the highest ever quarterly proportion of overall take-up. (CoStar)
Decarbonisation efforts leading to greater office obsolescence
A large proportion of the UK’s office market could become obsolete in the near future as it does not meet proposed environmental standards, Knight Frank has warned. The firm stated that 70 percent of commercial property floor space is rated EPC C or below, while half of the 2.7 million sq ft of available offices in London will need upgrading over the next six years. (CoStar)
UK outpacing EU and US for overseas property investment
The UK commercial real estate sector is attracting more cross-border deals than its counterparts in the US or Europe, with figures from Savills showing £10.9 billion of investment in the first half of the year, driven by rising confidence in the UK’s economy and positive rental growth. (CoStar)
5 UK locations among Europe’s leading logistics hubs
A new analysis by LaSalle has found five UK cities rank among the largest logistics markets in Europe for centrality, with the country as a whole coming third. Greater London was the top UK hub, in fifth overall, while West Midlands, East Midlands, North-West and Kent also appeared in the top 20. (CoStar)
Strong leasing performance helps drive up rental guidance
Derwent London has announced it is increasing its rental guidance to between three and six percent on the back of strong leasing demand in the second quarter. This is up from between two and five percent as occupiers seek top-quality assets. (CoStar)
UBS to liquidate Credit Suisse real estate fund
UBS has confirmed its plans to liquidate its 2.7 billion Swiss francs (£2.36 billion) Credit Suisse Real Estate Fund International, which it inherited following its takeover of Credit Suisse in 2023. The portfolio consists of 53 assets with eight in the UK, including 15 Appold Street and 11 Monument Street in London and 70 Great Bridgewater Street in Manchester. (CoStar)
British Land secures tenant for 100,000 sq ft office space
Law firm A&O Shearman has agreed to lease an additional 100,000 sq ft of office space at British Land’s 1 Broadgate development in the City. This takes its total occupancy at the site to 354,000 sq ft and highlights the growing demand from international law firms for high-quality, sustainable lettings in the capital. (CoStar)
ACAI Group secures £41.5m London office deal
Property investment firm ACAI Group has agreed the purchase of Grafton House at 2-3 Golden Square from USS for a price of £41.5 million, which includes 23,198 sq ft of office space and represents a net initial yield of 4.37%. (CoStar)
For further information about any of the insights shared above or to find out more about Bedrock’s Real Estate services, please do reach out: info@bedrockgroup.ch
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This month’s UK real estate update highlights sustained confidence in the market, with significant activity from domestic and international investors. London’s office market continues to lead, with strong leasing performance, record-breaking rents, and a growing appetite for flexible, sustainable spaces.
In July's news round-up, we're focusing on the positive activity in the central London office market as a surge in demand for leasings and strong interest from investors help give the sector a boost.
In June's news round-up, we look at some of the major trends and transactions that are helping demonstrate growing positivity for the London office market and why this is creating new opportunities for investors.