Derwent London PLC on Thursday said the central London office market ‘continues to see strong occupational demand,’ as it said £14.3 million of leasing and asset management transactions have completed or are under offer since the start of the year.
The London-based property investor and developer said leasing activity in the year to date totals £2.7 million, with a further £3.7 million of rent under offer.
Open market lettings were agreed 2.7% ahead of December 2024 estimated rental value, it said.
Derwent said renewals and regears totalling £2.9 million have also completed since the start of the year, with a further £5.0 million of deals under offer.
It said its European Public Real Estate Association vacancy rate is 3.4%, up marginally from 3.1% at the end of December.
The firm said it continues to review asset recycling opportunities in its portfolio and expects to make further disposals in 2025.
Derwent said practical completion of its 298,000 square foot site at 25 Baker Street is due at the end of the first half. It said the office element has been pre-let to five occupiers at an average headline rent of £104 per square foot.
It said contracts have also been exchanged on 20 private residential units for £98.4 million, with three more units under offer. This is at a 15% premium to its appraisal valuation.
It said a new 133,500 square foot site at Holden House, Tottenham Court Road is expected to start in August. Two further central London sites are expected to start in the first half of 2026.
During the period, Derwent net debt fell slightly to £1.47 billion from £1.48 billion at the end of December.
Chief Executive Paul Williams said: ‘The central London office market continues to see strong occupational demand against an ongoing backdrop of low supply. Larger occupiers are planning further ahead than ever before as the medium-term pipeline is squeezed. Investment volumes more than doubled to £2.4 billion in the first-quarter, compared to the prior year, driven by London’s global appeal and the positive rental growth outlook.
‘We have a high quality portfolio with an attractive average lease term and a substantial development pipeline, which positions us strongly for current and future markets. Our focus on earnings, regeneration and recycling underpins our positive total return outlook, and we reiterate our 2025 portfolio ERV guidance of 3-6%.’
Shares in Derwent London were up 1.9% to 2,020.00 pence in London on Thursday afternoon.
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