Knight Frank

South East commercial office investment market hits strongest quarter since 2013

The commercial office market in the South East of England (excluding central London) has seen the strongest quarter for investment volumes since 2013, reaching £1.49bn in Q2 2021.

According to the latest research from Knight Frank, investment activity in the second quarter was up 400% year-on-year, and 49% higher than the post-election period of Q1 2020, when £997m was invested in South East offices.

In the first six months of this year, £1.97bn worth of offices were sold, the highest in more than 16 years, and more than what was recorded throughout the whole of 2020.

Key transactions in H1 included the sale of Ealing Cross for £70.2m, McLaren’s Technology Centre in Woking for £170m and Heathrow business park, Bedfont Lakes, for £101m.

The leasing market also saw strong signs of activity returning in H1, with take up rising to 1.37 million sq ft, up 24% year-on-year, and the highest for a H1 period since 2018. 

This included six deals over 50,000 sq ft, the biggest number in a H1 period since 2016.

During the same period, technology, media and telecoms (TMT) firms in the South East market took up 406,100 sq ft of space, making up 30% of all leasing deals across the region.

The M4 corridor is proving a particular market of interest to the sector, accounting for 76% of TMT take up in Q2.
This included ITV’s commitment to 120,000 sq ft of space at Broadcast Centre in White City in June. 

Simon Rickards, head of South East capital markets at Knight Frank, said: “This has been a particularly strong first half of the year for investment, with the exposure to growth industries, such as life sciences and tech that the South East has, proving attractive to investors.”

Emma Goodford, head of national offices at Knight Frank, added: “Market activity has been dominated by larger strategic transactions which have supported the overall performance of H1. 

“With the focus on best quality/new space, choice is limited, resulting in several large commitments being advanced to secure space now.  

“The TMT and life science sectors have dominated activity, hence the focus on the M4, Oxford and Cambridge markets — a trend set to continue in H2 as we emerge from the pandemic.”

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