It is hard to remember a period when UK commercial property has felt so weighed down by caution around the economy and wider challenges, and CoStar's second-quarter agency awards show the industry working harder than ever to get deals over the line.

Lambert Smith Hampton's figures for the quarter find only £7.5 billion of property changed hands, down 10% on the previous quarter’s already low figure, and 41% below the five-year quarterly average. The adviser says the run is the first time in over a decade that the market has experienced a third successive quarter of sub-£10 billion volume.

Hopes the market would begin to return to more normal patterns in the second half of 2023 were hit by the Bank of England's repeated interest rate rises in a bid to tame high inflation.

CoStar data shows £1.2 billion was spent on London offices last quarter, a 59% drop on the £2.9 billion spent in the previous quarter and the fourth-lowest quarterly total in the past two decades. In retail, CoStar finds that after a strong start to the year, the £1 billion spent on retail properties between April and June was down 60% and the sector’s second-weakest quarter in over a decade, behind only the lockdown-hit second quarter of 2020.

Retail warehouses did remain a bright spot and there are others. Savills reports the second quarter has seen the highest investment transaction volume seen by the build-to-rent sector, at £1.26 billion.

And investment in industrial property is undergoing a return to stability. Cushman & Wakefield reports investment volumes reached £1.6 billion during the second quarter, "showing signs of recovery" from the first three months of the year and taking the total half-year volume to circa £2.8 billion.

Within this, Gerald Eve says a total of £2.6 billion of assets across 22 portfolio transactions either completed or went under offer during the second quarter, and it is from this buoyant part of the market that CoStar's top sale emerged.

Better news on inflation recently suggests the Bank of England's rates measures may be having an effect and that means as the quarter has drawn to a close sentiment is at last more positive about the remainder of the year.

Blackstone's Appetite for Industrial Remains Unsated

If Blackstone has sounded less than thrilled about offices recently, its love affair with global industrial and logistics real estate has only strengthened.

In April it reached agreement on the £700 million take-private of UK multilet industrial investor Industrials REIT. That deal valued Industrials' share capital at £511,196,472, with close to £200 million of debt included.

Established in 2012 and headquartered in London, Industrials REIT converted to a UK real estate investment trust in 2018 and announced plans to become a 100% UK-focused multilet REIT. That ambition completed on 5 April 2023 following the disposal of Industrials’ interest in a joint venture in care homes in Germany.

And it was at that point that Blackstone took control. It paid £511.2 million for the real estate, a portfolio that covered 7.12 million square feet across 104 assets, as part of a deal that Eastdil Secured advised on.

REIT Ticks All the Right Boxes for International Law Firm

Law firms have been London's big movers recently, with their focus on shifting staff to environmentally greener and often smaller space that is better suited to flexible working patterns.

Landsec scored a major coup in persuading international law firm Taylor Wessing not only to stay put and renew its lease at its home in the capital, but also to expand – from 166,000 square feet to 175,000 square feet.

The law firm said its decision to remain and increase its space at 5 New Street Square in EC4 had been driven by sustainability concerns and it would be joining forces with the real estate investment trust to carry out an extensive refurbishment.

The transaction effectively sees the firm take an extra floor at the Midtown campus, near the legal heartland of Chancery Lane.

Landsec sold the building's neighbour at One New Street Square to Hong Kong investor Chinachem Group in the first quarter for £349.5 million in what is one of the capital's biggest recent investment sales.

Newmark BH2 advised Landsec; Savills advised the law firm.

Segro Does It Again in Coventry

Perennial dealmaker and the UK's largest REIT, Segro, secured third-party logistics firm Syncreon for a prelet of more than 700,000 square feet at its Segro Park Coventry development in the West Midlands, in a transaction first revealed by CoStar News.

In taking the purpose-built Unit 3A shed at the West Midlands development, the DP World Company is understood to have struck a deal to pay a rent of around £8.50 per square foot.

Syncreon is busy expanding its UK footprint having taken a 271,227-square-foot warehouse at Tritax Symmetry's Symmetry Park development in Bicester, Oxfordshire the previous month.

DTRE and Savills advised Segro.

Stricken House of Fraser Store Brought Back to Life

As the UK's shopping centres have looked to reinvent themselves in the wake of changing shopping habits, new uses have come forward to take space no longer required by traditional retailers.

An increasingly common tenant is frontline healthcare, attracted by the locations to get close to local communities.

In this spirit, two NHS trusts have signed a long-term lease for 40,000 square feet in the former House of Fraser department store at the Metrocentre in Gateshead, for the biggest retail letting of the quarter.

The letting is for a Community Diagnostic Centre facility that will provide imaging, respiratory investigations and cardiac investigations for Gateshead Health NHS Foundation Trust and Newcastle upon Tyne NHS Foundation Trust.

With the Trafford Centre in Manchester, the Metrocentre is the biggest regional shopping centre in the UK, with 2 million square feet of lettable space. Sovereign Centros took over the running of the mall in October 2020 after owner Intu collapsed into administration in June that year because it failed to reach an agreement with its creditors. The asset manager has been busily repositioning the mall and filling vacant space.

Lunson Mitchenall represented Sovereign Centros.