More than £2 billion of central London offices are under offer at the start of 2024, but they will need to complete before a major increase in new disposals gets under way.
The largest transaction involves Indonesian investor Sinar Mas Land, which has gone under offer to buy 20 Old Bailey from Korean global mutual investment fund Mirae Asset Global Investments for around £240 million.
The Korean investor bought the 247,000-square-foot building in 2018 for around £340 million. Mirae is being advised by Cushman & Wakefield and Sinar Mas by JLL. React News first tipped the transaction.
Separately, a number of parties are circling Senator House at 85 Queen Victoria Street, which has been placed on the market by Legal & General and Dutch pension fund PGGM, advised by JLL. It is thought that a successful bidder would pay around £65 million for the 180,000-square-foot office which is multilet to tenants including Quilter.
Bids are understood to have been received for 5 Churchill Place, the former headquarters of collapsed investment bank Bear Stearns in Canary Wharf, with market sources suggesting a price of around £110 million to £120 million is close to being agreed. Savills is marketing the 12-storey office block on behalf of receivers from FTI Consulting, which had taken over the property from Chinese investment firm Cheung Kei Group.
A private UK property company is understood to have gone under to buy 2 Hosier Lane from a private Hong Kong investor, which is being advised by CBRE. It is thought that the 42,000-square-foot building will sell for around £25 million.
In addition, a party is understood to be under offer to buy Old Change House at 128 Queen Victoria Street for circa £30 million. Knight Frank is advising the vendor Delancey on the sale of the 53,000-square-foot building. Market sources suggested the likely buyer is Addington Capital backed by Baumont.
The market is this week waiting on completion of Dominus's circa £85 million acquisition of 65 Fleet Street, a 225,000-square-foot office building, from a private Hong Kong investor linked to plastics and car parts manufacturer Jing Mei Industrial Holdings. Dominus is planning a hotel conversion of the building.
Landsec, the major UK real estate investment trust, is also finalising the sale of a significant development opportunity on Tottenham Court Road in London's West End.
CBRE has been quietly marketing the freehold interest in the 0.7-acre site at 6-17 Tottenham Court Road seeking around £60 million, before going to best bids at the end of last year. Market sources have said NorthStar Capital has gone under offer to buy it.
Shaftesbury Capital, the listed London investor that owns much of Covent Garden and Soho, is imminently expected to complete its acquisition of a series of Covent Garden buildings for around £80 million.
CoStar News revealed earlier this year that Lothbury Property Trust had put the six buildings in the heart of Covent Garden up for sale seeking £90 million or a 4.28% net initial yield. The buildings comprise 20,001 square feet of shops, offices and homes. Michael Elliott and Colliers are handling the sale of the estate, which is available to buy for the first time since Lothbury's purchase in 1985.
The buildings date back to the 17th century. Located on the corner of James Street and Floral Street, they are 25-31 James Street and 7-8A Floral Street.
There is also expected to be progress on the sales of 55 St James Street, which Lothbury has been marketing for sale seeking up to £80 million, and of 33 St James Street, which is being sold by the Argyll Club seeking circa £100 million. Michael Elliott is advising on both sales.
In addition, the South Molton Street Estate is under offer to a private Greek investor for around £57 million. The City of London Corporation put up for sale the freehold of its South Molton Street Estate in London's West End via CBRE last year.
South Molton Street comprises 200 metres of premium retail frontage. The estate is made up of 19 directly managed freehold assets and 34 freeholds subject to long leasehold interests. The total net lettable area of the directly managed freeholds is circa 46,250 square feet.
Knight Frank reports that it is tracking around £2 billion of central London office investment under offer and says there is particular confidence to be taken from the strength of private investor appetite. It estimates there is £12 billion of private investor funds actively targeting London offices.
A senior London office adviser said transactions would need to complete before the market begins to feel more confident.
"While it is good to see a number of transactions progressing, the majority went under offer last year, and little new stock has been launched in 2024. The market will want to see these deals transact."
At Knight Frank's London office presentation last week Nick Braybrook, head of London office capital markets and development, said central London office transactions had fallen to £6.9 billion in 2023, a low last seen in the aftermath of the Lehman Brothers collapse. But he said the year would see recovery driven by "price discovery, recovery capital, and performance outlook".
Victoria Ormond, head of capital markets research, said critical is that 2024 will see a peak in loan maturities, at £6.34 billion, particularly for acquisition financing in the capital.
Braybrook said private buyers will lead the recovery, having accounted for 53% of acquisitions last year but added that real estate investment trusts, Japanese and Middle Eastern investors were all likely to be strong participants, while KF's residential land clients were increasingly looking to diversify exposure to London via commercial acquisitions.