Priory Place, Chelmsford – CLS Holdings purchased the 41,036 sq ft Priory Place in Chelmsford from Aviva Investors as part of the three asset ‘Commuter Belt’ portfolio for £59.7m. The price attributable to Priory Place is estimated to be in the region of £18.7m, with the building close to being fully let to five occupiers. The principal occupier at the building is HM Courts & Tribunals Service.
Office investment slowed to £610m in 2020, with uncertainty surrounding the role of the office in the future. Some investors took the opportunity to target prime assets during the period of uncertainty, with Hong Kong based Link REIT purchasing the 482,000 sq ft Morgan Stanley headquarters building at 25 Cabot Square E14 for £380m from Hines Global REIT. The purchase price reflected a net initial yield of 4.86%. Generally, activity has remained slow in Q1 2021, with the only significant office transaction being the £46.2m purchase of Melbourn Science Park in Royston by a science and technology real estate joint venture between Legal & General and Bruntwood Estates.
Average prime office yields in the Eastern M25 moved up in 2020 as investors exhibited caution about the future of the office sector. Average yields in the principal Eastern M25 markets moved up to 6.13%, an increase of 44 basis points from 5.69% prior to lockdown. Prime yields in the Docklands market shifted out by 75 basis points to 5.25%, although renewed interest in the sector has seen a 25 basis point reversal in the first three months of 2021, with yields hardening to 5.00%.
The Cabot, 25 Cabot Square E14 Hong Kong based Link REIT made their first UK purchase by acquiring the 17 storey, 481,600 sq ft headquarters building in Canary Wharf from Hines Global REIT for £380m, with the price reflecting a net initial yield of 4.86%. The building is multi let to Morgan Stanley and several UK government departments.
North London & Herts
Melbourn Science Park, Melbourn – Bruntwood SciTech, a 50:50 joint venture between private property company Bruntwood and Legal & General purchased the long leasehold interest in the 182,350 sq ft Melbourn Science Park from the parks principal occupier, The Technology Partnership (TTP). The purchase price reflects a net initial yield of 6.50%, with the average unexpired term at the park being 3.8 years to break options.
SE London & Kent
Unit 210 Eureka Park, Ashford – The 15,700 sq ft office building located on one of Kent’s primary business parks was sold for £3.05m to a private investor, with the price reflecting a net initial yield of 9.40%. The building is entirely let to healthcare products group Advanced Health & Care, with an unexpired term on the lease of 4 years.