Office investment market activity in the Eastern M25 totalled £300m in the first three quarters of 2023, with 73% of the years activity to date, being completed in the first three months of the year. The largest deal over the past six months has been the £20.7m sale & leaseback by Bank of America of its administrative and deal support building in Bromley at a net initial yield of 10.20%. The first quarter’s activity was boosted by two larger deals in Docklands and EastLondon although both transactions were likely to see the office buildings being re purposed. The largest of these was GIC and Oaktree’s purchase of Columbus Court with the intention to create a 188,000 sq ft life science hub.
Prime yields in the office sector have continued to move out markedly and now stand at an average of 8.25 % across the regions, with yields in Docklands at 5.75%. Yields have now shifted up by 194 basis
points over the past 18 months as fears about the future of the office continue. Prime yields in Docklands have moved out by more modest 100 basis points over the same time frame but the short term prospects for the market remain subdued. Occupational demand remains patchy and variable, with the levels of
requirements across the Eastern M25 region remaining weak after a brief recovery in 2021/22.
Squibb House, Stanford le Hope – Marchmont Investment Management purchased the 16,500 sq ft Squibb House in Stanford le Hope for £8.75m. The entire property serves as the head office to waste management company Squibb Group. The purchase price reflected a net initial yield of 7.80%.
Connaught House, Loughton – Higgins Homes sold the 12,145 sq ft Connaught House in Loughton to a private investor for £7.75m. There is planning permission to convert the office building to residential, with the upper parts to be converted to 18 apartments. The ground floor units are to remain as retail use.
Meadway Court, Stevenage – a private investor purchased Meadway Court, Stevenage as part of a two property portfolio deal from Hillview Real Estate for an estimated £6.65m. The property consists of 14 self contained buildings totalling 41,722 sq ft and is 92% let.
Bank of America House, Bromley – Praxis Group continued to increase their exposure the regional office market by agreeing a sale & leaseback of Bank of America House in Bromley. The 123,000 sq ft building was purchased for £20.7m, with the US bank agreeing a 10 year leaseback. The purchase price represents a net initial yield of 10.20%.
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