Investors are close to doing over £3 billion of deals for central London office buildings, according to research that shows buyers are betting on high-quality workspaces being popular post-Covid.
Despite many bosses reviewing how much office space they need following the success of working from home, with some looking to reduce the amount used, investors are committing to purchases.
Property agent JLL estimates that transactions totalling around £2 billion are under offer in the West End, while £1.3 billion of office buys are in advanced stages in the City.
For the first three months of the year in those respective areas, when lockdown restrictions remained in place, deals completed were £541 million and £618 million. That is below the central London 10-year quarterly average of £3.7 billion.
JLL did not say which buildings are currently under offer, but it pointed to robust investor demand coming from confidence as the vaccine rolls out, travel restrictions ease, and an uptick in office leasing activity.
Buyers are interested in sites with long term rental income and ones where they can add value, such as through revamps and extensions.
Work from home guidance if you can is set to be relaxed next month. Many companies are expected to embrace a mix of home and office working in future.
If firms shrink space, the landlords likely to lose out are those sitting on older stock. Modern space is expected to be more in demand from employers.
Rob Corbett, head of West End investment at JLL, said: “The reactivation of the occupational market, with very robust rents being achieved, has given investors confidence that the London office market is resilient and will perform well as we emerge from the pandemic.”
Lettings in capital in the first quarter included to TikTok UK and Calvin Klein owner PVH Corp. Meanwhile, purchases earlier this year include a consortium led by Wing Tai Properties Limited, a Hong-Kong based real estate company, agreeing a £255 million swoop for office block Athene Place in the City.