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.
Our BRE team has been searching the headlines for the most fascinating and important 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.
In recent weeks, we’ve seen various private equity and family offices complete on ~£100 million transactions, including Ares’ purchase of Times Place, Pall Mall from JP Morgan for £135 million, the Von Finck Group’s acquisition of 24 Savile Row for £90 million and Oval Real Estate’s £131 million deal to buy 14 St George Street.
Occupationally, a surge in demand for prime space is shown to continue with numerous significant leasing deals, as businesses look to relocate to more sustainable and recently refurbished office buildings in the West End. This demand is particularly strong in the niche financial sector, with hedge funds and venture capital firms helping drive occupancy rates to levels not seen in London since before the Covid-19 pandemic.
In Paris, a new report noted there remains a large gap in demand between prime central business district (CBD) locations – which is highly attractive to investors and occupiers and has seen two transactions of over €100 million this year – and more secondary locations on the edge of the city.
First £100m London office deal of 2024 drives investment to new high
Monthly investments in office space in London hit a new high for the year in June, with £285.5 million of deals completed. The headline among these was the sale of Herbal House in Faringdon to Yellow Tree Group, which was 2024’s first London office deal worth over £100 million. (CoStar)
Ares set for £135m+ Pall Mall office purchase from JP Morgan
US private equity firm Ares Management continues its office investment spree, having agreed the purchase of a 59,712 sq ft office space at Times Place, 45 Pall Mall from JP Morgan in a deal that is set to exceed the £135 million (+£2,250 per sq ft) guide price. (CoStar)
Oval makes progress on £131m West End office deal
Oval Real Estate has gone under offer for the purchase of 14 St George Street for £131 million from Chinese Estates, reflecting a 3.50 per cent Net Initial Yield. The property consists of 51,861 sq ft of grade A office space in Mayfair close to Bond Street and the Elizabeth line. (CoStar)
Von Finck Group finalises £90m Mayfair office purchase
Wilhelm von Finck group subsidiary Euro Real Estate, has completed the purchase of 24 Savile Row in Mayfair for around £90 million, reflecting a net initial yield of ~four per cent for the property, which is multi-let as office and gallery space. (CoStar)
Niche finance sector leases over 1m sq ft of London office space
London has remained a global hub for hedge funds, venture capital providers and asset managers within the financial sector despite the challenges posed by Brexit and Covid, with new figures revealing that over one million sq ft of office space in the capital has been leased to these companies since 2019. (CoStar)
Surge in central London office leasing sees takeup reach 2.3m sq ft
The second quarter of the year has seen a substantial increase in takeup of central London offices, rising by 21 per cent quarter-on-quarter to reach 2.3 million sq ft. Savills claims this reflects “resilient demand” for high-quality space. (CoStar)
Sustainability ‘a key driver’ of London office leasings
Increasing demand for sustainable office space was one of the key drivers behind an uptake in office leases in the capital, with occupiers showing a clear preference for factors such as low carbon footprints and proximity to public transport in order to meet ESG goals and employee expectations. (City AM)
Grosvenor hails new post-pandemic occupancy record
The Duke of Westminster’s property firm Grosvenor has celebrated hitting a new post-pandemic high for occupancy across its portfolio, with 64 new leases this year at its Mayfair and Belgravia assets covering 127,000 sq ft and generating £8.52 million in rent – 11 per cent above estimated values. (CoStar)
UK hits two-year high for commercial real estate with £11bn of Q2 deals
The UK commercial real estate sector enjoyed its best performance in two years in the second quarter of 2024, with £11.1 billion of acquisitions completed. This marked a 12 per cent increase on the previous three-month period and included the £964 million purchase of 30 purpose-built student accommodation (PBSA) assets by Mapletree – the biggest single transaction of the quarter. (CoStar)
Paris office market remains polarised with best locations growing in demand
The office market in and around Paris remains highly polarised, with prime sectors seeing growing demand while more secondary areas struggle to attract occupiers and investors alike, according to a new report. This is illustrated with two €100 million-plus transactions in prime locations this year. (CoStar)
Monday.com takes up 80,000 sq ft of Fitzrovia office space
Software company Monday.com has agreed to lease 80,000 sq ft of office space across three floors of 1 Rathbone Square in Fitzrovia for its new HQ, taking up a location that was previously used by Meta before the social media site scaled down its global office presence. (CoStar)
Uniqlo set for $350m purchase of flagship NY retail space
Japanese clothing retailer Uniqlo is set to spend $350 million to acquire a portion of the flagship 666 Fifth Avenue store in New York that it has been leasing since 2010, buying just over 17,000 sq ft of space from a joint venture between Vornado and Crown Acquisitions. (Bisnow)
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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.
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 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.