June sees the biggest deal since 2022 as Q2 finishes with turnover of £1.87 billion
June saw the highest volume of investment turnover so far this year, with £900.5 million of turnover across seven deals, including the largest deal seen in the market since March 2022, when Savills sold the long leasehold interest in 21 Moorfields. Supported by a dozen other smaller deals, the year-to-date volume at the end of June stands at £1.87 billion across 41 deals, reflecting an average lot size of £45.6 million. Compared with the five-year average, this represents a 28% decline in turnover volumes while remaining broadly in line with the average number of deals. As expected, the Bank of England’s Monetary Policy Committee voted to maintain the base rate at 3.75% as economic challenges and geopolitical uncertainty continue.
In the largest deal of the month – and the largest deal since 2022 – Barclays acquired the virtual freehold interest (999 years at a peppercorn rent) in 1 Churchill Place, E14, for £750 million. Located on the north-east side of the Canary Wharf estate, in close proximity to the new Crossrail entrance, the property consists of a tower building comprising 1,004,438 sq ft across 32 storeys. The property has been the headquarters of Barclays Bank since construction in 2005. At a passing rent of £42.88 million per annum, reflecting £42.69 per sq ft, Barclays occupies the building on an FRI lease expiring in July 2039 (13 years unexpired term certain) and opted to purchase a 999-year virtual freehold interest (at a peppercorn rent) from Canary Wharf Group for a sum of £750 million, reflecting a notional net initial yield of 5.62% and £747 per sq ft.
The deal highlights the continuing trend of owner occupier transactions, more than doubles the scale of State Street Bank’s £330 million (net) acquisition of 100 New Bridge Street in 2025, as well as emphasising the continuing challenge for major office occupiers to find sufficiently large headquarters in the City, as seen with JP Morgan’s recent decision to proceed with the construction of its new Canary Wharf headquarters. The transaction also reiterates the importance of larger lot size deals in terms of the optics of turnover volumes, with this single transaction accounting for 40% of all turnover so far this year.
In another major deal, Savills acquired the freehold interest in 55 Old Broad Street, EC2, acting on behalf of Ashby Capital. Situated in a prime City of London location to the south of Liverpool Street station, the property is a consented office development totalling c. 300,000 sq ft across 23 storeys. The property was sold by UK REIT, Land Securities, who will remain on the project as a development manager, while Ashby Capital will fund the build-out. Ashby acquired the property for £63 million, reflecting £208 per sq ft on the proposed scheme, and it is their first acquisition since they purchased Helical’s 50% stake in the JJ Mack Building in Farringdon in 2024, to take 100% ownership of the asset.
Another significant deal saw UK investor Bridge Group acquire the Sun Street Estate from British Land for £28 million. The Sun Street Estate comprises four adjoining freehold properties amounting to 44,344 sq ft and is located approximately a five-minute walk to the north-west of Liverpool Street station. The properties are currently multi-let at a passing rent of c. £2 million per annum, reflecting a highly reversionary £45.04 per sq ft and provide a WAULT of 5.3 years to expiries and 2.9 years to breaks. Bridge Group acquired the property from British Land for £28 million, reflecting 6.68% net initial yield and £631 per sq ft.
June’s activity appears to reflect familiar themes seen so far this year, demonstrating a healthy flow of sub-£20 million deals reflecting liquidity within the smaller lot size range, but rare £100 million-plus deals such as 1 Churchill Place inevitably capturing the headlines and having the most powerful impact on the overall optics of City transaction volumes. Thematically, Barclays’ acquisition is also the latest example of the owner-occupier trend which continues to be a prevalent theme.
As at the end of June, Savills is tracking £1.07 billion of volume under offer across 27 deals and £5.31 billion of available stock across 73 deals. With the upcoming summer holidays typically resulting in limited activity during July and August, it seems that the next anticipated wave of activity is likely to materialise from September onwards, when both vendors and purchasers will be targeting transactions before the end of the calendar year.
The West End prime yield remains at 3.75%, while the City prime yield stands at 5.25%.