Blackstone Makes Its Big Dollar UK Regional Office Debut
Blackstone has acquired its first UK regional offices, buying a £182M Birmingham office block.
The arrival of the global private equity giant in the UK’s prime regional office market will boost confidence in a sector that is already showing signs of rapid, though selective, recovery-focused on new build and good quality refurbishment.
The deal means a delayed, but still impressive, post-pandemic payday for AshbyCapital, which first began to seek buyers in 2019 for the 329K SF Colmore Building in Colmore Row. At the time, Knight Frank reported the asking price as £175M, a yield of 5.18%.
Today’s price shows a more than full recovery to pre-pandemic pricing and earns Ashby a reward for an extensive building refurbishment.
Blackstone made the purchase on behalf of the Blackstone European Property Income Fund, Midlands Business Insider reported.
Ashby bought the block in 2015, paying £140M to Carlyle. Carlyle's ownership coincided with the Great Financial Crisis and resulted in a £10M loss of capital value. At the time the building was only 40% occupied.
The big dollar deal comes as Birmingham’s office market picks up pace.
Central Birmingham take-up in Q1 totalled 175K SF, matching that recorded in the final quarter of 2021 and up sharply in early 2021, the Birmingham Office Market Forum reported.
The Q1 figures suggest the scope for growth investors like to see. The average for Q1 2019 and 2020 was 266K SF.
Around a third of the Q1 take-up this year was in new build floorspace, with good quality refurbishment making up much of the rest.