Commercial Investment National Office Market Update

Market Overview

Market Recovery Signals

• £1.28bn transacted across the national office market YTD, showing a notable uptick from last years volumes, albeit still c.60% below the 5 year average
• Return of larger lot sizes, with 7 transactions exceeding £20m in the South East during H1
• Standout transaction: Central Square in Leeds, acquired by Ashtrom for c.£78m (8.00% NIY)
• EQ in Bristol rumoured to be under offer for over £100m (7.50% NIY)

Key Investment Drivers

• Significant yield rebasing across core, core plus, and value-add opportunities
• Base rates decreasing (now at 5.00%) as inflation stabilises (1.70%)
• Improving occupational market with clearer post-Covid space requirements
• Prime rent increases in key markets (notably Leeds, Bristol, Richmond, Maidenhead, Reading, Watford)
• Limited Grade A stock driving competition among occupiers

Investor Activity

• Increased interest from mainland European investors, particularly French Open Ended Funds
• Middle Eastern High Net Worth individuals active in the long income market
• UK funds becoming more acquisitive for best-in-class assets

What does this mean for the market?

Allsop sees this as an opportune moment to enter the market before further base rate reductions potentially drive-up competition. We're observing activity across various office sector divisions, including Best in Class, Refurbishment, Long Income, and Repositioning to Alternative Use

Read Allsop' full analysis into the National Office Investment Market