Derwent London shrugs off concerns about the commercial property market with new Cushman & Wakefield deal

Derwent's newest building, Network W1.

Property investment business Derwent London has reported new leases in 2024 totalling £5.4m, including a deal worth £1.8m announced today.

The company announced a fresh 15-year lease with Cushman & Wakefield at a rent of £1.8m for 17,100 sq ft on Baker Street.

The deal was completed at a “substantial premium” to the December rental value, Derwent London said.

Lettings in the first quarter were done at an average of 9.2 per cent above their December rental value.

The company’s vacancy rate fell to 3.7 per cent in March from 4 per cent in December. It added that 58 per cent of space available to occupy at December 2023 has “either been leased or is under offer.”

Transactions include buildings let to Starbucks, incident.io and PLP Architecture – two of which are in the City, with the third on Oxford Street.

Derwent London said it has seen a “positive trend” of interest in its London properties.

Split by rent, 58 per cent of lettings since the start of the year have been in the West End and 42 per cent were in the City Borders.

Net debt increased marginally from £1.37bn at the end of March to £1,36bn at the end of December.

In April, the company exchanged contracts for the disposal of Turnmill EC1 to Titan Investors, a UK investment manager. The sale price before costs was £77.4m, three per cent above the December 2023 book value.

“We are seeing further strengthening in occupational demand for our well-located, design-led buildings,” said Paul Williams, Chief Executive of Derwent London.

“Rental growth has increased as demonstrated by our leasing performance against ERV. As part of our strategy of capital recycling, we were pleased to agree the sale of Turnmill above book value, with proceeds to be re-invested into our higher returning West End regeneration pipeline,” Williams added.

Derwent London owns 66 buildings valued at £4.9bn as of 2023, which made it one of the largest London office-focused real estate investment trusts.