MORNING NEWS: Savills sees improved outlook for offices

Good morning. Here’s your daily round-up of the latest news and views from EG and a collection of real estate-relevant headlines from the national papers. A bounceback could be under way for the office market. The outlook for returns from London and regional workspace makes them some of next year’s likeliest top performers, according to the team at Savills. The agency has raised its outlook for the average total return for UK real estate to 7.4%, compared with 6.8% for 2024.  The firm’s top performer for annual returns remains residential buy-to-let in the North West, at close to 11%, but central London and regional offices have moved up its table, both to more than 10%.  James Gulliford, Savills’ joint head of UK investment, said: “The 40-year high of inflation has passed, and most forecasters are predicting around 100 basis points of base rate cuts from now until the end of 2025. Both of these are good news for land and property occupiers and landlords, and should bring increased levels of transactional activity in many markets.” We take a look back at deals and developments from the life sciences sector over the course of this year and ask what the future holds. Investment, development and leasing activity across the Golden Triangle markets remained relatively resilient through 2024, ending on a high and with a good level of optimism for the year ahead. Joanne Henderson, head of life sciences for Europe at CBRE, said: “2024 has been marked by global volatility and a challenging environment for life sciences businesses, with geopolitical uncertainty and high inflation impacting venture capital funding. However, post-election stability in the UK has revitalised venture capital activity, with £3.7bn anticipated for the sector by year end.” Matt Smith, head of science and technology at DTRE, added: “There is a belief that we have turned a corner, and some green shoots are beginning to show. Renewed occupier confidence is reflected in companies now returning to the market. We have seen an uptick in larger space requirements, with more than 270,000 sq ft of lab space currently under offer across the Golden Triangle.” And more than 95% of London’s flex operators are planning to expand as average attendance in London reaches four days a week. Nearly half are targeting growth in the West End, while one-third are looking at the City, according to a survey by Knight Frank of flex providers in the capital, including GPE, British Land and Fora. Amanda Lim, head of flexible offices at Knight Frank, said: “Premium spaces in the best locations have witnessed strong demand, given that scarce availability within new prime buildings across the City and West End have complicated matters for companies looking to secure traditional long-term leases.” There’s also news on Regional REIT’s next chair; Capital & Centric’s shopping centre redevelopment play; and a new face on the New Towns Taskforce. All of the news from EG, plus a selection of headlines from the nationals: Returns from office investments set to rise, says SavillsGreen shoots appear for life sciences real estateFlex operators set to expand as attendance hits four days a weekRegional REIT names chair designateCapital & Centric picked as Buxton development partnerFormer LLDC boss joins New Towns TaskforceHB Reavis secures £106m HSBC UK loanAlpha Real Trust buys Liverpool Travelodge for £6.5 mLandsec scores as JD Sports signs four new leasesConygar’s latest student scheme performing ‘well below’ targetMilton Keynes quad bike centre stays on track with planning approvalCompound Real Estate secures £11m for self-storage facilityPuma to provide Vita with £52m facility for Edinburgh PBSA schemeL&Q appoints new finance directorSwissport expands footprint with SEGROAnnington ends MoD legal battle with £6bn dealIs Rachel Reeves the Grinch who stole UK Christmas? (£)Keep interest rates unchanged, says Times shadow MPC (£) More than half of UK company bosses consider relisting overseas (£)