World Research UK Commercial

West End Investment Watch

Robust monthly turnover reconfirms positive West End sentiment May 2018

GRAPH 1 Market comment and Purchaser Activity notable deals

g April saw volumes of £615m over g In the largest transaction of the 10 transactions, the largest monthly month, Seaforth Land has acquired turnover of the year taking the total CAA House for £165.0m, reflecting a investment volume to £1.76bn, down capital value of £720 per sq ft. First approximately £1bn on this time last constructed in 1969, the Grade II year. listed property totals 229,164 sq ft of office accommodation with eight g Savills has sold Brockton’s freehold storeys fronting Kingsway and fifteen interest in The Centro Building to storeys arranged on Kemble Street. Workspace for a net price of £76.5m, The building is let to the Civil Aviation reflecting a 4.90% net initial yield and a Authority until December 2019 at which capital value of £902 per sq ft. date it is understood that Seaforth Originally developed as a furniture Land will look to refurbish and re-let the Source: Savills. Data to end of April 2018 depository, The Centro Building provides building. GRAPH 2 approximately 84,855 sq ft of warehouse West End Yields style office accommodation together g We have recorded five deals by with a 3,000 sq ft communal roof UK institutions this year; two in April, terrace. The property is multi-let to four representing 10% of turnover year to office tenants and one leisure operator date. This is encouraging news for the providing an average unexpired term of market however they are still net sellers 8.7 years. Over 84% of the income is to the tune of over £330m so far this secured against Hugo Boss UK Limited year. Unsurprisingly overseas private and French Connection Group Plc as investors remain the largest buyer their UK Headquarters. group, making up over 40% of turnover, continuing a trend which started in 2015 g On behalf of Great Portland Estates, (see graph 1). Savills sold the Portland & Riding Estate to M&G for £49.6m, g Savills was involved in over 50% reflecting a 3.90% net initial yield and of deals by both turnover and number Source: Savills and MSCI a capital value of £1,362 per sq ft. The during April, acting on six transactions. newly redeveloped estate totals circa With a healthy sales book and four 0.45 acres and comprises 18,121 sq ft transactions totalling over £500m of offices, seven retail units and eight already exchanged in May, the team residential units. M&G’s purchase was remains focussed on targeting active one of two UK institutional acquisitions capital across a full spectrum of this month. opportunities.

g The MSCI average net initial yield moved out to 3.4% this month whilst the equivalent yield remained at 4.66%. Savills prime yield remains at 3.25% (see graph 2).

savills.co.uk/research 01 West End Investment Watch | UK Commercial

TABLE 1 Key deals in April 2018

Address Tenure Area Sector U/x Price Yield CV/sq ft Vendor Purchaser House No Street PC Sq ft FH/LH Gearing term

43-59 Kingsway CAA House WC2 Office 229,164 FH £165.00 M - £720 Almacantar Seaforth Land 1 Kemble Street

Retail 5 Strand WC2 72,359 FH £92.50 M 4.00% £1,278 Blackrock Private Investor Office

The Centro 39 Plender Street NW1 Office 84,854 FH £76.50 M 4.90% £902 Brockton Capital Workspace Building

Columbia 56-68 Dover Street Office Private European W1 14,726 FH £55.00 M 2.81% £3,735 Threadneedle 32 Brook Street Retail Investor Investments

Great Portland Retail Portland & Riding 78-92 Street Great Portland W1 Office 36,410 FH £49.60 M 3.90% £1,362 M&G Real Estate Estate 15-23 Riding House Estates Residential Street

48 Charlotte Street W1 Office 24,310 FH £31.00 M 3.70% £1,275 Wesleyan Carlton Properties

78-79 Newman Street Hostel 29,161 LaSalle Investment W1 FH £26.90 M 3.50% £922 JMS Estates 1-2 Berners Mews Office (GIA) Management

Upper Grosvenor Private UK Middle Eastern 11 W1 Office 8,283 LH 107 10.00% £18.65 M - £2,252 Street Investor Owner Occupier

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