South East Office Investment Q3 2021
We have pleasure in providing you with our Q3 South East Office Investment Report.
Q3 saw a total of £587m invested into South East offices, a 46% increase on the £316m invested in Q3 2020. However, this was a 174% decrease on transaction volumes for Q2 2021.
The main observations for Q3 are:
Almost 50% of all transactions were in Cambridge, with a focus on the Life Science sector. This included Blackstone’s BioMed Realty acquisition of the 42 acre site at Cambridge International Technology Park & Granta Park for £135m, British Land’s acquisition of the Peterhouse Technology Park for £75m & Brydell Partners’ acquisition of Castle Park for £63m.
Residential developers continue to buy secondary office accommodation benefitting from Permitted Development consents. This accounted for 16% of the 37 office transactions but had a lesser impact on transaction volumes as the lot size is generally smaller.
It is noticeable that deals are taking longer to complete. Three headline transactions went under offer in Q2 and have still not exchanged (accounting for approx. £310m).
There is generally a shortage of stock for sale which will undoubtedly impact on transaction levels for Q4. Specifically there is a lack of sensibly priced value add opportunities. There is however a strong depth of capital from a variety of buyers which is looking to be deployed.
Consistent with Q1 and Q2, Private Equity was the strongest buyer in Q3, Funds continue to be one of the most active sellers.
Prime yields across the South East remain at 5.50%, the exception being Cambridge and the Life Science sector where prime yields are now well below this level, taking account of the strong reversionary prospects.
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 you may own.
Please do get in touch with the Bray Fox Smith team if you wish to discuss the market or any specific South East office assets in more detail.
Rob Cregeen – robcreegen@brayfoxsmith.com
James Archibald – jamesarchibald@brayfoxsmith.com
Rob Bray – robbray@brayfoxsmith.com
Scott Helyer – scotthelyer@brayfoxsmith.com
Harvey Veitch MRICS – harveyveitch@brayfoxsmith.com
