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Our View

Investment into the office sector in the Eastern M25 market remained restricted over 2021, with just over £612m of transactions completing.  The first three months of 2022 has seen this trend reversed, with £565m of deals completing, prompted by the return of larger transaction.  Two large deals in Docklands completed in Q4 2021, with Brookfield Asset Management buying the 20 Churchill Place for £245m (NIY 5.86%) and Blackstone Real Estate purchasing 6-9 Harbour Exchange for £196.5m (NIY 3.99%).  This trend carried through into Q1 2022, with overseas investment into two office led schemes, AustralianSuper entering a joint venture with British Land to develop the Surrey Quays scheme at Canada Water, and Canada Pension Plan Investment Board entering into an agreement to develop the Turing Building with Lendlease.      

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Prime Yields

Prime yields in the office sector edged up in the early months of 2022 across most locations in the Eastern M25 market as investors remain uncertain regarding prospects of rental growth and the future of office based working.  Yields shifted up by 25 basis points across most locations, although East London saw yields remain stable at 5.50%.  Prime yields in Docklands, on the other hand, have hardened as the prospects for the market have become clearer and the occupational market strengthened. Occupational demand remains patchy and variable, with the levels of requirements across the Eastern M25 region weakening after a strong end to 2021.   

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Essex

Key Deal

Victoria & Dorset House, Chelmsford – private property company DNA UK Properties bought the 84,000 sq ft Victoria & Dorset House in Chelmsford for £14.15m reflecting a net initial yield of 4.89%.  The property is part vacant and has received approval for change of use to residential.  The two inter linked buildings are situated at the gateway of the city centre.         

Prime office yields Essex

East London

Key Deal

Warehouse K, London 16 – Kajima Properties purchased the 108,500 sq ft grade II listed office led scheme Warehouse K at Western Gateway E16 for £45m from Melberg Capital.  Kajima have let the building to a number of occupiers, with the Secretary of State for Housing Communities and Local Government providing 50% of the income.       

Prime office yields East London

North London & Herts

Key Deal

Anglia House, Bishops Stortford – East Anglian farming group Ashwicken Farms purchased the 24,000 sq ft former HMRC occupied town centre office building from abrdn for £3m, with the purchase price reflecting a net initial yield of 7.24%.                        

Prime office yields N London & Herts

SE London & Kent

Key Deal

Central Court, Orpington – UK value added real estate investment management company Praxis Real Estate purchased the 67,200 sq ft Central Court in Orpington from Aegon Asset Management for £13.3m.  The property is fully let to nine tenants.

Prime office yields SE London & Kent
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Key Contact

Philip Colman

Philip Colman

Divisional Director
020 3141 3520
[email protected]