June Real Estate News Round-Up 2024

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.

Our BRE team has been searching the headlines for the most intriguing and important stories and trends over the past few weeks. 

Themes of interest and market movements

Several major deals and trends have emerged in the last few weeks that illustrate the continuing strength of the London commercial property sector, with the publication of strong leasing and investment figures in June providing further evidence of a recovery in the market.

For example, some of the major investments in the last month include BlackRock increasing its ownership in GPE to over ten per cent and the £71 million acquisition of 126-127 New Bond Street by the Dyson family office at a 2.8 percent net initial yield. This showcases that private investors continue to acquire prime assets in London whilst there is a lack of institutional competition. Meanwhile, Herbal House in Clerkenwell is under offer to Yellow Tree Group for £102 million, which will be the largest office deal in The City this year. 

Occupationally, major firms including Amazon and Revolut have shown their commitment to London with new long-term leases. Amazon’s recent letting in Shoreditch takes their total footprint in London over one million sq ft.

Elsewhere, there was also more evidence of a continuing ‘flight to quality’, with new figures revealing that vacancy rates for top quality office spaces in The City have hit a five-year low, with occupiers paying more for recently refurbished and environmentally efficient buildings in prime locations, as opposed to cheaper secondary product. This occupier trend, coupled with an attractive buying environment, represents an opportunity for investors. 

‘Flight to quality’ drives demand for London office space

Strong appetite for high-quality assets is driving demand for City office space as firms continue to return to the Square Mile post-pandemic, with leases 19 percent above five year average leasing stats in H1 2024. (City AM)

GPE looks for central London investment opportunities with new £350m funding

GPE is set to take advantage of favourable occupational and investment markets in London thanks to a £350 million capital raise in June, with the firm tracking around £1.3 billion worth of office opportunities. (CoStar)

Amazon completes Shoreditch letting

Retail giant Amazon has finalised a deal to lease almost 180,000 sq ft of office space on the site of Shakespeare’s Curtain Theatre in Shoreditch, which will take its total occupancy in the capital to over one million sq ft. (CoStar)

Dyson finalises £71m Bond Street purchase

The Dyson family office has completed the purchase of 126-127 Bond Street, with the firm paying £71 million for the 12,900 sq ft retail space – currently let to fashion house Swaine London until March 2032. This reflects a capital value of £5,503 per sq ft at a 2.8 percent net initial yield. (CoStar)

Yellow Tree Group set for purchase of £102m Herbal House office

Israeli investor Yellow Tree Group is poised to complete the City of London’s first £100 million-plus office acquisition of the year, with the firm under offer on the 115,000 sq ft Herbal House at 8-10 Back Hill for a price of around £102 million following strong bidding interest. (CoStar)

Vacancy for top quality assets in The City hits five-year low

Vacancy rates for top-quality rated buildings in the City of London have hit a new five-year low, with less than one million sq ft of unoccupied space in these assets. This is despite an increase in overall vacancy rates, signalling how occupiers are making a ‘flight to quality’, abandoning older, less-sustainable stock for prime offices. (CoStar)

Opportunities emerge as yield gap hits record high

The spread in yield between small and large offices has hit a new high of 170 bps, which offers investors attractive pricing for property over 20,000 sq ft, with discounts of around 14 percent. (CoStar)

BlackRock increases ownership of GPE by 10%

US investment group BlackRock has increased its stake in Great Portland Estates (GPE), with the company now taking its ownership to more than ten per cent (Property Week)

Revolut agree letting for new Canary Wharf HQ

Challenger bank Revolut is set to relocate its global headquarters to the YY London Building in London’s Canary Wharf after agreeing a ten-year lease for 113,000 sq ft of office space.The firm is set to complete the move in May 2025, increasing its total floor space in Canary Wharf by 40 per cent. (CoStar)

UK office markets ‘show greater resilience’ than US counterparts

Major office markets in the UK have proven to be more resilient in the face of structural change compared to US counterparts, with occupancy losses lower in the UK’s six biggest markets. (CoStar)

Plans for City’s tallest tower set to be approved

Proposals for a new 74-storey skyscraper in the City of London that would match the height of the Shard are expected to be given the green light, with the redevelopment of 1 Undershaft by Singapore-based developer Perennial Group set to be recommended by planners at the City of London Corporation. (CoStar)

Hotel investments boom in first half of 2024

Investments in the UK hotel sector have seen strong performance in the first six months of 2024, with over £3 billion pumped into the sector, according to a new report from Knight Frank. This already exceeds the full-year performance from 2023, with major deals including  Blackstone’s £850 million acquisition of the Village Leisure portfolio and Starwood Capital Group’s £800 million purchase of Radisson Edwardian Hotels. (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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