In this news roundup, we look at some of the big deals and trends that took place in the London office market throughout March. We saw a very active month driven by the return of private equity (PE) buyers seeking to take advantage of discounted pricing. We highlight some of the biggest deals and what these mean for the capital.
Our BRE team has been scouring the headlines for captivating 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.
A key theme in March has been the booming interest in prime central London office space, with the West End and locations within easy reach of mainline rail stations proving particularly attractive to both investors and occupiers. PE firms in particular have been highly active in this area, increasing their share of the London market threefold compared with 2022.
Indeed, there are currently over £2 billion worth of deals under offer or close to completion, with some of the most noteworthy transactions including BlackStone’s return to the London office market with its £230 million acquisition of 130-134 New Bond Street, Ares’ purchase of 25 Charterhouse Street for £43.5 million and £100 million worth of purchases by Greycoat.
These all represent strong confidence in the capital, boosted by growing demand from occupiers in both the office and retail sectors. Falling vacancy rates in prime locations – especially those within 0.2 miles of key stations – also highlight the opportunities available for investors.
West End market leads way as Central London office market reaches £2bn under offer
The office market in central London has continued its run of strong activity as more than £2 billion of deals are now under offer or near completion, including BRE’s acquisition of Hammer House, with the West End proving particularly attractive to buyers from across Europe, Asia and the Middle East. (CoStar)
BlackStone targets £230m New Bond Street acquisition
US private equity firm BlackStone is in talks for the purchase of 130-134 New Bond Street for a price in the region of £230 million, which represents a 3.50% yield for the 27,657 sq ft block. (CoStar)
PE firms overtake REITs in battle for London property
Private Equity firms have significantly increased their spending in the London office market, in 2024, buying buildings at ‘bargain prices’ as debt-laden traditional real estate investment trusts (REITs) struggle to keep up. New data from Colliers shows PE now accounts for 25% of under-offer deals over £10 million in London office market and 11% of total deal. – almost triple the figure from two years ago. (Investors’ Chronicle)
UK offices reach highest post-pandemic occupancy rate
Office spaces in the UK are enjoying their highest occupancy rates since the pandemic, in March as return-to-office initiatives continue to gain pace. (CoStar)
Ares reaches £43.5m deal for 25 Charterhouse Square
Real estate fund Ares Management has acquired 25 Charterhouse Square in Farringdon from office developer Helical for £43.5 million, which represents a discount of 6.5 percent on the property’s September 2023 book value. (IPE Real Assets)
Feldberg Capital secures €87.75m Covent Garden asset
Real estate management firm Feldberg Capital has agreed the purchase of 21-25 Bedford Street in Covent Garden for a price of €87.75 million (£75.25 million) through its ReForm fund, which aims to improve the sustainability of acquired assets. (Europe Real Estate)
Greycoat seeks fourth asset in £100m London acquisition spree
Asset manager Greycoat is aiming to add a fourth property to its recent London buying spree, having entered talks to buy 140 Leadenhall Street in the City. With the firm already having agreed terms on 120 Aldersgate, 55 Strand and 77 Kingsway, this brings its spending to around £100 million as it looks to take advantage of weakened investor demand for the sector. (React News)
Lazari gains approval for Fenwick New Bond Street redevelopment
Lazari Investments has secured planning consent to convert the former Fenwick department store on London’s New Bond Street, which was acquired for £430 million in 2022, into a 225,000 sq ft office-led development . (React News)
Hybrid working drives interest in offices near main stations
Offices that provide close proximity to London’s mainline rail stations are in high demand among occupiers aiming to attract hybrid workers, with vacancy rates on these properties 200 basis points lower than the central London average due to their promise of shorter commute times. (CoStar)
Evercore under offer for 120,000 sq ft of space for new West End HQ
Investment bank Evercore is set to make 105 Victoria Street in the West End its new London headquarters, with the firm said to be under offer to take 120,000 st ft of space in the £1 billion development at a rent of around £130 per sq ft. (CoStar)
Oxford Street continues signs of resurgence
An influx of occupiers including Abercrombie and Fitch, Uniqlo, HMV and IKEA have agreed to take up space in Oxford Street, with over 40 new openings and signings in the year to March signalling the strongest performance in decades on the street. (The Times)
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 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.
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.