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Derwent London buys more West End sites and cheers demand for offices from life sciences sector

Derwent London has agreed a deal to buy 250 Euston Road (derwent)
Derwent London has agreed a deal to buy 250 Euston Road (derwent)

Landlord Derwent London has bet on there being strong post-pandemic office demand from the life sciences sector, and invested over £200 million on sites in the capital’s ‘knowledge quarter’.

The FTSE 250 firm has bought buildings from Lazari Investments on Euston Road and Tottenham Court Road. They are both in an area where there is a high concentration of academic, medical and scientific organisations.

The former has been bought for £190 million. It is let to University College London Hospital and provides steady income and longer term a potential opportunity to create a larger scheme. The latter is a multi-let office bought for £24.7 million.

Firms in life sciences sectors have also been clustering in other parts of London, such as White City, looking to be close to universities and hospitals.

Derwent’s boss Paul Williams said: “There is very much growing demand for space from this sector.”

He also expects demand from other business sectors for offices, as employers look for high quality and modern space, even if staff are only in for part of the week for hybrid working.

The firm added that it has a new joint venture with Lazari to look at developing a office-led project on Baker Street, subject to planning consent.

Shares in the firm, which saw first half net rental income rise 6.8% to £90.1 million, increased 66p to 3777p.

Derwent London also raised its estimated rental guidance for this year to 2% to -2%, from 0% to -5%.

Elsewhere in the property sector, shares in serviced office giant IWG improved, up 5.6p to 325p.

The firm said enquiries in the second quarter were back to pre-Covid levels.

Mark Dixon, chief executive of IWG, said: “Whilst the pace of recovery remains dependent on the continuing easing of pandemic restrictions across our markets, we look forward to the second half with cautious optimism having implemented the necessary changes to our network and cost base.”

He added: “Looking further ahead, with the improvements we are observing in our operating environment, we remain confident of a stronger recovery in 2022.”

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