September sees steady activity as year to date volume surpasses total 2024 annual turnover
September saw a steady month of transactions, with £170 million of turnover trading across five deals. This brings the year-to-date (YTD) turnover volume up to £2.40 billion across 58 deals, reflecting an average lot size of £41.4 million. While these figures show a 39% decrease in turnover volume and a 6% fall in number of deals when compared to the five-year average, it is notable that the YTD volume at the end of September has already surpassed the annual total for the whole of 2024, and that volumes are currently 56% higher than at this point last year. With Q4 typically being the busiest quarter of the year, and with Savills tracking £2.84 billion under offer across 45 deals, including eight deals in excess of £100 million, the City market will be hoping for an end-of-year flourish to push final volumes back towards long-term average levels.
In the largest deal of the month, Savills sold the freehold interest in 110 Cannon Street and 5 & 6 Martin Lane, EC4. Located on the south side of Cannon Street, within five minutes’ walking distance of Monument, Cannon Street and Bank stations, the property is situated on a freehold island site and comprises three buildings totalling 105,670 sq ft of office, retail and ancillary accommodation. The property is multi-let with a WAULT of approximately three years with a 2028 block date, providing the incoming buyer with an opportunity to reposition the asset and capture higher rents.
In a major development deal, Stanhope and Cheyne Capital acquired the freehold interest in Row One, 46–48 Park Street, SE1. Situated on London’s Southbank, within a five-minute walk of London Bridge station, the property provides a 1.24-acre riverside site with planning consent for a brand new office-led development with a consented NIA of 252,123 sq ft arranged across ten upper floors and featuring approximately 12,000 sq ft of terraces offering exceptional views of the River Thames and the surrounding central London cityscape. Stanhope and Cheyne Capital purchased the freehold interest from Land Securities for a sum of £42.5 million, reflecting £169 per sq ft on the consented NIA.
In another development deal on the Southbank, and another sale by Land Securities, the freehold interest in 22–24 Southwark Bridge Road, SE1, was acquired by Infinite and Latium for a sum of £27.5 million, reflecting £346 per sq ft on the existing area and £194 per sq ft on the consented area. Situated approximately 0.4 miles to the west of London Bridge station, 22–24 Southwark Bridge Road consists of two buildings totalling 79,341 sq ft office and ancillary accommodation, benefitting from vacant possession and planning consent for a partial demolition and redevelopment of a brand new 141,459 sq ft office scheme, as well as change of use potential (subject to planning permission). In a competitive process primarily driven by change of use interest, the freehold was eventually acquired by a joint venture partnership between Infinite and Latium, targeting future hotel use. The deal is an indication that demand for change of use opportunities within central London remains strong and is still demonstrating a premium to office values in competitive processes. Of the 58 deals in the City market so far this year, 26% have been for change of use.
With the summer holidays over and investors eagerly awaiting the arrival of new stock, September saw £703.9 million of new sales launched across 15 deals. The batch of new opportunities brings total availability to £2.73 billion across 64 deals, and with £2.84 billion currently under offer across 45 deals, the City market looks well set to finish the year positively. However, with inflation rising and the UK’s annual budget looming on 26 November, there is a sense that macroeconomic and geopolitical sentiment may be a key factor in determining how Q4 unfolds.
Savills City prime yield is 5.25%, while the West End prime yield is 3.75%.