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Our View

Investment into the office sector has been limited over the first nine months of 2021, with investors still uncertain about the future direction of occupational demand for offices. Activity in the year to date has been restricted to £91m, with the main focus of investor interest being in the Essex and North London & Herts markets. The largest transaction in the year to date was the £46.2m purchase of Melbourn Science Park in Royston by Bruntwood SciTech, a new joint venture between Bruntwood and Legal & General. Columbia Threadneedle also sold out of two buildings in Brentwood, raising a total of £33.6m from the sale of Countryside House and Academy Place.     

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Prime Yields

Prime yields in the office sector edged up in the early months of the pandemic with a greater level of uncertainty surrounding the future role of the office in working practices. Yields have stabilised since that time, with limited transactional evidence to support where current pricing is. The outlook for the sector has improved since the first quarter of this year, with the demand for office floor space rising to record levels – albeit this demand is focused towards locations within Greater London. This positive news has yet to filter through to improved take up and rental growth but prospects look more positive over the next 12-18 months.     

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Essex

Key Deal

Countryside House, Brentwood – Saudi based investment management company Sidra Capital purchased the 38,900 sq ft Countryside House for £19.4m from Columbia Threadneedle. The building is wholly let to Countryside PLC, on a new 15 year lease. The building is currently undergoing a comprehensive £8m refurbishment.    

Prime office yields Essex

East London

Key Deal

20 Churchill Place, Canary Wharf – Brought back to market by M&G Real Estate after failed negotiations with Canadian investor Brookfield for around £300m. Brookfield had entered talks to buy State Street's headquarters at the start of the pandemic, a net initial yield of 4.5%. The long leasehold interest in the 345,000 square foot office development is now being remarketed, seeking upwards of £275 million or a 5% net initial yield.

Prime office yields East London

North London & Herts

Key Deal

Oliver House, Enfield – private property company Ebury Holdings purchased the 10,130 sq ft property from Wesleyan Assurance for £3.1m. The building is currently vacant and plans are being considered for redevelopment.              

Prime office yields N London & Herts

SE London & Kent

Key Deal

Anchor Boulevard, Crossways Business Park, Dartford – private property company Craigard purchased the 14,900 sq ft Anchor Boulevard from Aberdeen Standard Investments for £3.1m, reflecting a net initial yield of 9.29%. The building is wholly let to Westbury Homes, with the lease expiring in July 2023.

Prime office yields SE London & Kent
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Key Contact

Philip Colman

Philip Colman

Divisional Director
020 3141 3520
[email protected]