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National OFFICE Investment BULLETIN - Q2 2021

Key facts & figures

  • Total investment volumes for Q2 2021 reached £545m (32 deals). This is an increase of 52% on Q1 2020 (£359m – 31 deals) although it is 44% below the five year quarterly average of £980m (89 deals).
  • H1 2021 volumes total £905m (63 deals) which is c.38% ahead of H1 2020 figures demonstrating the improved investor sentiment for regional offices as covid restrictions ease and the return to the office continues to gather momentum.
  • The North West was the most active region in Q2 accounting for c.26% (£143m) of overall regional volumes, bolstered by Ashtroms purchase of 8 First Street for £82m.
  • Yorkshire & The Humber was the second most active region recording £101m of completed transactions in Q2, albeit these figures were skewed by RevCap’s acquisition of Broadgate in Leeds for £85m/ 6.94% NIY which was the largest single asset regional office deal of Q2.
  • A total of £538m of regional offices are currently under offer or have exchanged (19 assets) with a number of marquee deals due to complete early in Q3. Full year figures for 2021 are anticipated to be in excess of 2020 volumes (£2.1bn) but still considerably down on the five year rolling average of £3.9bn.
  • There is £272m (25 assets) of openly marketed stock currently available with over £215m available on an off market or restricted marketing basis.
  • 68% of completed deals in Q2 were completed ‘off market’ or on a ‘restricted marketing’ basis, an increase from 64% in Q1.
  • The average NIY of all transactions has sharpened by 35bps in Q2 compared with Q1 however, the gap in pricing and liquidity between prime and secondary has continued to widen with 72% of the available stock which hasn’t sold considered secondary.
  • Property Companies were the most active buyers in Q2 2021 and H1 2021 accounting for c.34% and c.28% of total volumes respectively, although Q2 activity was dominated by Trinity IM and Harrison Streets £120m acquisition of the BioCity Group Portfolio.
  • Institutions remain the most active vendor in the year to date accounting for 23% (£211m) of sales in H1 2021.
  • ESG credentials continue to move up the agenda and it is expected that H2 2021 will experience an accelerated shift towards sustainable investing.
  • Q2 2021 has shown an increase in active capital seeking regional offices and a more positive outlook held by many for the long-term future of the sector. We expect this to translate to a considerable increase in investment volumes in H2 as more stock is released to the market now lockdown measures are being eased and with a large percentage of the under offer stock being transacted in Q3.
  • If you would like to discuss any of the above in more detail please do not hesitate to contact a member of the team

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National office investment team

Callum Robertson

Partner

Leo Nicholson

Senior Associate