We have pleasure in providing our Q2 2023 South East Office Market Investment Report.
Q2 2023 saw a total of £294.6 million invested into the south east market. This was in 25 transactions totalling 1.325 million sq ft, at an average lot size of £11.8 million. Based on the £641.3 million transacted in Q1, this is a 65% reduction on Q2 2022 and a 54% reduction on Q1 2023.
The reduction in trading volumes and the lowest seen since Q2 2020, which was the start of the pandemic, is the result of a number of factors. Market sentiment continues to weaken as interest rates rise, with many sales failing to reach their asking terms and either trading at a significant discount or being withdrawn from the market. Vendors have been unwilling to crystalise losses or sell at below valuations unless they are forced to do so. There was also a lack of large Trophy or Life Science assets traded in the quarter, which in past quarters has significantly buoyed transaction numbers. This downward trend in transactions is not specific to the south east office market, but is playing out across the UK office sector.
In addition to the £294.6 million invested in the quarter, there is a further £594 million under offer in 36 deals (average deal size £16.5 million).
UK Institutions continue to be the dominant seller of south east offices so far this year, with private and overseas investors the dominant purchasers. In terms of availability, there is approximately £1.38 billion of stock on the market in 56 sales.
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 held within your portfolio.