City Investment Watch – September 2017

■ In the City market, we are currently monitoring 62 investment opportunities totalling circa £5.2bn. Of which, 22 are currently under-offer totalling circa £1.2bn, leaving an estimated £4.07bn worth of available opportunities. The 10 largest available assets account for 73% of total availability.

■ A notable August deal saw a private investor acquire Lacon London, 84 Theobalds Road, WC1 for £285m, reflecting circa 4.50% and £1,290/sq ft. The building is let to eight tenants including Industrial Light & Magic, Argus Media and Kilburn & Strode. The 220,885 sq ft Midtown asset was acquired by Blackstone in July 2013 who undertook a comprehensive refurbishment. Savills advised the vendor.

■ August also saw the sale of the Royal Mail Sorting Office, Mount Pleasant, WC1 to Taylor Wimpey for £193.5m. Planning consent was secured for the development site in March 2015 to create 681 residential units, as well as retail, office space and public space. Savills advised the purchaser.

■ For the year to date, Asian investors have continued to be the most active accounting for 59% of City turnover. However, just over half of their total turnover has come from two deals alone; 20 Fenchurch Street and The Leadenhall Building. They are followed by European investors at 15%, and UK investors at 13%. Activity from the Middle East has began to increase, now accounting for 8%, while the US remains relatively quiet accounting for 3%. Investors from other regions account for the remaining 2% of turnover.

^{Source: Savills Research – accurate to end of August 17}

■ Following on from WeWork acquiring their first City building in July, 51 Eastcheap, EC3, they continued to invest into the City last month. They acquired 120 Moorgate, EC2 for £43.00m and £526/sq ft. The 156,530 sq ft freehold building was sold with short term leases across the office accommodation and Barclay's occupying the retail unit.

■ At the end of August, the average of the top ten capital values of traded assets in the City was £1,442/sq ft, up on last year by 10.3% and up on the 10-year average by 41.8%. This has been due to a number of trophy assets being traded this year amidst strong overseas demand.

^{Source: Savills Research – accurate to end of August 17}

■ Savills prime City yield remains at 4.00%. The spread between the City and the West End is still just 75bps with the West End prime yield currently at 3.25%.

^{Source: Savills Research – accurate to end of August 17}

^{Source: Savills Research}