JLL prime yields Substantial investor interest saw prime yields contract 8bp to 6% last month; overseas buyers were a major influence on West End offices
JLL prime yields Substantial investor interest saw prime yields contract 8bp to 6% last month; overseas buyers were a major influence on West End offices
The Jones Lang LaSalle prime weighted yield fell in February by 8 basis points to 6%, reflecting the continuing strength of investor demand. The office sector saw yields fall 4bp to 5.76%.
The West End office market recorded a 50bp fall in yields to 4.50%, driven by strong interest from overseas buyers. A notable deal last month was M1 Real Estate’s acquisition of Victoria House, WC1, for £175m, reflecting an initial yield of 6.5%. The core regional and national offices and M25 towns also saw a further 25bp decline in yields to 5.75% and 6.50%, and both are now below their long-term averages.
The retail sector continues to see significant demand from private investor funds. However, a key constraint is a shortage of quality stock, which is forcing some buyers to overbid for true prime.
As with all sectors, prime industrial yields contracted significantly in Q4 2009 before stabilising in the first two months of 2010. While demand remains strong, there is a limited supply of good-quality products.
