The South East office investment market showed clear signs of recovery in 2024, with total transaction volumes for the region reaching £1.51 billion, reflecting a 16% increase from 2023, according to new market analysis by commercial real estate advisor and service provider Newmark Group.
The South East market witnessed a 35% rise in transactions, with more than 110 closings, marking an improvement from the historic low recorded in 2023. Transaction volumes remain below the five-year average of £2.37bn, indicating further room for growth.
Quarterly investment performance fluctuated throughout the year. The market started on a subdued note in Q1 2024, with £307m in transactions, marking a 10% decline from Q4 2023.
Signs of improvement emerged in Q2, as transaction volumes increased to £384m, a 25% quarter-on-quarter rise. However, Q3 2024 saw a slowdown, with transaction volumes dropping to £232m, making it the second-lowest quarter since 2017.
In contrast, Q4 2024 experienced a significant rebound, with £586m in sales volumes, representing a 153% increase from Q3 2024.
Several high-profile transactions shaped the market in 2024. The Cambridge Biomedical Campus was acquired by Danaher (Abcam) for £125m, underscoring strong demand for life sciences real estate.
Cody Technology Park in Rushmoor, a major technology and research hub, was purchased by Tristan Capital for £112m, while Assembly London in Hammersmith changed hands in a £52m transaction between AXA IM and Knight Frank IM.
In 2025, the South East office market will likely be shaped by the demand and limited supply for prime, sustainable and refurbished office spaces, which is driving extreme rental growth.
The changes in Permitted Development Rights are reshaping investment strategies, making secondary office stock more liquid and attractive for developers.
High-yielding opportunities also continue to emerge, particularly for overseas and private investors, as edge-of-core office buildings are now trading at over 10% yields.
Newmark partner Guy Freeman said: “While 2024 began with uncertainty, the significant surge in volumes leading into 2025 signals a renewed sense of investor confidence.
“Institutional investors once again led the market, driving transactions as they strategically rebalanced portfolios in response to shifting occupational demands and rising interest rates.
“Simultaneously, sustainability considerations continued to accelerate, prompting divestment from secondary office spaces in favour of energy-efficient assets.
“With growing demand for sustainable offices and evolving investment strategies, 2025 is set to be a strong year for the South East office market.”
