West End Investment Market
The West End recorded £1.068Bn of transactions during the July to September Q3 period, either exchanged or exchanged and completed in 26 deals with an average lot size of £41M. During October and November, the West End has recorded £1.038bn. With a month to go, this brings the total YTD to £4.73bn across 85 transactions – almost £1Bn ahead of the total for 2024 and some way ahead of 2023 (£3bn). The 15-year average is slightly over £6Bn. We estimate there is in excess of £1Bn of further property under offer, some of which is likely to exchange in 2025.
For Q1 – Q4 the average deal size was £55M which reflects an increase in the larger lot sizes trading, with two £100M+ deals having transacted in Q3 and thirteen over Q1 – Q4, with a number under offer and three having exchanged in Q4. These include Hines, who have exchanged on the disposal of their office and retail development, The Burlian, 80 New Bond Street & 325 Oxford Street, W1, to Allwyn Entertainment at pricing in the region of £200M, with a 3.50% NIY; 123 Victoria Street, SW1 originally guided at £265M / 6.3% NIY, which exchanged to Sculptor and LBS; and 33 St James's Square, SW1 which is under offer with vacant possession for approximately £100M, at £2,250 per sq ft. There have been a further 10 £100M+ deals launched or to be launched since the start of August. However, this is still somewhat behind 2017, when there were 26 deals completed over £100m+.
The two largest transactions for the quarter were the off-market sale of Land Securities’ 102 Petty France, SW1, to hotel developer Arora Group for £245M / 5.75% NIY / £694 per sq ft; and Mago Capital's acquisition of part of The Notting Hill Gate Estate - for c.£125M following Frogmore launching the asset to the market in March 2025. Allsop is currently tracking over £1.15Bn of stock under offer in the West End in over 30 deals, with the total 2025 volume set to be far ahead of the 2024 annual total. These include Nuveen's disposal of 60 Great Portland Street & 46-50 Mortimer Street, W1 for c.£85M / 5.50% NIY. Private Investor Gruppo Romeo is selling 7 Old Park Lane, W1, following its recent full refurbishment. It has been reported in the press that this asset is under offer to Oval with SVP Global for c.£92.5M / £1,700 per sq ft. Since the start of August, we have seen over 60 assets formally launched for sale, equating to over £3Bn of value in the West End. Significant launches include 10 Stratton Street, W1which has been launched to the market with a price tag of £100M / 3.65% NIY / £2,500 per sq ft, Barings’ sale of the Davidson Building, 3-8 Southampton Street, WC2 for £70M / 5.00% / £1,635 per sq ft and BEAM launching 72 Welbeck Street, W1 for £165M / 4.40% NIY / £1,450 per sq ft. Investor demand for core assets in prime locations, primarily driven by rental growth, remains strong, with the number of buyers, particularly in the £20M-£50M bracket, having doubled.
Who is Buying?
We have seen a significant upswing in UK based investor activity with The Crown Estate's purchase of 100 Regent Street, W1 and REITS who are active on the buy and sell side with GPE's acquisition of The Gable, Alfred Place W1 for £18M from the City of London Corporation and Shaftesbury's off market acquisition of 1 Golden Square, W1 for £21M reflecting £1,500 per sq ft. UK funds are back, accounting for a significant proportion of the year-to-date acquisitions. Including Aberdeen's Q4 purchase of Standbrook House, 2-5 Old Bond Street, W1, rumoured to be in excess of £120M, which we estimate broadly reflects c.3.50% NIY. Staffordshire County Pension Fund acquired Derwent's Francis House, Francis Street, SW1, for £55.5M / 4.90% NIY. DTZI acquired 120-134 Tottenham Court Road, W1 for £58M / £332 per sq ft and CBRE Capital advisors bought for RBKC Pension Fund The Stanford Building, 12-14 Long Acre, WC2 for £34.5M / 4.64% NIY. Furthermore, Ares continues their acquisition strategy, having recently acquired 101 New Cavendish Street, W1, from WELPUT for £92.745M / 7.10% NIY following their Q2 acquisition of 10 Brook Street, W1. Other trends of the quarter include private investors acquiring 38% of the deals, while only one deal was acquired by an owner-occupier, which goes against the trend usually seen in the West End.
Who is Selling?
UK funds are also active on the sell side with Schroders' disposal of One Lyric Square, W6 - £57.05M / 8.77% NIY / £552 per sq ft and WELPUT's sale of 101 New Cavendish Street, W1 and Columbia Threadneedle's disposal of 4-5 Bedford Square, WC1 – c.£6M / £646 per sq ft. Non-traditional sellers are entering the market, such as Global Holdings, which are typically long-term holders now looking to dispose of non-core assets. They recently launched 210 Pentonville Road, N1, to market for £90M / 7.84% NIY, offering the multi-let, 91,000 sq ft Freehold, all-electric office building and The BEAM / Abu Dhabi royal family are selling 72 Welbeck Street, W1.
Direction of Travel
With more than £3Bn launched since August and £1.15Bn under offer, we are on track to exceed the 5-year average and are likely to finish on a high in terms of volumes in the West End.
The number of buyers has doubled, and there is much greater liquidity in the market.
Buyers are moving closer to vendors’ pricing expectations as illustrated by the sale of 1 Newman Street, W1 – which exchanged to Royal London for £250M / 4.48% NIY – this had been quietly tested c.18 months ago by GPE, who elected to hold at the time when offers were apparently received around 75bps short of where it has now transacted.
We expect to see a continued resurgence in activity at the top end of the market. Allsop has tracked over 10 £100M+ deals launched or to be launched to the market since August, showing renewed investor confidence in bringing these larger lot sizes to the market.
