Investment in London Midtown Property Market Hits 10 Year High

Investment in London Midtown Property Market Hits 10 Year High

1 February 2019

Investment into London’s Midtown commercial property market hit a 10-year high in 2018 with transaction volumes of £4.97bn – the highest level since 2008 and 72% above the 10-year average of £2.89bn.

In Farebrother’s latest Midtown Market Update, Alastair Hilton – the firm’s Head of Investment - comments: “Midtown’s investment market has recorded its highest running annual total since the financial crisis which demonstrates the depth and strength of this particular market’’.

“Whilst a number of large transactions contributed to this, even if you discount the £1.2bn sale-and-leaseback of the new Goldman Sachs HQ, the underlying volumes are still compelling.

“There is a diverse and deep pool of investors who continue to seek exposure to the Midtown market as it is fundamentally underdeveloped and undersupplied in the context of the infrastructure improvements that the area is seeing.”

With good and sustained occupier take-up of space, the correlation between demand for office investments and the leasing market is clear. The Midtown office leasing market had a strong 2018 with the total volume of space let reaching 2.8m sq ft – just above the long-term average. In the final quarter of the year, the total take-up of 833,346 sq ft was up quarter-on-quarter 25%.

The availability of Midtown offices dropped by 13% during Q4 to stand at 1.4m sq ft. This was 28% below the corresponding point in 2017 and well below the long-term quarterly average of 2.5m sq ft.

Farebrother Head of Leasing & Development, Jules Hind, commented: “Midtown finished the year strongly with occupier demand from across the board contributing to a performance which defied cautious projections for 2018”.

The pipeline of new Midtown office space remains modest. At the year-end, a total of 1.2m sq ft was under construction - 27% of which has already been accounted for by pre-lets and lettings during construction.