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According to Morgan Pryce, the London commercial property agent, demand for offices near Liverpool Street will increase further. This upward trend for offices in Liverpool Street has been, and will continue to be, driven by overseas investors. £2.9 billion was traded over 39 deals in the second quarter of 2012, the focus of these deals being offices in the City. A large amount of this investment was in offices near Liverpool Street.
The reason for this high investment demand for offices in the City, and especially in offices near Liverpool Street, is that Central London offices are viewed by overseas investors as a safe haven for their property investments. Prime yields for all lot sizes in offices in Liverpool Street have remained stable for the last 12 months at 5.25%.
Overseas investors opting for prime offices in the City
However, the market for offices in the City has been experiencing a yield divergence between prime and secondary stock. Uncertain economic times have been causing a flight to quality sharpening yields; investors are not willing to take risks on off-prime property, especially with short-term only income security and poor covenant strength. Eugene O’Sullivan, of Morgan Pryce, believes “this trend will continue and I expect yields for off-prime offices in the City will continue to soften.”
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.
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