2016 Was A Watershed Year For South Bank
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South Bank specialists Union Street Partners said office space take-up in 2016 was 40% more than the long-term average. Even discounting Apple’s big chunk of space, the final quarter was still the strongest of the year.
Simon Smith, Union Street Partners’ leasing and development partner, said the market was not just about one deal. “In many respects, 2016 was a roller coaster, but we’ve finished on a massive high,” Smith said.
Investment in the first half of 2016 reflected both the lack of liquidity in the market and some hesitation to make decisions ahead of the Brexit referendum. The year finished more encouragingly with Q4 sales up 13% on the previous quarter; but the year's total investment — £487M — was significantly below the eight-year annual average of £763M.
Alastair Hilton, Union Street Partners investment partner, said the South Bank investment market is steady. “There is a broad capital base and investor appetite remains strong with buyers who are seemingly not deterred by world events,” Hilton said. “There will, however, be a widening gap between vendor and purchaser aspirations, driven in part by their interpretation of current macro level events. There is more sizeable investment stock currently in the market, and this will be a good barometer for the year ahead.”
South Bank is experiencing a large-scale regeneration, with new retail and leisure developments cropping up, including those at Vinopolis, Leake Street and Waterloo International Terminal. The restaurant sector has had an especially rapid start with recent deals by Hix, Hawksmoore, Lobos, Caravan and Union Street Café.
Smith said the South Bank has always had a strong cultural identity primarily because of its theatres and galleries, but his company is now seeing a growing enrichment of the food, drink and leisure amenities into the hinterland beyond the riverside. “Business is being attracted to the South Bank not just because of the high quality of workspace available but also by the increasing vibrancy of the location,” Smith said.
In 2016, Union Street Partners advised on more than 280k SF in South Bank.