We have pleasure in providing you with our Q1 2022 South East Office Investment Report.
Q1 was one of the quietest quarters the sector has seen for a while with only £430m of transactions completing. There is however a further £74m that exchanged during the quarter, plus another £569m under offer which sets a positive scene for Q2.
The strong demand for buildings and sites in the Life Science Sector continues and this accounted for 37% of all completions in Q1. In addition there is significant interest from developers and investors in targeting older office stock and Business Parks which are now obsolete but lend themselves well to alternate uses such as industrial or residential. These type of deals accounted for 44% of the total in Q1.
One of the reasons for the low level of transactions in Q1 is not necessarily down to reduced demand or a shortage of capital but due to the lack of good quality stock being offered for sale. We do see this improving in Q2 and beyond as owners of good quality South East offices recognise the strong prices that are being achieved for the right product.
The buyer profile in Q1 was dominated by Property Companies and REITS with the Private Equity and Overseas buyers not far behind. The UK office market continues to be viewed positively by overseas capital, particularly for those assets offering long lease terms to strong covenants.
Whilst the Funds were once again the largest seller of South East offices, we are beginning to see a select few considering buying into the market again with very specific criteria for fully ESG compliant offices in prime markets.
I hope you find this research helpful and informative. Please do not hesitate to contact the Bray Fox Smith team to discuss the market in more detail, and we would welcome the opportunity to advise on any specific assets.