Investment in London’s West End got off to a quiet start this year as a shortage of supply left investors competing for limited available stock, with just one deal of more than £100m last month.
Seven trades were recorded last month, according to Savill’s most recent Market in Minutes: West End Investment Watch report. Total turnover for February came to £454m, taking turnover for the year to £767m – 9% below the five-year average by volume.
The largest transaction recorded this month, and year-to-date, was Prada’s off-market acquisition of its store at 150 New Bond Street, W1, and its offices at 40 Bruton Street, W1, for £250m from M&G’s Life Fund, which worked out to more than £12,000 per sq ft overall.
The month also included other smaller deals, with the average transacted price for the month coming in at £65m.
CLI Dartriver acquired the 27,746 sq ft office block at 1 Albemarle Street, W1, for £57m at a 4.5% yield and £2,054 per sq ft from CBRE IM, after the property was initially brought to market in September 2023.
M&G also sold The Portland & Riding Estate, a mixed-use freehold estate comprised of office, retail and residential accommodation across 36,410 sq ft in Fitzrovia, W1, to a private US investor for £22.7m, reflecting a 7.06% yield and £755 per sq ft.
The month also included Feldberg Capital’s acquisition of Ariel House, 74a Charlotte Street, for its brown-to-green value-add office Cora Fund. The company acquired the eight-storey, 23,820 sq ft block for £29m from an institutional investor.
Seven assets were also brought to market last month, albeit at a smaller average lot price of £11m.
This included Patrizia’s 11 Baker Street, W1, a 70,058 sq ft block made up of office and retail space, with the office accommodation currently single-let to Pimco Europe until 2026. The building is held on a long leasehold from The Portman Estate with 111 years remaining and Patrizia is inviting offers of £60m, at a yield of 5.87% and £856 per sq ft.
Others brought to market included Soho Estate’s 44-46 Cranbourne Street, 5-7 Bear Street, WC2, which is multi-let to five tenants with a weighted average lease length of 7.58 until breaks and is being marketed for £18m, which reflects a 4.84% yield and £2,369 per sq ft, according to the report.
While this limited number of assets coming to market illustrates the constrained supply pipeline within the submarket, the report points to the competitive nature of the 11-12 Hanover Square, W1, bidding process as evidence of improving demand.
Delancey and Australian superfund Aware Super are under offer to acquire the building from Aviva Investors and PSP for nearly £170m, at a yield of less than 4%, having beaten Royal London in a bidding battle which blew past the original £160m asking price.
Savills West End prime yields remained at 4%, but the report predicted this would reduce as the year goes on and pricing levels become more defined.
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