Investment market activity in the Eastern M25 office market has remained subdued over the past 18 months, with just £284m of transactions completing and £103m (36%) transacting in the first three quarters of this year. The majority of activity this year has been focused on assets below £10m, with only two transactions completing above this threshold, the £16.1m purchase of 125,000 sq ft at Hatfield Business Park by Affinity Water, whilst a private property company bought the 61,000 sq ft Regus operated serviced office at The Grange in Southgate N14 for £11m. Both assets traded at net initial yields above 10% as the price on office investments continued to slip.
Prime office yields have continued to move out since the start of the pandemic, with average yields across the Eastern M25 rising from 6.00% in March 2020 to their current level, 8.38% at the end of Q3 2024. The pace of increase has slowed in recent months, with average prime yields rising by 13 basis points over the past six months. The most significant increases have been in Essex and South East London & Kent, where yields moved out by 25 basis points, whilst East London and North London & Kent saw yields stabilise at 7.25% and 8.50% respectively. Prime yields in Docklands have stabilised at 5.75% over the past 12 months. Occupational demand remains patchy and variable, with the levels of requirements across the Eastern M25 regions softening over the past six months.
Sandringham House, Harlow – Regional REIT has purchased the 33,140 sq ft office Sandringham House in Harlow from Palace Capital for £3.3m. The property is wholly let to US business process engineering company Excela Technologies for a term expiring in 2027. The purchase price reflects a net initial yield of 12.00%.
Capital Gate, Ilford – Medina Capital Investment purchased the 40,435 sq ft vacant Capital Gate in Ilford from an overseas investor. The property is on a site of 3 acres and Medina has submitted a planning application to redevelop/ repurpose the property to residential.
Affinity Water, Hatfield Business Park – Affinity Water purchased their 125,400 sq ft headquarters building on Hatfield Business Park for £16.1m from RailPen Pension Fund. Affinity occupy the whole building and the purchase price reflects a net initial yield of 10.02%.
Broadland House & Oakhurst House Tunbridge Wells – active management real estate investment management company STR Capital Partners purchased the 69,000 sq ft across two buildings in Tunbridge Wells from Blackrock for £10m. The properties are 72% let at market rents and the price represents a net initial yield of 17.50%.
Our trusted team of experts are ready to help…
Explore our website to see our full range of services or call us on 020 3141 3500
