London’s West End market set a new quarterly investment record in Q1 2017 with the average deal size hitting £86M, significantly exceeding the previous quarterly high by 45%, according to a report published by Savills.
 
Transactions in the market totalled £1.89B in the first quarter, boosted by volumes of £558M across 10 deals in March. This was the second-largest Q1 turnover figure ever and 30% above the five-year average.
 
Twenty-two deals were transacted in Q1. Key deals included:

• Arup Group's purchase of Derwent London's building at 8 Fitzrovia St. for £197M and its acquisition of Workspace Group's 93K SF headquarters at 13-17 Fitzrovia St.

• The Langham Estate's £85M purchase of 190 Oxford St.

• AXA Investment Managers, advised by Savills, acquiring the Warwick Building in Kensington for £56.6M, reflecting a net initial yield of 5.19%. This former Victorian warehouse is almost 80K SF of office space, let to PG Media Services Limited until 2021 at £39.90/SF.

• Tellon Capital's purchase of three assets for £44M: 40-48 Broadway, 1-11 Carteret St. and 13-15 Carteret St.

• A private Irish investor's purchase of 16-19 Soho Square, a 23K SF office and retail scheme bought for £41M.

Paul Cockburn, head of the West End investment team at Savills, said that such strong quarterly data reflects how robust investors see the West End market dynamics.

“One of the biggest challenges our market faces is supply and persuading owners to part with their prized assets,” Cockburn said.
 
Savills said prime yields in London’s West End market remain at 3.25% for the fourth successive month.