Investor sentiment grows in regional offices

Investor confidence in regional offices is growing, according to the latest figures from Savills, with just over £1bn invested in Q3. The number is almost double the previous quarter and brings total investment in offices outside of London to £2.1bn so far this year. The year-to-date figure is some 7% up on 2023 but still 50% down on the five-year average. Savills said there had been a particular uptick in the number of deals recorded, with 87 transactions completed in Q3, the highest volume since Q2 2022. Lots sizes are smaller, with 61% of all deals recorded in the first nine months of this year being below £10m. This is some 2% above the five-year average. Overseas buyers have been the most active investor in regional offices so far this year, accounting for 44% of all deals. Notable acquisitions include Tristan Capital Partners’ purchase of Cody Technology Park in Farnborough, Hampshire, for £112m and Mitsubishi UFJ Financial Group’s acquisition of Syngenta’s International Research Centre in Berkshire for £70m. Savills said it expected to see activity from overseas investors continue to increase, especially from existing and newly created French funds and from Middle Eastern capital. The agent added that it expected the full year to finish strongly with some £542m of assets put under offer in Q3 but not completed and a further £482m of office assets brought to market. Prime yields across the regional office market are currently around 7%.