Investment rockets as investors seek Midtown exposure

Midtown specialists Farebrother say Q1 investment in Midtown offices reached £850m

Article posted: 26 May 2011

Investment in office space in London’s Midtown reached £850m by the end of Q1, according to Midtown specialists Farebrother. This is the highest quarterly total for over three years as investor confidence in the area’s rental growth prospects, a restricted development pipeline and the fact that no significant tenant supply would be put on the market, boosted interest and helped ensure that interest remains strong.

Active interest in well-priced, medium-term asset management opportunities in Midtown that will fulfil occupier demand in the absence of new developments is strong across all UK investor sectors.

Alastair Hilton, Head of Investment at Farebrother commented: “Everyone wants a piece of Midtown. Fresh rental evidence that headline rents are improving means there will be further pressure to drive prime yields down below the current 5.25% mark.”

Three large transactions in the Fleet Street area in Q1 underpin the market. In the largest deal, Hong Kong-listed Chinese Estates acquired the 430,000 sq ft River Court, 120 Fleet Street, EC4, (pictured) let to Goldman Sachs until 2025, from an Irish syndicate for £280m at a yield of 5.25%.

Across the road, at 65 Fleet Street, EC4, the Malaysian Employees Provident Fund (EPF) acquired the 230,000 sq ft HQ of Magic Circle firm Freshfields Bruckhaus Deringer for £148m from Union Investments, at an initial yield of 5.75%. At 60 Victoria Embankment, EC4, JP Morgan bought the 414,000 sq ft building it occupied on a lease to 2016 from The Carlyle Group for £190m. Carlyle acquired the building in 2010 as part of The White Tower portfolio.

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Posted by Jo