Morgan Stanley’s Glasgow HQ sells for over £50m in French deals hat-trick

French investment group Iroko Zen has bought the 157,000 sq ft Scottish HQ of Morgan Stanley. Knight Frank Investment Management put the building at 122 Waterloo Street up for sale in May this year. It is home to Morgan Stanley’s largest office in Europe outside London and provides an annual rent of around £4.8m. The deal is the latest in a flurry of acquisitions for Iroko Zen, which made its UK office debut in June this year, splashing £14.4m on the 18,000 sq ft 90 Union Street, SE1. It bought the block from CBRE Global Investors. Two months later it bought the 84,000 sq ft St Stephen’s Place leisure park in Trowbridge, Wiltshire for £11.4m. The Paris-based investment firm is already active in Ireland, the Netherlands, Germany, Spain and its homeland of France, but is expanding in the UK to take advantage of opportunities it believes have arisen as a result of both Brexit and the Covid pandemic. The investor has a portfolio of around 10 assets in Ireland and more than 100 assets in total. Gary Cameron, head of Scotland at BNP Paribas Real Estate, which advised Iroko Zen on the Glasgow buy, said: “This milestone transaction is significant for Glasgow’s office sector and serves as a reflection of the broader trends shaping the market, including its strong rental growth prospects, top sustainability credentials and strategic location, all of which are becoming almost mandatory for certain investor groups.  “Since the start of the year, the Glasgow office market has been experiencing an improved flow of activity. The city continues to be a key destination for both domestic and international occupiers, thanks to its skilled workforce and competitive operating costs compared to other major UK and European cities. There has been a steady demand for core high-quality space, driven by finance, technology and professional services.” He added: “Looking ahead, the Glasgow office market is expected to continue its positive momentum. The city’s ability to attract major financial institutions, coupled with ongoing investments in infrastructure and regeneration projects, suggests a strong outlook for the sector. However, the market will need to continue adapting to broader economic challenges and the evolving needs of investors who continue to strive towards best-in-class income profiles and assets at a time where the pipeline of new stock is critically low.” The sale marks a hat-trick of deals completed by BNP PRE to French investors across Scotland in the last few months. Deals include the acquisition of two office buildings on behalf of Remake Asset Management for £36.6m – a blended yield of 7%. The two properties, sold by LondonMetric, include Dundee’s 2 Greenmarket, spanning 85,000 sq ft and let to BT on a 17.5-year lease with CPI-linked rent reviews, and Glasgow’s 4 Pacific Quay, a 60,000 sq ft office leased to STV for a further 17 years, with five-yearly compounded fixed reviews of 1.5% a year. Hugh White, head of national capital markets at BNP PRE, said: “The investor interest from French SCPI funds is an encouraging endorsement of the long-term attractive fundamentals of the UK office market. This investor base is leading the way in the institutional market and, in turn, we expect to see momentum from other core investors over the next 12 months”. Knight Frank and Cushman & Wakefield advised KFIM at 122 Waterloo Street; Lismore acted on behalf of LondonMetric. Investment comparables in Glasgow >> Image from BNP Paribas Real Estate