EDITOR’S COMMENT: With the sun finally shining, I was preparing myself for the great summer lull, but after some 18 months of relative quiet it looks like real estate is coming back to life.
Summer will not be sitting back and sipping cocktails; it will be running hard and fast to keep up with the flurry of activity that looks set to keep the market on its toes.
First to the good news. After a slow start to the year, with Q1 very much being a “wait-and-see” time, transactional activity is heating up, with a noticeable step change in buyer activity over the past few weeks. More than £4.6bn of office properties are being prepped for sale across the West End and the City, according to figures from JLL, with £3.3bn of kit under offer and £5.6bn of assets on the market.
Those numbers, a notable uplift on the £1.2bn of deals exchanged during Q1, are a clear indicator of confidence returning to the capital.
Big-name investors that paused activity at the start of the pandemic are now defrosting deals that had been frozen for the past year or so. Brookfield is finally going ahead with its £635m deal to buy Plantation Place in the City, while German investor Union has pushed through its £500m acquisition of BT’s soon to be HQ at One Braham Street in Aldgate.
The capital has awoken. And so too have large parts of the rest of the sector.
Manchester University this week selected Bruntwood SciTech and Stanhope as its partners for its 4m sq ft, £1.5bn ID Manchester scheme, while Oxford Properties has made its first acquisition (of several) in the European life sciences market, buying a 59,000 sq ft facility at Cambridge Science Park for £45m. It plans to spend around £1.2bn buying life sciences property across Europe over the next five years as part of its goal to build a $15bn (£10.6bn) global life sciences portfolio.
And in the no-longer-nascent BTR sector, activity continues to grow. As you will have read in EG’s first in-depth report on the sector a couple of weeks ago (check out the 22 May issue if you missed it), BTR has blossomed over the past 12 months, with a whopping £4.7bn invested in the sector in the year ended March 2021 – more than double the £2.3bn recorded in the previous 12 months.
This week, UK Residential REIT confirmed its intention to IPO, with the hope of raising £150m to build a diversified portfolio of regional BTR assets.
The REIT, which will be led by a who’s who of real estate – including McKay chairman Richard Grainger, former co-head of EMEA asset services at Cushman & Wakefield Louise Bonham and CBRE’s former chief executive of loan services, Phillip Cropper – is poised to acquire a £145m seed portfolio for the new business and has identified a further £440m of potential acquisitions.
There is activity out there and the market seems hungry to act.
The less good news – unless you’re a lawyer or administrator – is that legal activity is hotting up too. The British Retail Consortium this week claimed that two-thirds of retailers are facing legal action once the moratorium comes to an end later this month, and exclusive figures from EG show in uptick in insolvency filings from retail and leisure occupiers in May.
Whether it’s deals or dealing with debts, one thing is certain: summer 2021 is going to be no holiday. It’s time, it seems, to make hay while the sun shines. Welcome back, real estate. Welcome back.
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