Key facts and figures
Total investment volumes for Q4 2021 reached £1.3bn (35 deals). This is the highest figure since Q1 2019, reflecting a 59% increase on the previous quarter (£816m – 31 deals) and a 67% uplift on Q4 2020 (£780m – 40 deals).
High profile, large scale transactions were the key driver in this increase in volumes, with Landsec’s £426m acquisition of a 75% stake in MediaCityUK in November 2021 accounting for 33% of quarterly activity.
Another key deal in Q4 was NatWest’s acquisition of 1 Hardman Boulevard for £292m in December, accounting for 22% of Q4 activity. This transaction was the largest office deal of 2021 outside of London and the South East and is one of Manchester’s largest ever single-asset sales.
Annual investment volumes totalled £3.2bn (144 deals) in 2021, up 52% on 2020 (£2.1bn – 128 deals), as the roll-out of the vaccination programme, stabilisation of the economy and return to the office continued to restore investor confidence across the sector.
The average NIY of all transactions sharpened to 7.42% in 2021. This is the lowest average NIY for almost a decade, compressing 59 bps on 2020’s average NIY of 8.01%.
Despite a year of improved investor activity, 2021 investment volumes remain significantly below the current five-year annual average of £4.5bn.
The North West was the most active individual region in 2021, accounting for 43% (£1.4bn) of overall regional volumes, bolstered by the MediaCity investment (£426m), 1 Hardman Boulevard (£292m) and Revcap and Longmead Capital’s acquisition of 3 & 4 Piccadilly Place for £127.5m.
Scotland was the second most active region recording £510m of completed transactions, with strong levels of activity in the capital following Union’s acquisition of New Uberior House for £78.6m and CBRE IM’s acquisition of Exchange Place One for £57.5m.
A total of £460m of regional offices are currently under offer or have exchanged (34 assets) with several key deals due for completion in Q1 2022. This reflects an increase of 42% on Q3 2021 (£323m – 18 assets) and suggests continued positive momentum for the regional office market moving into 2022.
There are currently 27 assets available for sale (£314m), with 10 assets (£224m) being formally released to the market in Q4 2021. This is an increase of 41% on Q3 2021 (£223m – 26 assets) and 35% on Q1 2021 (£233m – 17 assets) as landlords seek to capitalise on improved investor appetite for regional offices.
Property Companies were the most active buyers in 2021 accounting for 37% (£1.2bn) of total volumes, with Institutions accounting for 20% (£630m) of the market share. Occupiers were the third most active buyer, acquiring £330m of stock (10%), albeit these figures are skewed by NatWest’s recent acquisition of 1 Hardman Boulevard.