We have pleasure in providing our Q3 2023 South East Office Market Investment Report.
There are many challenges facing the UK investment market as a whole right now and the office sector is no exception. This is reflected by the statistics for the South East office market which saw a total investment in Q3 of £218 million in 20 transactions (14 of which were less than £10 million). This was down by 71% on Q3 2022 and down by 26% down on the previous quarter in 2023.
There were many factors contributing to this, not only the normal quieter months of July and August, but also the continued uncertainty over future interest rate rises, questions over post Covid tenant occupancy, and the growing cost of meeting ever increasing ESG standards.
Of the 20 transactions seen in Q3 there were no repeat buyers with six being residential developers and four owner occupiers. The most notable deals were the sale of 22 Market Street in Maidenhead and the Kia Motors HQ in Walton-On-Thames. Both were good quality offices let to strong covenants which attracted good interest and achieved strong prices. The interest was principally from overseas investors who continue to be one of the more dominant buyers in the sector.
On a positive note, going in to Q4 there is £651 million under offer in 31 deals. This supports our view that buyers are selectively returning to the office sector recognising that in the right locations there are some very well priced opportunities.
In addition, there is approximately £1.64 billion of stock on the market in 80 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.