(Entertainment-NewsWire.com, March 25, 2013 ) London, UK -- London Midtown Availability is set to fall to a five-year low of 4.5% by the end of 2013,Take-up remains consistent and its Secondhand market continues to shrink, all putting upward pressure on rent, according to Farebrother.
Investment turnover in Midtown exceeded 2011’s total by 7% to hit £2.5 bn in 2012. Investment sentiment has remained steady in 2013 as Investors continue to search for the right assets for both commercial and Change of Use potential, chased now by Overseas Investors. Their knowledge of Midtown has been growing and with the fundamentals of a low Availability Rate, limited Pipeline and diverse occupier base in place, Midtown has increasingly been seen as an attractive, alternative location to the City or West End.
Corporates such as Skype, Linkedin and Warner Bros. have been relocating, renewing or expanding in Midtown but it is their Take-up of Secondhand and Refurbished commercial property in London that has fueled Investors’ bids. Recent Corporate Inward Investment includes Skype’s Acquisition of 88,000 sq ft at Waterhouse Square and the 46,000 sq ft taken by Linkedin at Castlewood House, New Oxford Street. Warner Bros. has renewed its 135,000 sq ft head lease at WELPUT’s 98 Theobald’s Road and Westfield has regeared at MidCity Place.
Farebrother’s new instructions include AVIVA’s 31,700 sq ft 20 Red Lion Street, WC1, fully-let to IP specialists Kilburn & Strode LLP and Abel & Imray, quoting offers in excess of £15.25m and the 44,000 sq ft Summit House,11-12 Red Lion Square, WC1, also fully-let to lawyer Mishcon de Reya, quoting £25.5m, reflecting a Capital Value of £580 per sq ft.
On assets where there is residential use potential there will be strong competition. Farebrother has just sold 64 Lincoln’s Inn Fields, WC2, to Cannon Estates for £4.5m, a C19th Grade II Listed building, equating to £611 psf overall. Cannon is thought to be seeking Change of Use of the 7,359 sq ft stucco building which overlooks London’s largest garden square. A few weeks ago, Farebrother sold a rare 14,000 sq ft Victorian warehouse scheme off Exmouth Market, with Planning Consent to convert and extend the top two floors to Residential Use, to a joint venture between German contract furnisher Brunner and residential developer Londonewcastle, for £5.05m and a Capital Value of £360 psf.
Alastair Hilton, Head of Investment at Farebrother commented “Over 50% of total Investment in the market in 2012 was from Overseas Investors, expect this trend to continue, however, UK Funds have always been active in Midtown and remain an important component, not least because they understand the value of a diversified occupier base as a way of spreading risk. Furthermore, the smaller lot sizes (sub £15m) tend to appeal to the majority. Funds’ requirements remain strong. UK Property Companies are also keen to increase their Midtown exposure. Their business is to add value so they will look carefully at entrance prices, particularly Capital Value per sq ft. Midtown has tended to be competitive in this respect, however, there is pressure for these Capital Values to rise. They were quick to see the benefits of infrastructure improvements although competing with Overseas Investors and residential developers has been difficult and will continue to be a challenge.”
About Farebrother:
Farebrother is an established, multidisciplinary practice of property advisers and surveyors whose core business is to provide office and retail brokerage, investment, lease advisory, valuation and management services to occupiers, investors and developers.
Based in Central London, Farebrother specialise in London Midtown and Southbank markets. A private practice since 1799, three partners have become Lord Mayor of London. The Practice acts for funds, estates, property companies, occupiers and private individuals, including PRUPIM, the CBI and City of London. For more information, click here or visit http://www.farebrother.com
