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.
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.
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.
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.”