More than £1bn of deals have fallen through across the UK’s capital markets, double the level three weeks ago, according to new research from Cushman & Wakefield.
And only a further £700m of assets have been put under offer or closed in the past three weeks, taking the total amount of assets under offer or now closed to £6.9bn.
London offices represented two-thirds of the £6bn of assets under offer or exchanged, C&W reported.
However, the amount of available central London office assets is at 20% of what it should normally be as sellers withdraw from the market and wait for transparency.
C&W added that as evidenced by the recent sale of 90 Bartholomew Close, EC1, by Helical to La Francaise Real Estate Partners International, which was 3% down on the price it had previously been placed under offer at by Aberdeen Standard Investments, prime prices have shifted marginally since January.
Meanwhile, 10% of all named UK office space demand above 20,000 sq ft has either cancelled or delayed their acquisitions citing Covid-19, a 3.5% increase from 7 April – albeit tech and pharma companies are still looking to lease space, C&W said.
Demand deferred due to Covid-19 increased by 48% from circa 1m sq ft to circa 1.5m sq ft as companies sought short-term extensions to leases while they determine the impact of the pandemic on their business.
Since 7 April, the amount of office space under offer across the UK has fallen by 13%, while cancellations due to Covid-19 are still limited to less than 200,000 sq ft across the UK, C&W added.
Approximately 130,000 sq ft of new demand has been recorded per week since the lockdown was announced on 23 March, C&W said.
This is a 70% reduction on a typical week of registered named demand over 20,000 sq ft.
In the retail sector, most high street, out-of-town and shopping centre assets remain on hold and no new stock is being brought to market, but pre-pandemic logistic deals are still proceeding, C&W said.
There is, however, some evidence of a gap of up to 20bps emerging between buyer and vendor expectations in the logistics sector.
Logistics’ landlords received 50% to 75% of Q2/April rent, and new demand continued to be above average since the lockdown began, with a further 5m sq ft of requirements in the two weeks from 7 April and circa 2m sq ft more going under offer.
C&W reported that it was starting to see the second phase of short-term demand stemming from the high volumes of unsellable and seasonal product entering the UK ports.
To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette
