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LSH Charlie Lake

Office market key driver of 85% increase in commercial property investment in the south east

13/05/2015

The office market is the key driver of an 85% increase in commercial property investment in the south east according to the Lambert Smith Hampton’s quarterly UK investment transactions bulletin.

• South east region investment totalled £1.3bn in Q1, representing an 85% increase on the same period last year
• The office sector was a key driver of this, seeing more than double the amount of investment in Q1 2014
• Overseas investment in south east property reached £253m in Q1, 19% of the total and 158% more than was recorded in the same period last year

The largest deal was Legal & General’s purchase of the mixed-use scheme, Grenfell Island, in Maidenhead for £90.2m, with the tenants David Lloyd, Pizza Hut and Three’s headquarters.
 
Charlie Lake, director of capital markets at Lambert Smith Hampton, comments: “The start of 2015 has been dominated by a number of significant transactions. Both the global and UK institutional appeal of the south east market continues to strengthen as the fundamentals of the occupational market dynamic, indicating a strong potential to deliver rental growth performance in the short to medium term.”
 
Overseas investment into the south east region continued on its upward trajectory as foreign investors seek less competitive markets outside London.
 
Lambert Smith Hampton’s research analyst, Isabel Watterson, explains: “Overseas investor appetite for London assets will no doubt continue, but intense competition has led to a clear outpouring of investment to the regions. The south east is a good alternative to London and in Q1, almost 20% of investment into the region was from overseas, with the largest foreign deal being the purchase of Arlington Business Park in Theale for £75m.
 
“We expect this to increase as foreign buyers continue to spread out of the capital in search of higher returns.”
 
Top south east investment deals of Q1 2015

PROPERTY  TOWN  PRICE £M  YIELD %  SECTOR  PURCHASER 
Grenfell Island Maidenhead  90.2  5.9  Leisure/office/retail  Legal & General Property 
Marchwood/Cracknore Hard Industrial Estates  Southampton 89.0  5.74  Industrial  Associated British Ports 
Magna Park, MP3      Milton Keynes  85.0  4.2  Industrial Standard Life
Broadstreet Mall Reading  75.0  6.75  Retail  Catalyst Capital
Arlington Business Park  Theale  75.0  8.64  Office  Patron Capital Partners 
Farnborough Aerospace  Farnborough  71.0  25  Office  Hermes REIM


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Charlie Lake
Director - Capital Markets

020 7198 2227

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