Estates Gazette • 15 February 2025 • News

Institutional investors are looking to spend £5bn on core assets in London’s office market, with Middle Eastern and European investors expected to be the most acquisitive.

The figure comes from requirements of 80 institutional investors tracked by Knight Frank as part of its report The London Series. These investors were found to have a focus on large, sustainable office assets with secure long-term leases, strong covenant terms agreed with blue-chip tenants and amenity offerings.

Of these institutional investors, which included sovereign wealth funds, pension and insurance funds, two-fifths were Middle Eastern, 36% European and 11% Asian.

Knight Frank has identified at least 30 prime core assets above the £100m mark that are potentially buyable. If successful, this would point to a recovery following muted investment activity over the past two years.

This outlook is underpinned by a positive leasing market, in which occupiers are increasingly agile and willing to move – over the past 25 years, Knight Frank found the average number of office occupiers looking to move on lease expiry has risen to 77.4% from 52. 5%. Occupiers’ appetite for new or refurbished space is especially strong.

Take-up of such space accounted for 65% of total take-up last year, whereas the average for the past five years has been 45%.

There is, however, a supply crunch, with just 7.5m sq ft of the 12m sq ft under construction falling into the prime category, which could result in a shortfall of nearly 8m sq ft based on current levels of take-up, according to the agency.

The report also found office availability in new, prime City and West End offices are at near record lows at 1.1% and 0.3%, respectively.

As a result, occupiers are committing to prelets on average 28 months in advance to secure larger spaces. Rents grew by 4.3% across London last year, with core prime rents coming in at £95 sq ft in the City and £160 sq ft in the West End.

Even when regearing, 90% of occupiers tracked in the report were found to have maintained or increased their office space and 70% agreed rent increases averaging £20.08 per sq ft.

Seaforth and QuadReal sign tech tenant

Seaforth Land and QuadReal have signed the first lettings at their redevelopment of Space House, a 260,000 sq ft Grade II listed block in Covent Garden, WC2.

Software company Blackline has signed a lease for the 8,066 sq ft seventh floor of the block.

Seaforth Land founder Tyler Goodwin said the letting showed “the growing demand for distinct, authentic and welllocated office space in central London”.

Jay Kwan, managing director of QuadReal Europe, added that the project “demonstrates that it is possible to offer innovative, modern workspaces by breathing new life into listed buildings while preserving its unique heritage and minimising the carbon footprint”.

The pair said that a listed company is also lined up to take the sixth floor of the building.

QuadReal, Seaforth Land and Atelier Capital Partners acquired Space House in 2018. Originally built in 1968 and designed by George Marsh and Richard Seifert, the redevelopment was designed by Squire & Partners.

CBRE and Savills are leasing agents for the office space, with Bruce Gillingham Pollard acting as retail and leisure agency.

New mutual banking on 60 branches

A new mutual bank for the North West has launched a search for around 60 properties to be turned into bank branches.

NW Mutual has been launched in response to more than 50% of traditional bank branches closing in the region. About £1m has been invested in NW Mutual to build the systems and financial model of the bank, prepare the license application and analyse its market.

The move will deliver staffed branches, mobile and online banking, providing retail and small and medium-sized enterprise customers with a full range of financial products and services.

The network of branches includes 16 earmarked for Lancashire, more than 20 in Greater Manchester, 12 in Liverpool and Merseyside, potentially 10 in Cheshire and six in Cumbria.

The bank is headed by senior financial services executive Dave Burke. The location of its headquarters is yet to be confirmed but it will also sit in the North West. It is due to open in the second quarter of 2025.

Burke said: “Our aim is to provide access to as many people and businesses in the North West as possible, with 95% of residents and small and medium-sized businesses within a 30-minute drive to a branch.”

The firm will submit a banking licence application to the Bank of England later this year and plans to open in Q3 2026, with a full roll-out in Q1 2027.

BNP Paribas Real Estate has appointed Philip Longstaff as a director within its valuation team. Based in the Leeds and Sheffield offices, Longstaff will cover Yorkshire, the East Midlands and the North West, providing advice across commercial and residential investment and development. He joins from CBRE, where he spent 17 years, most recently as an associate director in the international valuation team, where he covered UK and European commercial markets.

Montagu Evans has expanded its national ratings team ahead of the 2026 business rates revaluation with the appointment of Julie Chalmers as partner. Chalmers joins the firm from Colliers, where she served as a director for three years. Before that, she spent several years at Newmark. Based in the Manchester office, Chalmers will initially work on major projects including Manchester Metropolitan University, Salford College, Transport for Greater Manchester, Arnold Clark, Innside Hotels (Melia) and Greater Manchester Fire and Rescue Service.