2024-08-23-莱坊-M25_Offices_Q2_2024_7页_3mb
报告摘要
M25 & South East Market Report Summary - Q2 2024
Core Content Overview
This report provides an analysis of the office market dynamics in the M25 and South East regions for Q2 2024, focusing on leasing volumes, investment activity, prime yields, and occupier behavior. It highlights both the challenges and opportunities within the market, emphasizing the resilience of demand and the evolving investment landscape.
Main Points
Leasing Activity
- Leasing volumes in the South East dipped in Q2 but showed a year-on-year increase of 57% for H1 2024.
- Total take-up for H1 2024 reached 1.8m sq ft, the strongest first six months since 2019.
- Deal rate improved, with 71 occupier transactions completed in Q2, exceeding the 10-year quarterly average of 63.
- Seven transactions over 50,000 sq ft were completed in H1 2024, compared to zero in 2023 and a long-term average of four.
- Oxford and Reading were the top-performing markets, with Oxford accounting for 21% of total take-up and Reading showing a fourfold increase in take-up compared to 2023.
Investment Market
- Investment volumes in H1 2024 were £758M, 108% higher than H2 2023 and 19% below H1 2023.
- Investment volumes in Q2 2024 reached £360M, 48% below the 10-year quarterly average.
- Prime net initial yield remained stable at 7.00%, with 85% of deals under £25M.
- Private investors and property companies accounted for two-thirds of investment activity, while institutional buyers were still absent.
- Liquidity is concentrated in smaller lots, and prime assets are attracting more attention due to their strong income return.
Key Trends
- Occupier confidence is rising, with a shift from "just enough" to expansionary space.
- Prime yields are unchanged at 7.00%, as best-in-class assets stabilize in pricing.
- Inflation at 2.00% and potential BoE interest rate cuts could drive increased investment activity in the future.
- Development pipeline is under pressure due to rising costs, and speculative development remains a key focus.
- Active demand in the South East reached 5.17M sq ft, with 4.9M sq ft under construction.
- Grade A office availability is constrained in key locations, intensifying competition.
Market Performance
| Market | Take-up (SQ FT) | Take-up vs Q1 2024 | Supply (SQ FT) | Supply vs Q1 2024 | Vacancy Rate |
|---|---|---|---|---|---|
| South East | 826,331 | -16% | 15.2m | -3% | 8.2% |
| M25 | 338,259 | -22% | 8.7m | -7% | 7.3% |
| M3 | 99,065 | -44% | 2.5m | +12% | 6.3% |
| M4 | 423,436 | +32% | 7.4m | -10% | 11.2% |
Key Transactions in Q2 2024
| Address | Price (£M) | Net Initial Yield | Vendor | Purchaser |
|---|---|---|---|---|
| Assembly, The Foundry, Hammersmith | £52 | 17.00% | AXA Group | KFIM |
| Windsor One & Two, Windsor | Conf. | 7.00% | Canmoor | Letter One |
| The Hive, Wembley | £38 | 11.00% | Quintain | Lone Star Funds |
| North Bailey House, Oxford | £21 | 7.00% | Lothbury | Brydell |
Market Outlook
- Occupier assurance is driving larger space requirements.
- Investment sentiment is improving, despite volumes remaining below long-term averages.
- Prime assets are gaining traction, while secondary and tertiary assets continue to face value erosion.
- Interest in alternative uses is increasing for non-prime assets.
- Expectation of a BoE interest rate cut before year-end may stimulate more investment activity.
Key Contacts
- Roddy Abram – Partner, Head of South East & Greater London Offices
- Jack Riley – Partner, South East & Greater London Offices
- Andy Nixon – Partner, South East & Greater London Offices
- Ashley Drewett – Partner, Lease Advisory
- Andrew Wood – Partner, Tenant Representation
- Simon Rickards – Partner, Head of South East & Greater London Office Investment
- Henry Wyld – Partner, Capital Markets
- Emma Goodford – Partner, Head of Life Sciences & Innovation
- William Matthews – Partner, Head of Commercial Research
- Darren Mansfield – Partner, Commercial Research
- Jodie Gibson – Analyst
Technical Notes
- M4 includes areas from Hammersmith to Newbury, incorporating Uxbridge, High Wycombe, Staines, Bracknell, and Reading.
- M3 covers the main South West London boroughs, extending to Leatherhead, Guildford, Basingstoke, Farnborough, and Camberley.
- Data is based on net internal area as defined by RICS.
- Minimum 10,000 sq ft is used as the cut-off for all data.
- Second-hand space is categorized into A and B grades based on property quality.
- Vacancy rates are calculated using updated stock figures from Q1 2017.
Conclusion
The South East and M25 office markets have shown resilience in Q2 2024, with increased leasing activity and improving investment sentiment. Despite lower volumes compared to historical averages, the market is showing signs of recovery, particularly in prime assets and key locations like Oxford and Reading. Occupier confidence and potential rate cuts are expected to further drive market activity in the coming months.
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