Soho in London is more desirable to tenants and investors than ever before. The area has always appealed to restaurateurs, bars, clubs and the creative industries but the last three to five years have seen it mature again into a newer form.
Looking back, its rich cocktail of amenity, dominated by niche operators, set the solid foundations for an exciting place to socialise, live and work. Developers then capitalised on Soho’s hedonistic brand and it now boasts some of London’s best food and beverage and leisure operators, hotels and residential schemes. With these perfect ingredients for an exciting environment, the business occupier base has followed and in turn the next stage of its evolution is its perception among investors.
Traditionally, Soho formed the heartland of London’s media and entertainment sector, attracting major industry players beginning with 20th Century Fox, Sony, M&C Saatchi, CNN and Spotify. But the area’s appeal has evolved and new developments such as Great Portland Estates (GPE)'s 30 Broadwick Street and Shaftesbury’s 57 Broadwick Street have led to corporate and financial sector occupiers such as Boston Consulting Group and OakNorth Bank moving in. These new corporate entrants have been prised away from their previous homes in Marylebone and Mayfair in search of a more vibrant sub-market where they can attract the best talent.
Our average grade A office rents are now £84.60 per sq ft; 44 per cent ahead of where they were five years ago. Peak rents have reached £110.00 per sq ft, prime yields have firmed up and on many of our sales we are recording initial yields close to 3 per cent. Capital values have therefore increased to over £2,000 per sq ft, a range once only the preserve of Mayfair and St James’s.
With a broader tenant base, better quality buildings and rising values, the biggest change in Soho has been the shift in the buyer base, moving away from being a market predominantly driven by domestic investors to now include private and institutional buyers from Asia, the US, the Middle East and Europe. Buyers from all of these regions have transacted deals in the market in the last 18 months.
Soho was once seen as a specialist market yet today it is regarded as a true competitor to London’s traditional prime investment sub-markets. This shift has occurred before the arrival of the much anticipated Crossrail, suggesting momentum will continue to build when the Elizabeth Line starts running at the end of 2018.
Further information
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