The commercial office investment market in the South East of England has seen one of its busiest first halves of the year, according to the latest research from Knight Frank.
Total investment into commercial offices in Q2 2021 across the South East region (excluding central London) was just less than £1.5bn, the highest quarter for investment volumes since Q4 2013 and the second highest since 2005.
Investment activity in the quarter was up by 400% on Q2 2020, the first phase of the pandemic, but was also up by 49% on the post-election period of Q1 2020, one of the busiest quarters for investment activity in recent years when £997m was invested in South East offices.
In the first half of 2021, a total of £1.97bn of offices was sold, the highest total for more than 16 years and higher than recorded throughout the whole of 2020.
Key transactions in the first half of the year included the sale of Ealing Cross for £70m, McLaren’s Technology Centre in Woking for £170m and Heathrow business park Bedfont Lakes for £101m.
The leasing market also saw strong signs of activity returning in the first half of the year, with take-up in H1 rising to 1.37m sq ft, up by 24% on H1 last year and the highest for a H1 period since 2018. This included six deals over 50,000 sq ft, the highest number in a H1 period since 2016.
Technology, media and telecoms firms underpinned leasing activity, taking 406,100 sq ft of space and making up 30% of all leasing deals across the region. The M4 region was particularly popular with TMT tenants, accounting for 76% of the sector’s take-up figures.
Emma Goodford, head of national offices at Knight Frank, said: “Market activity has been dominated by larger strategic transactions which have supported the overall performance of H1. With the focus on best quality/new space, choice is limited. This is resulting in several large commitments being advanced to secure space now. TMT and life sciences sectors have dominated activity hence the focus on the M4, Oxford and Cambridge markets – a trend set to continue in H2 as we emerge from the pandemic.”
■ Listen to an interview with Knight Frank’s Emma Goodford and Simon Rickards about the South East office market here
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