The Midtown sector was the strongest for growth and income return out of all central London office locations, according to the Farebrother IPD Midtown Investment report.
Midtown office space saw an average rent increase of 7.1% over 2010, surpassing the traditionally better performing the City of London office space and offices in the West End, at 6.6% and 5.2% respectively.
The Midtown area, which offers prime office space in areas such as Holborn, Bloomsbury and St Giles, were well above the entire London office average of 1.5%. With income return at 6.1%, this was 40 basis points higher than the nearest London Office sector, offering investors an attractive return premium in a market increasingly focused on income streams.
Alastair Hilton, Head of Investment at Farebrother said "The case for investment in Midtown becomes even more compelling, with all the key ingredients in place for strong asset performance. Whilst there are some clear short to medium term gains, in the long term the strategic position of the Midtown market can no longer be ignored."
Greg Mansell, Research Manager at IPD commented “The Midtown office market achieved total returns of 22.2% y/y in 2010. Re-pricing, as measured by IPD’s yield impact series, was the main source of performance at 11.3% y/y, outlining the positive influence of sustained investor appetite for Midtown assets. Capital values increased not only due to favourable yield movements but were also supplemented by the timely return of rental value growth."
"By the end of 2010, rents were 7.1% higher than they were the previous year, which surpassed that of the City and West End office markets. With both investors and occupiers driving returns in Midtown, it is no surprise that the 2010 total return figure represents the fourth best year for Midtown office performance in IPD’s 30-year history.”