Derwent reports strong lettings momentum as it talks to potential TMT tenants from the US
What sort of office space do TMT companies want? Derwent London has been on a trip to San Francisco and Silicon Valley to see for itself what occupiers in this sector are seeking in terms of office space, and to meet US tenants that may be expanding to the UK.
The company, which specialises in Central London office space, said: “We were able to create an ongoing dialogue with potential tenants and confirmed that our concept of space creation is very similar to those of the properties and occupiers visited”. Derwent says its City Road Estate in EC1 is a “significant potential development” in this area of London. The company says TMT sector occupiers are particularly attracted to its mid-market, design-led offices to let, and that its H1 2012 vacancy rate of just 1.1% partly reflects the strong demand for office space from TMT sector companies.
Derwent reported strong lettings momentum in the six months to end-June, with £8.9m of lettings on 229,100 sq ft concluded during the period. These included the largest West End offices letting to date – Burberry’s pre-let of 127,000 sq ft at 1 Page Street in SW1, at a rent of £5.3m per year, rising to a minimum £5.7m per year after five years – equating to a rent of £50 per sq ft on the best space.
EPRA net asset value reached 1,770p per share as at 30 June compared with 1,701p six months earlier. The group’s underlying portfolio valuation increased by 3.3% during H1 2012 and it reported rental value growth of 2.8% for the period.
“London has a number of characteristics that makes its real estate market particularly attractive. Investment and tenant demand remain strong and supply of good quality office space is restricted by the constraints of planning and the general limited availability of finance. Furthermore, the events of this year, the Diamond Jubilee celebrations and the Olympics, have enhanced London’s global status as a premier capital city,” the company said.
“We remain confident that, if current market conditions persist in central London, the level of rental growth experienced in our portfolio in the first half will be sustained throughout the rest of the year. In addition we expect our valuation yields to remain firm in the months to come,” it added.
