Savills World Research UK Commercial

West End Investment Watch

Worrying supply trend continues June 2018

GRAPH 1 Market comment and Marketed Property Jan-May notable deals

g May saw volumes of £712m over g The freehold interest in 20 Soho nine transactions, the largest monthly Square has sold to a private European turnover of the year taking the total investor for £117m, reflecting a investment volume to £2.46bn. Savills 4.00% net initial yield and a capital was involved in over 75% of deals by value of £1,757 per sq ft. The recently turnover in May, made up of three sales refurbished office building comprises and one acquisition. 66,575 sq ft of office accommodation and is single let to Palantir Technologies g Savills, jointly acting on behalf of Thor for a term of 10 years from November Equities and Meyer Bergman, has sold 2016, at a rent reflecting £75.00 per sq ’s Burlington to Motcomb ft overall. Estates for £300m, reflecting a 3.20% Source: Savills. Data to end of May 2018 net initial yield and a capital value of g So far this year we have recorded £8,155 per sq ft. The Arcade, which just £2.22bn of assets being marketed GRAPH 2 opened in 1819, provides 36,787 sq ft over 51 properties, compared to West End Yields of prime retail space, has a combined £3.73bn over 69 transactions in the frontage of 360m and attracts over first five months of 2017 (see graph 1). four million visitors a year. It is the Of particular note has been the lack of longest covered shopping street in the availability of sales in excess of £100m, UK, linking and Burlington with just six properties launched over Gardens. This was Motcomb Estates this hurdle compared to 13 over the sixth known purchase in the last 12 same period in 2017. Investors and months, with the private investment agents remain frustrated by this lack of vehicle having deployed over half a availability with turnover suffering as a billion pounds over this period. result, down approximately 28% year- on-year. g Acting on behalf of a private Middle Eastern investor, Savills has sold the g The MSCI average net initial yield freehold interest in 4 Tenterden Street, remains at 3.4% for the second Source: Savills and MSCI off market, to a Private European consecutive month whilst the equivalent investor for £51.625m, reflecting a yield moved out just 1 bps to 4.67%. capital value of £3,377 per sq ft on the Savills prime yield remains at 3.25% office accommodation. The property, (see graph 2). which is multi-let to seven tenants at an annual rent of £477,795, comprises 14,990 sq ft of office accommodation and car parking space at basement level. Vacant possession is available within six months, providing a near-term development opportunity, subject to planning.

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

TABLE 1 Key deals in May 2018

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

Meyer Bergman & Burlington Arcade 51 Piccadilly W1 Retail 36,787 FH £300.00 M 3.20% £8,155 Motcomb Estates Thor Equities

Private European 20 Soho Square W1 Office 66,575 FH £117.00 M 4.00% £1,757 Aviva Investors Investor

Private Middle Private European 4 Tenterden Street W1 Office 14,990 FH £51.625 M N/A £3,377 Eastern Investor Investor

Kensington Retail Savills Investment Private South 145 W8 6,067 FH £7.50 M 3.93% £1,236 Church Street Office Management African Investor

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