Constrained pipeline continues to hold back transactional activity
West End volumes totalled £454m in February spread across seven transactions. This brings cumulative annual turnover to £767m across eight transactions, which sits 9% below the five-year average by volume and well below the five-year average by number of transactions, owing primarily to a quiet January.
The largest transaction recorded in February (and year-to-date) was Prada’s off-market acquisition of their store at 150 New Bond Street and offices at 40 Bruton Street from M&G’s Life Fund, believed to reflect over £12,000 per sq ft overall. The disposal of Albemarle House, 1 Albemarle Street, by CBRE IM to clients of CLI Dartriver concludes a process that began in September 2023 when the property was first marketed. The property comprises 27,746 sq ft of office and retail accommodation, fully let to 12 tenants providing short-to-medium-term asset management opportunities via rolling refurbishment. The property went under offer in December 2024 and exchanged for £57m, reflecting circa 4.50% and £2,054 per sq ft.
Savills advised M&G on its second disposal of the month, The Portland & Riding Estate, a mixed-use freehold estate in Fitzrovia comprising office, retail and residential accommodation across 36,410 sq ft overall. The estate offers extensive asset management across a range of properties. The estate was purchased by a Private American investor for £22.7m, reflecting 7.06% and £755 per sq ft overall.
Feldberg Capital’s acquisition of Ariel House, 74a Charlotte Street, for its Central London brown-to-green workplace fund, advised by Savills, represents the fund’s third London acquisition. The property comprises 23,820 sq ft of Grade A office accommodation with a private roof terrace at sixth floor level and opportunities to create significant additional terracing, subject to planning. There is also the immediate option to enhance the income profile through implementing an existing planning consent to convert the mews garage accommodation to contemporary offices.
February saw seven new assets openly marketed at an average lot size of just £11m, demonstrating the current market’s constrained supply of larger sales. Noteworthy is Patrizia’s marketing of 11 Baker Street, a prominent corner building comprising 70,058 sq ft of office and retail accommodation, with the office accommodation single let to Pimco Europe Limited until 2026, providing the opportunity for future vacant possession of the office accommodation. The building is held on a long leasehold basis from The Portman Estate with 111 years unexpired, subject to a geared head rent. Offers of £60m, reflecting 5.87% and £856 per sq ft have been sought. Other assets marketed include the freehold interest in 93 New Bond Street offering single let retail accommodation until September 2027 and four residential units with vacant possession achievable by October 2025, and Soho Estates’ 44–46 Cranbourne Street, 5–7 Bear Street, WC2, multi-let to five tenants with a WAULT of 7.58 years to breaks (Q.£18.0m, 4.84%, £2,369 per sq ft).
Whilst supply remains constrained, we are seeing improving demand from a wider pool of investors, with core opportunities by both location and/or secure income remaining sought after, demonstrating the perceived depth of interest in the 11–12 Hanover Square process.
Savills West End prime yield remains at 4.0%; however, as the year progresses, we expect to see downward pressure as pricing levels begin to crystallise. The Bank of England base rate remains at 4.50%, and the SONIA five-year swap rate stands at 3.98%.