Central London office market picks up following sales plunge, research shows

The firm’s preliminary data shows that £1 billion transacted in November with a further £2.2 billion exchanging last month.

Deals in the fourth quarter included Landsec agreeing a £552 million sale of office buildings 1 & 2 New Ludgate, to Singapore-based investment firm Sun Venture.

James Beckham, head of central London investment at CBRE said: “Whilst the Central London investment market experienced a festive flurry at the end of the year, there remains pent-up demand from investors. We expect volumes to continue to recover over the next 12 months albeit with a slower start to the year."

Beckham added: "With Brexit off the table and a vaccine rollout in place investors remain committed to looking for opportunities to deploy capital in 2021."

There are a number of global investors taking a long term view on London, who think occupier demand for the best office space will hold up.  

The Times today reported that the ‘Cheesegrater’ skyscraper has achieved a record office rent for the City of London, with a company agreeing to pay almost £110 per square foot for space at the Leadenhall Building. Meanwhile, Savills this week said it saw occupier demand for London offices improve in December 2020.

Although many firms are expected to embrace more flexible working post-Covid, a number of bosses have said they think a office remains important.

In the West End offices sector, Nick Pemberton, a partner at Allsop, said  there was a “diverse investor base, including strong demand from both Europe and Asia” last year.

He added: “Allsop expects to see this demand continue in 2021 with many London buyers looking for long term investments into prime offices.”

BNP Paribas Real Estate estimates around £3.7 billion of office buildings are under offer in the West End and City currently.

Simon Glenn, head of London markets at BNP Paribas Real Estate, said: “There have been concerns around the impact of remote working on the office market but, I think company bosses are increasingly seeing the value an office environment brings.  The office has a key role to play in building a brand and company culture, which cannot be done in the same way with staff working entirely from home.”

He added that the capital will “continue to be a highly attractive city for investors”.