Investors spent nearly £3bn on central London offices in third quarter

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Investor appetite for central London office buildings has bounced back to surpass pre-Covid levels, with nearly £3 billion spent in the last quarter, figures show.

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Buyers are betting that demand for high-quality and modern workspaces will improve, even as many firms adopt flexible work and some bosses try to reduce the size of the office.

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Preliminary data from property agent JLL, compiled for the Evening Standard, showed that approximately £1.5 billion and £1.4 billion were spent on City and West End office buildings, respectively, in the three months to 30 September.

This is well ahead of the £1 billion spent a year ago when travel restrictions and lockdowns made deals difficult. There was also panic about tenant demand as people worked from home.

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But amid buyer uncertainty about Brexit and the prospect of a general election, the £2.6 billion invested in the third quarter of 2019 is still ahead.

Total year-on-year spending on central London offices reached £7.5 billion, up from £4.1 billion last year.

The purchases over the past three months include Derwent London’s acquisition of 250 Euston Road in a £190 million deal.

Julian Sandbach, Head of Markets, Central London Office at JLL, said: “Investors are increasingly optimistic about London’s economic prospects in a post-Brexit environment and are encouraged by increased occupancy activity and positive return-to-work messaging. “

He added: “The last quarter is always the busiest and we expect a strong end to the year with more deals in traction than at any other point in 2021.”

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