We have pleasure in providing you with our Q2 2022 South East Office Investment Report.
Q2 saw £853 million invested into the South East Office market. There were three large transactions which helped make this quarter a 98% improvement on Q1.
These were Citibank’s acquisition of Forbury Place in Reading (£100 million), LCN’s acquisition of Unilever’s new HQ in Kingston (£250 million) and Life Science’ REIT’s acquisition of the Oxford Technology Park (£183 million).
In addition a further £86 million exchanged in Q2 and £554 million is under offer.
Funds were once again the dominant seller, whilst Prop Cos/REITs were the dominant buyer.
The proportion of offices trading for residential conversion fell to only 6% of the market which is a reflection on the Permitted Development window closing. There is however still strong interest from industrial developers and investors looking to buy secondary office stock where the continued use is not financially viable.
We approach Q3 with a close eye on the UK’s wider economy with rising interest rates and inflation. The higher cost of borrowing has already impacted the demand from some overseas investors who will need to see longer income getting cheaper if they are to buy.
Value add deals continue to attract good demand, albeit rising build costs is a concern for many and needs to be reflected in the pricing.
The primary focus of investor demand is still for assets that meet today’s high ESG standards, or buildings that are capable of meeting them once they’ve received the required investment. This too remains a priority for tenants.
We 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.