Research by property consultancy Gerald Eve suggests rising numbers of deals are likely in the office market in 2022.

Its Office Investment Bulletin for Q1, 2022 shows £687 million worth of transactions currently under offer in the South East. This is despite the figure in the first quarter being 18 per cent down on Q1 last year at £468m across 29 deals.

And, in another sign of increasing activity, the research shows that while just £266m of sales were launched to the market during Q1, 2022,  48 per cent of those were in March.

Guy Freeman, partner at Gerald Eve, said: “With a staggering £687m currently under offer and market sentiment improving amid the removal of Covid restrictions, we expect transactional volumes in the South East offices market to progressively increase throughout the year. This will be bolstered by M&A activity, including Workspace’s acquisition of McKay Securities, which is expected to complete in May.

“From an occupational perspective, offices continue to remain an experiment in finding the optimal layouts to maximise collaboration and amenity provision.

“Whilst occupiers may reduce the amount of space they occupy, we expect a rise in demand for better quality accommodation with a focused ESG agenda; evidenced by new record headline rents set in St Albans, Windsor and Wimbledon at £38.50 per sq ft, £43 per sq ft and £56 per sq ft respectively.

“With cost inflation curbing the development pipeline, we expect to see further rental growth for the best quality stock.”

The trend of buying office space to repurpose for alternative uses dominated in Q1 with around £264m of office space being acquired for conversion to uses such as data centres, industrial, life sciences and residential.

Deals included Bridge Industrial’s £55m purchase of Weybridge Business Park, which will be repurposed for industrial, and Keppel DC REIT’s purchase of Waterside House, Bracknell, which Vodafone currently uses as a data centre, for £57m.

A key transaction in the life sciences sector was Breakthrough Properties’ purchase of Trinity House, a large-scale redevelopment opportunity at The Oxford Science Park for £41m, which equates to £25m per acre.

However, the report says Q1 activity in the sector was subdued due to a lack of stock.

Key residential conversion transactions included McKay Securities’ sale of Great Brighams Mead in Reading to Kings Oak Capital for £19m and CCLA’s sale of Syward Place in Chertsey, which the report says, is rumoured to be under offer considerably ahead of the £13m asking price.

Image shows The Oxford Science Park.

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