For only the second time since the world financial crisis in 2008, total transactions surpassed £100 million in Milton Keynes. A total of 15 office investments changed hands during 2019 worth approximately £140 million. Major transactions included the sales of Caldecotte Lake Business Park, MK Central (formerly known as Station House) and Burystead Court Caldecotte, which accounted for just over half of total volumes at around £76 million.
This outstanding year for Milton Keynes was against a backdrop of profound political and economic uncertainty, which resulted in the lowest total annual volume for the South East Office investment market since 2012 at just £2.6 billion.
A combination of positive factors has meant that Milton Keynes is no longer considered as a secondary location to invest, but a hotspot in the South East office market, providing excellent fundamentals and exciting growth prospects.
Out of the 15 transactions in 2019, there were no repeat buyers with the majority being new investors in Milton Keynes, which demonstrates the breadth and depth of demand willing to deploy capital in the city.
The occupational market has gone from strength-to-strength in the past two years with continued healthy levels of take up from occupiers and the erosion of supply, particularly from older obsolete buildings being converted into residential accommodation. The development of 100 Avebury Boulevard can be cited as responsible for kick-starting significant rental growth, which pushed prime Grade A rents on by nearly 20%, resulting in the rest of the market following the trend.
Landlords who purchased earlier in the decade have benefitted from this rental growth, with investors attracted by opportunities to add value through active asset management, such as refurbishments and the repositioning of buildings.
The outlook for 2020 is positive with the resounding election result delivering much needed clarity and stimulating an investor second wind with well over £500 million of stock under offer across the South East office market.
Whilst occupier take up towards the end of 2019 was at a slower rate to the first half of 2019, there is currently circa 115,000 sq ft of office space under offer in MK, which equates to nearly half of the average annual take up, signalling a very strong start to 2020.
In the past 18 months, Lambert Smith Hampton advised on seven investment transactions totalling over £47 million, including the three properties pictured which were sold on behalf of clients. The combination of in-depth local market knowledge and the reach of a leading UK commercial real estate consultancy, enables us to advise clients across the whole spectrum.
Please do not hesitate to contact the team to discuss any property related matters. Tom Harker – Office Advisory Associate Director, Milton Keynes, call 01908 544905. Charlie Lake – Capital Markets Director, London, call 0207 198 2227.