FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
Investment volumes in the Central London office market for Q1 2023 are expected to reach £2.1 billion, according to commercial real estate services company, JLL.
The firm’s provisional figures demonstrate that £1.4 billion was invested in the City of London and £670 million transacted in the West End throughout the first quarter of 2023.
JLL cited that this represents a 63 per cent drop from the corresponding quarter of 2022. The difference is attributed to an unprecedented strong first quarter of 2022 due to the wide scale return to the office post-pandemic driving up volumes. In contrast to investment activity prior to Covid-19 the first quarter of 2023 has seen a 39 per cent fall compared to the £3.4 billion that was transacted in Q1 2019.
According to JLL within Q1 2023, there were 22 transactions across Central London. There have been a number of notable transactions, including the sale of St Katharine Dock to CDL for £395 million, ChinaChem’s purchase of 1 New Street Square for £349 million and the sale of 60 Gracechurch Street to Obayashi for £140 million.
These muted Q1 figures follow a slow final quarter of 2022, in which £1.9 billion was transacted. JLL attributed this in part to the volatility surrounding the government’s mini-budget and the subsequent fallout during September and October.
JLL has predicted that investment activity will improve in the second half of 2023, with elevated capital flow from Asia-Pacific buyers, particularly those from Singapore and Hong Kong.
Julian Sandbach, Head of Central London Office Markets at JLL, said: “The level of capital deployed into Central London in the first quarter of 2023 has been relatively muted with a total of £2.1 billion invested, notably down on the corresponding period in 2022 when we saw £5.7 billion committed following the end of Covid restrictions and a return to office. Clearly the significant inflationary pressures seen building from summer 2022 and the corresponding rising cost of financing have impacted confidence and liquidity, leading to a more cautious environment.
“Despite these challenges London continues to see significant capital from overseas, notably Asia with largest transactions in the capital undertaken by Singaporean, Hong Kong and Japanese investors. Much of the investment is channelled into high quality, well specified, environmentally enhanced offices, which is where there is strong focus from occupiers seeking to pre-lease and capital seeking to fund or joint venture. International and domestic investors remain focussed on attaining London assets and we expect to see investment volumes begin to increase in the coming months.”
With the current economic crisis resulting in higher prices and more of a squeeze on resources, FMs need to ensure that they have robust building and maintenance services in place to control costs and reduce the need for emergency repairs. When it comes to drainage and plumbing there are also the challenges of dealing with extreme weather, from droughts to flooding, the need to meet stringent regulations and to avoid causing environmental damage.
UK drainage specialist, Metro Rod, has launched a survey which explores the main areas of interest for FMs in maintaining drainage and plumbing, including how they currently assess their supply chains to ensure they’re working with partners that meet the highest possible standards and provide value for money.
The results will be published online so that you can see how you compare to others within the sector.
The survey should take just 5-10 minutes of your time, and as a thank you, you will be entered into a prize draw, where one lucky winner will be picked at random to receive a £100 Amazon voucher.
To take part click here.
