National Investment Market Overview
Alternative Sector
Overview
As we move through Q3 2024, alternative real estate continues to attract investor interest, particularly across the automotive, nursery, and hotel markets. We have seen yield compression in some sub-sectors but a selective approach continues as investors carefully consider lot size, residual value and tenant quality. In the long let automotive sector, net initial yields are stabilising between 6-7% for good quality tenants, although larger lot sizes are providing investors with more attractive yields due to the smaller buyer pool. VW’s Citygate West London unit received competitive interest at c.£35M / sub NIY 6%, its prime location and lease length vital in achieving that. Care homes continue to attract buyers in what is an aging population and in Q3 Allsop sold two well placed care homes for 6.45% NIY. Hotels, particularly Premier Inns, remain popular and have seen yield compression, we understand The Premier Inns at Stansted and Tottenham Hale have exchanged at pricing reflecting a NIY of c.6% and 5% respectively.
Retail Warehouse
Overview
In terms of investment volumes, we have generally had a very subdued 12 months but the third Quarter of this year we are seeing a dramatic increase in stock and transactions coming to the market which is a result of not just improved sentiment in the sector but improved levels of pricing being achieved. We have seen an increase in the number of deals being done at the larger end of the lot size curve which is a shift in the market as previously the smaller lot sizes were where there was more liquidity.
Industrial
Overview
Activity across the industrial investment market has picked up in recent weeks. Investors, notably Funds, who have been keeping their powder dry, are now starting to place their chips and deploy capital or at least try to. Whilst logistics transactions contracted slightly in Q3, the multi-let market sprang to life with a flurry of needle shifting deals and with more coming to the market in Q4, should lead to a strong close to 2024.
Offices
Overview
The office sector is showing signs of recovery, despite ongoing challenges. In H1 2024, the South East saw £363M in transactions, while the national office market reached £1.28Bn year-to-date. Although below the five-year average, this represents a notable uptick from the previous year.